Distributive Conflict and Interest Group Preferences in Surplus Countries

Abstract

Abstract A key characteristic of the Eurozone crisis is that the burden of adjustment was carried almost exclusively by crisis countries. Surplus countries did not contribute to the necessary rebalancing, even though internal adjustment likely would have reduced some of the pressure on deficit states. The chapter argues that surplus countries’ resistance to internal adjustment is rooted in domestic distributive struggles about the design of possible adjustment policies. To explore this argument, original survey data is leveraged from 357 economic interest groups from Germany, Austria, and the Netherlands and qualitative interviews with interest group representatives. The chapter shows that although there is general support for internal adjustment among economic interest groups, they disagree heavily about how exactly to achieve this goal. Together with a broad consensus to avoid a breakup of the Eurozone, the resulting deadlock turned interstate financing—such as bailouts to crisis countries—into a politically attractive strategy. Rather than being rooted only in ordoliberal ideology or export orientation, distributive conflicts thus contributed significantly to surplus countries’ resistance to adjust.