Klaus Armingeon Kai Guthmann David Weisstanner
How the Euro Divides the Union The Effect of Economic Adjustment on Support for Democracy in Europe Data 26 Eurobarometer surveys from 2002-2014 in 28 EU member states, based on four items: Satisfaction with the way democracy works in [country] / the EU Trust in the national parliament / in the EU NLD LUX 75 50 25 EU Level 75 100 2013/2014 0 25 75 50 75 100 2013/2014 DNK SWE LUX FIN MLT DEU NLD AUT BEL POL GBR IRL EST FRA LVA CZE HUN LTU CYP ESP ITA SVK ROU PRT BGR GRC SVN HRV 0 25 100 50 50 75 75 25 SWE FIN MLT DNK AUT LUX DEU NLD BEL EST HUN GBR FRASVK POL IRL LVA BGR CYP PRT HRV LTU GRC ITA CZE ROU ESP SVN 100 0 25 50 75 50 0 100 DNK FIN LUX SWE CYP AUT NLD BEL GRC ESP DEU PRT MLTEST GBR ITA IRL FRA SVK SVN HUN HRV ROU LVA CZE LTU BGR POL 0 0 25 50 75 IRL FIN AUT SWE BELESP GBR DEU GRCCYP CZE FRA MLT EST ITA SVN POL PRT LVA ROU SVK HUN BGR LTU HRV National Level 100 2006/2007 DNK 25 100 Trust 0 Our argument implies that by forcefully determining policy responses in deficit countries, the Euro itself divides the peoples of Europe with respect to their attitudes towards their democratic political system. 2006/2007 50 Internal devaluation leads to problems of democratic legitimacy: Internal devaluation policies are recessionary in the short-term and imply considerable social costs loss of output legitimacy Democracy is about choice, but the only option left for deficit countries is internal devaluation loss of input legitimacy For their lack of democratic legitimacy, the economic adjustment programs imposed on deficit countries result in an erosion of support for democracy. We test the following hypothesis: The stronger an internal devaluation imposed upon a country, the larger is the increase in the share of detached citizens. Satisfaction with Democracy 25 Argument & Hypothesis The Euro-crisis can be interpreted as the outcome of institutionally heterogeneous countries entering a currency union that was illequipped to prevent its members from diverging economically. More crucially, in terms of crisis response, Eurozone membership limits policy choices for the countries now struggling with balance-ofpayments deficits: External (exchange-rate) devaluation is not possible what remains is internal devaluation, i.e. reducing wages & prices Support for Democracy: The Divide of Europe Comparing citizens’ attitudes before and during the Euro-crisis, we observe two patterns of change and stability: countries where democratic support remains more or less stable countries strongly affected by externally imposed economic adjustment programs, where a majority of citizens becomes ‘detached’ from democracy (movement into lower-left quadrant) 0 Research Question What are the consequences of economic adjustment programs during the Euro-crisis for the attitudes of citizens towards their democratic political system both at the national and European level? Klaus Armingeon Kai Guthmann David Weisstanner 100 By cutting loose the Eurozone’s periphery from the rest of Europe in terms of democratic legitimacy, the Euro has divided the union, instead of uniting it as foreseen by its architects. Analyzing Typical Cases: Greece and Latvia Using the synthetic control method, we compare actual trends in democratic support with counterfactual scenarios: Methods Descriptive analysis based on four attitude types (‘approving’, ‘nationalist’, ‘escapist’ and ‘detached’). Time-series cross-sectional regression analysis. Dependent variable: changes in the share of the ‘detached’ (i.e., negative orientations towards both the national and the European level). Synthetic control method to compare four typical cases: Latvia and Sweden (non-Eurozone), Germany and Greece (Eurozone). Results of the TSCS Regression Analysis Rising detachment in the Eurozone’s periphery can to a considerable degree be attributed to externally imposed economic adjustments: Changes in unit labor costs (proxy for internal devaluation) have no effect on detachment outside the Eurozone, but a large effect within the Eurozone. July 2015 Institute of Political Science University of Bern Fabrikstrasse 8 CH-3012 Bern Prof. Dr. Klaus Armingeon Professor Chair of Comparative and European Politics [email protected] Left graph: Actual detachment in Greece has grown to almost 50 percentage points higher than in a hypothetical country similar to Greece, which pursued no internal devaluation. Right graph: Detachment in Latvia did not rise as could have been expected from the extent of internal devaluation pursued there (synthetic Latvia). This can be explained by the fact that Latvia voluntarily opted for those policies outside of the Eurozone, which has preserved both input legitimacy and democratic support. Kai Guthmann Teaching and Research Assistant Chair of Comparative and European Politics [email protected] David Weisstanner Teaching and Research Assistant Chair of Comparative and European Politics [email protected]
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