Conditionality, Democracy and Institutional Weakness: the Euro‐crisis Trilemma

Abstract

The sovereign debt crises of the eurozone have raised a set of systemic challenges for the European Union (EU) that questions the credibility and legitimacy of its governance across two levels, European and domestic. The challenges are both instrumental and normative. The critical case in these respects is Greece: in 2015, it needed a third bail-out, but it also launched a political confrontation with the EU following the election of a leftist-led government. The political drama made the enduring challenges even more acute. Firstly, there were (and are) questions of leadership. How could the eurozone provide leadership and lever domestic reform to keep Greece inside the euro? Was there the political will to do so, at either the European or national levels? Further, there was the institutional challenge that stems from the juxtaposition of complex and disparate leadership at the EU level with low-quality institutions for policy delivery domestically. Beyond the structural conditions, there are normative questions of the terms of the rescue, but also issues of the accountability and legitimacy of the decision-making process. What can elections decide in a state under an adjustment programme? Together, these challenges pose a conundrum that is existential in nature for the EU: a trilemma in which the external leadership of reforms via conditionality confronts national democratic choice and the operational deficiencies of weak domestic institutions...