https://orcid.org/0000-0003-0709-8736
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ABSTRACT
The article examines the impact of the euro on the political system through contrasting the experiences of eurozone countries with euro outsiders using a historical institutionalist perspective. While following the global financial crisis, many have argued that the homogeneity of rules within the Economic and Monetary Union (EMU) facilitate the rise of populist movements, authoritarian challengers have emerged only outside the eurozone. The parallel application of Rodrik’s political economy trilemma and the ordoliberal tradition of the Freiburg school to the EMU provides the theoretical background for explaining this puzzle. A most- similar research design based on the comparative case study of Greece and Hungary is used to uncover the causal processes through which the EMU contributes to the resilience of liberal democracy. It is shown that while the limits on economic policy autonomy strongly hinder authoritarian tendencies within the eurozone even under a populist government, being outside the EMU is a necessary though not sufficient condition for the entrenchment of authoritarian rule.
Acknowledgements
With the usual caveats I am grateful for helpful suggestions to László Csaba, Júlia Király and two anonymous reviewers.
Disclosure statement
No potential conflict of interest was reported by the author(s).
Notes
1 See the next section for references.
2 For a recent exploration of the theoretical links between Euroscepticism and populism see Csehi and Zgut (Citation2021).
3 The Freedom House index is the eldest and most extensive measurement of freedom and democracy worldwide. While it has been subject to a wide range of criticisms including conceptualization, measurement, and aggregation, Boese (Citation2019) show the high level of correlation (∼90%) with the Polity and the V-Dem indices. For the purposes of the present paper the numerical assessment that Hungary is only ‘partly free’ coincides with the assessment of the European Parliament (Citation2022), which declared the country as a hybrid regime of electoral autocracy.
4 The classification into these categories can cover a variety of combinations in political rights and civil liberties scores. A thorough discussion of methodology is offered at https://freedomhouse.org/reports/freedom-world/freedom-world-research-methodology.
5 Own calculations based on data in the Appendix.
6 Own calculation based on data is from the European Commission’s AMECO database, net lending variable.
7 The Memorandum of Understanding is available at: https://ec.europa.eu/info/sites/default/files/01_mou_20150811_en1.pdf.
8 For a detailed overview about the personal relationship between Orbán and Putin see the investigative reporting by Pethő & Szabó (Citation2018).
9 For a full-scale elaboration on the list of reasons for Greece to reorient itself towards Russia instead of the West see Efthymiopoulos (Citation2016), who focuses on economic opportunities such as links to other BRICS countries as well as cultural ties with the Orthodox Church.
10 János Kornai declared that Hungary became an autocracy in a Hungarian-language article published in the former leading opposition daily Népszabadság on 6 January 2011. Very few believed him at the time, but his position was eventually validated by subsequent events. See: http://nol.hu/gazdasag/kornai_janos-935811.
11 Howard and Roessler (Citation2006) show that the most significant factor in defeating the government in a competitive authoritarian regime is an opposition coalition. This was clearly present in Hungary in 2022.
12 For a thorough analysis of the causes of opposition defeat see Bojár et al. (Citation2022).
13 The flexibility for policy-making outside the eurozone was first recognized by Johnson and Barnes (Citation2015) noting that Orbán’s management of the financial crisis ‘reaffirms the decisions of Hungary and other non-euro states to delay membership’ (p. 563). They also claim that these decisions do not necessarily undermine developmental goals, but this is true only in the short-term.
14 Historical data on HUF-euro exchange rate can be found at: https://arfolyam.iridium.hu.
15 The base rate was lowered to 0,90% in May 2016, while inflation surpassed 1% in October 2016. Inflation has remained over the base rate up until the time of writing (April 2022). Data on base rate: https://www.mnb.hu/en/Jegybanki_alapkamat_alakulasa; data on inflation: https://www.mnb.hu/kiadvanyok/elemzesek-tanulmanyok-statisztikak/az-mnb-inflacios-alapmutatoi.
16 I am grateful for this point to Júlia Király, former Deputy Head of the NBH.
17 Data on funding is available at: https://ec.europa.eu/info/strategy/eu-budget/long-term-eu-budget/2014-2020/spending-and-revenue_en.
18 For a book-length exposition of the problem see Transparency International Hungary (Citation2021).
19 A thorough assessment of the uneven electoral playing field is provided by OSCE (Citation2022).