When The Lenders Leave Town: Partisanship, Electoral Calculations and Vested Interests as Determinants of Policy Reversals in Spain and Portugal

Abstract

To what extent are reforms made under external constraint maintained in the medium term? Under which conditions do decisions-makers reverse those, or alternatively keep them? This articles addresses these questions in Spain and Portugal. It shows that since 2014, 44% of the most important measures adopted under conditionality in both countries have been reverted. Nevertheless, the bulk (90%) of structural reforms enacted during the crisis remained. We also show that the left reverted more than the right; and that the preferences of veto players matter. Using crisp-set qualitative-comparative analysis (QCA), we find that within less than five years all temporary reforms were changed back, and that if businessor employers lobby for a reversal (and the costs to society are not salient), reversals will occur. Another finding is that most reversals are those with the largest electoral payoffs, as (cyclical) reversals always occur when the benefits are visible and concentrated rather than diffuse.

The guaranteed minimum income in Portugal: A universal safety net under political and financial pressure

“…After November 2015, the deep change in the political orientation of the government (with a left wing configuration following the general elections in 2015: a government led by the Socialist Party with the political support of the PCP and BE), with a different orientation of the economic and social policy, originated changes in social protection policies, including the SII. A reversal of social policies occurred with the new government, although keeping unchanged some structural reforms made in that period (Moury, Cardoso, & Gago, 2019). The two first decisions were: the reversal of the equivalence scale into original OECD equivalence scale that prevailed after 2010, and the reversal (in 25%) of the cut in SII value.…”