Good Samaritans vs. Hardliners: the Role of Credible Signalling in Greek Bailout Negotiations

Hennessy, Alexandra

doi:10.1111/jcms.12523

Cited by 13 publications

(11 citation statements)

References 26 publications

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“…For example, it has been proved that the credibility of the lenders' threats not to grant assistance decreases the borrowers' leverage. This credibility itself also depends on the level of exposure of the creditors' banks in the countries at risk (Howarth and Quaglia 2016;Hennessy 2017). This, for example, explains why, when a country -such as Spain -is 'too big to fail' (Wildasin 1999), is in a stronger bargaining position than smaller countries.…”

Section: On the Bargaining Contextmentioning

confidence: 99%

“…This is based on the contention that success is more likely in negotiations when actors share the same preferences and values as their negotiators (Zahariadis 2016) and have less extreme positions (Garrett and Tsebelis 1996). The government's credibility, finally, depends on the institutional capacity of the state to implement the deals and respect the rules (Sacchi 2018;Hennessy 2017;Exadaktylos and Zahariadis 2014 1 ). Hence, the relationship between credibility and leverage is circular and self-reinforcing rather than unilateral.…”

Section: On the Bargaining Contextmentioning

confidence: 99%

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Capitalising on External Constraint: Six Things You Should Know About Eurozone Bailouts

Moury¹,

Ladi

Cardoso³

et al. 2020

SSRN Journal

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In the last decade, five Eurozone governments in economic difficulty received assistance from international lenders on condition that certain policies specified in the Memoranda of Understanding were implemented. What room of manoeuvre did the governments of these countries have? After conditionality, to what extent were governments willing and able to roll back changes imposed on them by the international lenders? Do we find variation across governments, and if so, why?This paper addresses those questions, summarizing the main findings of our book (Moury et al. 2021) on constraints on national executives in the five bailed out countries of the Eurozone during and beyond the crisis (2008)(2009)(2010)(2011)(2012)(2013)(2014)(2015)(2016)(2017)(2018)(2019). We show that, despite international market pressure and creditors' conditionality, governments had some room for manoeuvre during a bail out and were able to advocate, resist, shape or roll back some of the policies demanded by external actors. Under certain circumstances, domestic actors were also able to exploit the constraint of conditionality to their own advantage. The paper additionally shows that after a bail-out programme governments could use their discretion to revert the measures which bring the greatest benefits at a lower cost.

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Section: On the Bargaining Contextmentioning

confidence: 99%

Section: On the Bargaining Contextmentioning

confidence: 99%

Capitalising on External Constraint: Six Things You Should Know About Eurozone Bailouts

Moury¹,

Ladi

Cardoso³

et al. 2020

SSRN Journal

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“…After committing to a series of public sector reforms in summer 2011 as a condition for receiving financial support from ECB, the Berlusconi government quickly reneged on its commitment. This opened a signalling game between the Italian government and the EU on the credibility of its threats to withdraw its financial support (Hennessy, 2017). The collapse of the Berlusconi government in November 2011 under the pressure of the rising costs of refinancing the Italian government debt was tangible proof of the seriousness of the ECB's conditions.…”

Section: The Connection Between European Semester Institutional Chanmentioning

confidence: 99%

Influence of the European Semester on national public sector reforms under conditions of fiscal consolidation: The policy of conditionality in Italy 2011–2015

Mascio

Natalini

Ongaro

et al. 2019

Public Policy and Administration

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This article applies the Schimmelfennig and Sedelmeier “governance by conditionality” framework to public sector reform in a European Union (EU) country subject to implicit rather than explicit conditionality in the context of severe fiscal consolidation. It analyses the reform programmes of the governments that alternated in power in Italy over 2011–2015, focusing on three major areas of public sector reform – fiscal consolidation, labour market reform and liberalization – in the context of the Country-Specific Recommendations–National Reform Plan (CSR-NRP) cycle. We show that the EU has influenced governance (budget institutions and the governance structure of the NRP process) as well as the content of reforms. These results are consistent with the Schimmelfennig and Sedelmeier framework regarding the importance of external incentives in explaining adoption and implementation of reforms. Our findings confirm not only the importance of material conditions and their credibility in explaining the fit between EU recommendations and domestic reforms, but also the significance of the strategic usage of Europe by domestic policy makers, which has become more important as the legitimacy of the EU has decreased among voters. We conclude with some reflections on the implications of our research for the ongoing debate on the reform of the European Semester, in particular with regard to the question of how to ensure a higher fit between EU recommendation and domestic policies.

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“…Scholarship focusing on these momentous events is beginning to emerge (Hennessy 2017;Matthijs 2016;Pitsoulis and Schwuchow 2017;Schimmelfenning 2015;Schneider and Slantchev 2018;Tsebelis 2016;Zahariadis 2016aZahariadis , 2016b. In light of the basic theoretical approaches to bargaining and cooperation, it is notable how unsurprising the most important outcomes were.…”

Section: Introductionmentioning

confidence: 99%

Puzzled out? The unsurprising outcomes of the Greek bailout negotiations

Lim

Moutselos

McKenna

2018

Journal of European Public Policy

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While to date the Eurozone debt crisis is one of the most important and consequential events in world politics of the twenty-first century, the actions taken by states to negotiate a cooperative resolution do not seem particularly puzzling. In this article, we employ the analytic explanation approach to process tracing to test whether the most protracted and high-profile casenegotiations between creditors led by Germany, and Greece as debtor stateindeed validate three central hypotheses of basic cooperation theory regarding the sources of bargaining strength. We conclude that while bargaining leverage did emerge primarily from the ability to withstand non-agreement, the weaker Greece was able to achieve marginal concessions reflecting terms that departed from Germany's initial win-set. This leverage stemmed however not from a threat based on domestic political constraints, but from the realization that Greece's structural economic weakness rendered the strictest austerity measures untenable. The policy implication is that the credibility of the weaker side's negotiating signal arose not from domestic politics, but the impartial assessments of international technocrats and private rating agencies.

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Good Samaritans vs. Hardliners: the Role of Credible Signalling in Greek Bailout Negotiations

Cited by 13 publications

References 26 publications

Capitalising on External Constraint: Six Things You Should Know About Eurozone Bailouts

Capitalising on External Constraint: Six Things You Should Know About Eurozone Bailouts

Influence of the European Semester on national public sector reforms under conditions of fiscal consolidation: The policy of conditionality in Italy 2011–2015

Puzzled out? The unsurprising outcomes of the Greek bailout negotiations

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