ABSTRACT
This paper analyses variation in the degrees of difficulty involved in negotiating and implementing loan programmes with the international lenders in Greece, Ireland, and Portugal. All three countries displayed high degrees of ultimate compliance with fiscal consolidation and structural adjustment conditionality, but the pace of implementation varied significantly. This paper argues that ‘domestic ownership’ of the loan programmes is a key determinant of outcomes, understood in terms of two dimensions: negotiating capacity and implementation capacity. Empirical evidence confirms that these concepts provide a strong explanatory framework for understanding variation in relations between national governments and the international lenders.
Acknowledgments
The authors wish to thank Carmel Hannan, Walter Kickert, Conor Little, Kevin Saude, Imre Szabo, Ben Tonra, Krishna Vadlamannati, Eva Wegner, Owen Worth, and three anonymous reviewers, for helpful comments. All shortcomings are of course our own. Joaquim Filipe Araújo wishes to acknowledge his funding for this project from the Research Centre in Political Science (UID/CPO/0758/2019) at the University of Minho, supported by the Portuguese Foundation for Science and Technology and the Portuguese Ministry of Education and Science.
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No potential conflict of interest was reported by the authors.
Notes
1. The EU devised two emergency time-limited temporary assistance mechanisms in response to the crises in Greece, Ireland, and Portugal: the European Financial Stability Facility (EFSF) and the European Financial Stabilization Mechanism (EFSM). The EU’s Greek Loan Facility of May 2010 was a special bilateral loans arrangement, pooled by the Commission and supported by an IMF Stand-By Arrangement. The Council’s consent was conditional upon Greece’s commitment to deficit reduction (Decision 2010/320/EU and Decision 2013/6/EU). In the case of Ireland and Portugal, EFSM was provided for by Regulation N° 407/2010 and decisions of the Council. After September 2012 these arrangements were replaced by the permanent European Stability Mechanism (ESM) to deal with any new bailout requirements. Like the temporary programmes, the ESM was a joint EU-IMF structure. But the pre-existing loan programmes to Greece (except the third), Ireland, and Portugal continued to be dealt with under the terms of the EFSF and EFSM: this makes them distinctive. The assistance to Spain’s government to support restructuring of the banking sector in December 2012 and February 2013 and the ‘bail-in’ as a partial solution to the financial crisis in Cyprus (2013–2016) were both managed under the permanent ESM scheme; so too was the third Greek loan programme of 2015.
2. ‘Certain elements of the financial part of the Programme were presented as non-negotiable by the Troika.. These included the higher-than-standard capital ratio required for the banks, a programme of rapid deleveraging of the banks… and the early transfer of deposits out of the failed banks. Given the absence of a risk-sharing element for the banking part of the Programme, parts of these initiatives required very careful implementation (fortunately successful) to avoid becoming counterproductive’ (Central Bank of Ireland Citation2013).
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Niamh Hardiman
Niamh Hardiman is a Professor of Political Science and Public Policy in UCD School of Politics and International Relations, a Research Fellow and member of the Executive of UCD Geary Institute for Public Policy, and a Fellow of UCD Dublin European Institute. She studied in UCD and in Nuffield College, Oxford. She was Tutor in Politics and a Fellow of Somerville College Oxford before moving to UCD. She is the Director of the interdisciplinary UCD Public Policy Programme. Her research interests include the political economy of European growth and development, the politics of fiscal policy, political-administrative relationships, and the implications of the crisis for the European periphery.
Calliope Spanou
Calliope Spanou is Professor of Administrative Science and Public Administration at the National and Kapodistrian University of Athens. She studied Public Law and Political Science at the National and Kapodistrian University of Athens, and obtained a Doctorat d’Etat en Science Politique – Science Administrative at the Université de Picardie, Amiens. She was the Greek Deputy Ombudsman from 2003 to 2011, and Ombudsman from 2011 to 2015. She has conducted research and teaching visits to the Robert Schuman Centre for Advanced Studies, European University Institute, Florence; the Universities of Picardy, Paris II; Paris-Saint Quentin-en-Yvelines; and the Centre for European Studies, Nuffield College, Oxford, among others. Her research interests range from issues in public administration and civil service reform to public policies including structural reforms, environmental and social policy, administrative policies, citizen-administration relations, administration and democracy, and Europeanization.
Joaquim Filipe Araújo
Joaquim Filipe Araújo is Associate Professor of Public Management, School of Economics and Management, University of Minho, Braga, Portugal. His PhD in Public Administration is from the University of Exeter, UK. His research interests are in public management, public sector reform, local government, and governance.
Muiris MacCarthaigh
Muiris MacCarthaigh is Senior Lecturer in Politics and Public Administration in the School of History, Anthropology, Philosophy and Politics at Queen’s University Belfast. His PhD is from University College Dublin. His research engages with a variety of debates within and between political science and public sector governance, and in particular the role played by administrative systems (and the organisations within them) in translating political preferences into policy outcomes.