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The cost of populist ideas in Europe

According to the pyramid of needs developed by the American psychologist Maslow, the need for belonging is among the fundamental needs for human beings. Nationalism responds to two socio-psychological needs: the need for belonging and the need to define one’s identity. Identity might be defined positively by using what people have in common, what do they share. Nationalism itself is not positive or negative. At its most basic form, nationalism is a way to define people’s identity by looking at what they share: the same territory, language, habits, religion, values, beliefs, etc.

by Paula Garzon


Nationalism starts to have negative consequences within a society, in socio-dynamic terms, when it is used for populist purposes. Through populism, political leaders’ purpose is not anymore to lead through a vision or direction they have for their country. Populism is based on the idea to give voice to the feelings and ideas of the mass, generally fed by anger and bitterness after an economic downturn. Populism can be defined as a specific set of ideas shared at the mass level by certain constituencies and employed at the elite level by some political actors, that defend popular sovereignty at any cost (Rovira 2019). Populist ideas generally gain power and quickly spread in economic downturns or prolonged recession situations, when the resources scarcity make people feel threatened for their economic survival.


In that case, the identity is defined by “what we are not” and in a scarcity resources context, alterity is seen as the source of danger.

Populism also responds to the need for belonging and define people’s identity but, in that case, by using other means. The aim is not anymore to look at what do people have in common. The deteriorated socio-economic context, source of frustration, anger, and bitterness, makes to define people’s identity in opposition towards someone else. In that case, the identity is defined by “what we are not” and in a scarcity resources context, alterity is seen as the source of danger.


In Europe, since the European sovereign debt crisis in 2011-2012, populist discourses have been growing within many European countries (Tony Blair Institute 2017). Recession and austerity measures decided at the European level, have led, for some countries, to the conclusion that European institutions and decision-making processes are against national interests.


If we must admit that the European Union and the Euro Zone tend to limit national institutions’ action power, we tend to forget the reasons behind this decision, which has been made more than 70 years ago. In the aftermath of WWII, the second war in the same century, the head of states representing traumatized nations decided to build the “Europe of nations” which would be based on creating high interconnection and economic interdependencies between European countries, making war impossible again (Schuman Declaration 1950). The deal at that time was: giving away some national sovereignty against the certainty that there will be no war. By renouncing partially their national sovereignty on certain topics, countries were paying the price for peace. We can’t deny the success of the European Union in terms of “peace and stability”. This objective has been successfully reached as we have spent 70 years in a row without any war on Western European soil.


On the economic side of the Union, some rules have been set to create a minimum of homogeneity for countries using the same currency and particularly to avoid the well-known “free rider” phenomena. The convergence criteria are about the public deficit, levels of public debt and, more than twenty years ago, exchange rates evolution were also considered. These rules are constraints for politicians that are not allowed any more to spend public resources in the way they would like to, particularly for electoral means: an excessive increase in public expenses would have a direct impact on the public deficit or level of public debt, ceteris paribus.


The emergence and ever-increasing populist discourses in Europe in the last decade tend to use European institutions as a target, the reason behind all national troubles. The use of the scapegoating mechanism that defines European institutions going against national interest, in a politician’s discourse toolkit, is observed in every single European country. With this analysis, I, therefore, aim to understand the limits and costs of the implementation of populist ideas in the European economic context.

Greece: from emotion to rationality.

The analysis of the Greek case is an interesting example to illustrate the dilemma that some politicians face when they are elected and when they perceive that the implementation of the ideas they were defending can generate more harm than good to the country.

Greece joined the Eurozone in 2001. After the 2004 general elections, a financial audit showed that public financial numbers were disguised from even before the entrance to the EU. Greece had much higher levels of public debt and higher levels of a public deficit than it was supposed to.


The rally against Greece was visible on financial markets where interest rates on Greek governmental bonds had reached historical heights, making it almost impossible for the country to borrow money on financial markets and putting in danger the country’s solvability.

After the 2008-2009 financial crisis, Greek public financial numbers continued to deteriorate and in 2010 after a downgrade from a rating agency, a financial rally started against Greek bonds. To avoid the rally spreading to other countries like Spain or Portugal, a financial intervention was decided at the European level: European Commission, European Central Bank and International Monetary Fund (called the Troika). The rally against Greece was visible on financial markets where interest rates on Greek governmental bonds had reached historical heights, making it almost impossible for the country to borrow money on financial markets and putting in danger the country’s solvability.


From 2010 to 2012 two recovery plans were set to help Greek public finances avoid full default that could have led to a financial crisis in the whole eurozone (European Commission 2012). On the one hand, these plans asked private banks holding public Greek bonds to erase 50 % of the debt and on the other hand, at the Greek national level, asked for deep and simultaneous national structural reforms. These structural reforms, which were implemented during the following years, were very unpopular: the main objective was a sharp decrease in public expenses (pensions, civil servant’s salaries, labour reforms …) during an economic crisis period, accentuating, even more, the economic contraction cycle.


It’s in that context, after four years of economic recession and the implementation of tough structural reforms, that new elections were held in January 2015. Syriza, an extreme left political party – whose main leader was Alexis Tsipras - announced that if they were elected, they would be ready to fight, to refuse and reject all the austerity measures. Consequently, his party won the elections (Financial Times 2015).


The “No” victory was interpreted by the Greek people as the full rejection of the austerity measures, as celebrations at the Syntagma place (Athens) have shown.

After a failed round of negotiations between the Troika and the Syriza government, a few months after the elections, a referendum was organized by Tsipras to ask the Greek people if they would accept the third recovery plan proposed by the Troika. Alexis Tsipras was supporting the “Oxi” (no) as a way for him to get some additional bargaining power in what was a very unbalanced negotiation in terms of power (