Explaining public opinion on the enforcement of the Stability and Growth Pact during the European sovereign debt crisis
| Author | Joshua C Fjelstul |
| DOI | 10.1177/14651165221075940 |
| Published date | 01 June 2022 |
| Date | 01 June 2022 |
| Subject Matter | Articles |
Explaining public opinion
on the enforcement of the
Stability and Growth Pact
during the European
sovereign debt crisis
Joshua C Fjelstul
Department of Political Science and International Relations,
University of Geneva, Geneva, Switzerland
Abstract
The EU reformed the regulatory rules of the Eurozone in response to the European sov-
ereign debt crisis, empowering the EU to more effectively enforce the Stability and
Growth Pact (SGP), which is designed to prevent debt crises. Given recent empirical
evidence that the EU’s willingness to enforce EU law depends on public opinion,
under what conditions will EU residents view SGP enforcement as an effective way of
tackling the crisis? I theorize how individuals will evaluate SGP enforcement and test
my theory’s predictions using cross-national survey data from all Eurozone member
states and Bayesian multi-level models. I find that respondents’preferences over SGP
enforcement depend on the interaction of their political support for the European
Economic and Monetary Union and their member state’s noncompliance with the
SGP criteria. Public buy-in for SGP enforcement is lower precisely when enforcement
is most important.
Keywords
Compliance and enforcement, European sovereign debt crisis, Eurozone, public opinion,
Stability and Growth Pact
Corresponding author:
Joshua C Fjelstul, Department of Political Science and International Relations, University of Geneva,
40 Boulevard du Pont d’Arve, 1211 Geneva, Switzerland.
Email: joshua.fjelstul@unige.ch
Article
European Union Politics
2022, Vol. 23(2) 192–211
© The Author(s) 2022
Article reuse guidelines:
sagepub.com/journals-permissions
DOI: 10.1177/14651165221075940
journals.sagepub.com/home/eup
Introduction
The European sovereign debt crisis threatened the future of the crowning economic
achievement of the European Union (EU) –the Eurozone. After adopting the euro,
and gaining access to cheaper credit, many Eurozone member states over-spent and over-
borrowed, violating the Stability and Growth Pact (SGP) criteria –the Eurozone’s statu-
tory limits on the size of member states’deficits and debts. Yet, the Council of the
European Union (Council) and the European Commission (Commission), jointly
tasked by the EU treaties with enforcing the Eurozone’s rules, failed to enforce the
SGP criteria, paving the way for a sovereign debt crisis. The crisis erupted in 2009
when bond investors, reacting to new information about the size of Greece’s sovereign
debt, launched a speculative attack on Greek bonds, causing financial contagion that
threatened to destabilize the Eurozone.
EU member states responded to the crisis by passing a series of legislative reforms on
the SGP (the Sixpack in 2011 and the Twopack in 2013) and by signing the Fiscal
Compact, an intergovernmental treaty, in 2012 (Lehner and Wasserfallen, 2019;
Lundgren et al., 2019; Roger et al., 2017; Târlea et al., 2019; Wasserfallen et al.,
2019). These reforms enhanced the SGP’s enforcement mechanisms to reassure bond
investors that the EU would enforce the SGP in the future. The Commission can now pre-
screen member states’budgets (ex ante enforcement) and more easily impose sanctions
on member states for violating the SGP criteria (ex post enforcement).
Under what conditions are residents in Eurozone member states more likely to think
that SGP enforcement (whether ex ante or ex post) is an effective response to the
Eurozone crisis? In this paper, I argue that individuals’attitudes towards the effectiveness
of SGP enforcement depend on the interaction of three key independent variables:
(a) whether the individual’s member state is violating the SGP deficit criterion;
(b) whether the individual’s member state is violating the SGP debt criterion; and
(c) whether an individual supports the European Economic and Monetary Union
(EMU) as a political project. In brief, noncompliance with the SGP criteria conditions
the effects of SGP enforcement on member states’economies and on the stability
of the Eurozone, and an individual’s political support for the EMU shapes the
conclusions they will draw about the effectiveness of SGP enforcement, given these
effects. I test the theory’s observable implications using cross-national survey data cover-
ing all Eurozone member states from 2013 (over 35,000 respondents) and Bayesian
multi-level models.
My findings have important implications for our understanding of individuals’evalu-
ation of economic policies and the future enforcement of the Eurozone’s rules. First,
I show that how individuals evaluate the policy of SGP enforcement depends not only
on its likely effects on their member state’s economy and on the stability of the
Eurozone, but also on how they interpret those effects through the lens of their political
commitment to the EMU. My findings suggest that individuals who support the EMU
interpret the effects of SGP enforcement differently than those who do not support the
EMU, leading them to hold heterogenous opinions on the effectiveness of the policy,
even when likely effects on their member states’economies are the same.
Fjelstul 193
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