Karakasis ECPR Conference

Univ. Lessons from crisis-bargaining: assessing the viewpoints of the Greek policy-entrepreneurs Vasileios P. Karakasis| v.karakasis@fgga.leidenuniv.nl Discover theworld Discover attheworld Leiden University at Leiden University 1/26  Introduction & Research Question - August 2018: “new era” after 3 bailout agreements (2010, 2012, 2015) - “Discrete & intensely scrutinized episodes bounded by externally imposed refinancing deadlines” (Lim, Moutselos, & McKen, 2019, p. 330). - Emphasis on inter-governmental bargaining or “crisis-induced” learning - Contribution 1: Key lessons from crisis bargaining by putting Greek negotiators’ view at the forefront - Contribution 2: Application of Q-methodology (human subjectivity) RQ: Main lessons that Greek policy-entrepreneurs have drawn from the crisis-bargaining with its creditors? Discover theworld at Leiden University 2 Contents 1. Literature review: crisis-bargaining 2. Conceptual framework: policy & crisis learning 3. Methodological design: Q-method 4. Factor analysis: Key lessons 5. Conclusions Discover theworld at Leiden University Literature Concepts Q-Method Lessons Conclusions 3  1. Literature review: Euro-crisis bargaining strategies Authors Key Concepts Key Conclusions Schimmelfening Liberal- a. Asymmetrical interdependence & different fiscal positions  Germany’s dominance (2015) intergovernmentalism b. Greece’s domestic turmoil  leverage for concessions   Lime et al (2019) Process-tracing Greece extracted concessions not because of domestic turmoil but IMF assessment Hennessy (2017) Conditions of Financial a. Costly exchange of information  recipient's incentives to comply with conditionality Assistance b. Creditors’ signal for suspension  extract concessions Schneider & Domestic Politics & a. Information asymmetries & great transaction costs Slantchev (2018) International Cooperation b. Credible signal by governments  forestall adverse domestic reactions to brinkmanship   Zahariadis (2016a) Bargaining Power Resources-BATNA-Domestic constraints Argument  Negotiation  Bargaining strategy: Soft (bandwagon) or Hard (shaming, threatening) Strategy Tsebelis (2016) MAD theory Defeat of SYRIZA’s 2015 strategy Nested games i. Unanimous decision-making ii. Creditors’ leverage through liquidity Discover theworld at Leiden University Literature 4 Concepts Q-Method Lessons Conclusions 2i. Conceptual Framework: Policy-entrepreneurs (1/2) Not testing theories but illuminating their plausibility Learning as analytic construction Interpretation of experiences through personal lenses Policy-entrepreneurs: • forming coalitions • ‘making decisions under conditions of uncertainty & ambiguity • deep-core’ beliefs • Invest social & political capital (Christopoulos 2006; Kingdon 2003; Mintrom& Norman 2009) Policy learning: enduring alterations of thinking or of behavioral intentions gained through experience Role of knowledge, ideas & policy-analysis in gov. responses to crises (Menno & Quaglia 2016) Concepts Discover theworld at Leiden University Literature Q-Method Lessons Conclusions 5 2ii. Constraints in Crisis-learning (2/2) 1. No relevant information  wrong interpretation in bargaining 2. Gravitate quickly in unreflective way towards a particular analogy (“threat rigidity”) 3. Disregard contextual or situational differences (Jervis, 1976; Neustadt & May, 1986. ) 4. Gaining commands of facts to deflect blame top priority (”learning as a luxury”) (Birkland , 2009; Boin, 't Hart, Stern, & Sundelius, 2017; Deverell , 2009; Staw, Sandelands, & Dutton, 1981; Stern, 1997). Research Objective: subjective understandings to grasp the situation at hand & evaluate their stakes in the context of the 3 bailout agreements Discover theworld at Leiden University Concepts 6 Literature Q-Method Lessons Conclusions 3. Q-methodology (1/5) 1. Tailor-made to measure human subjectivity 2. Capture subjective understandings through survey-like protocol 3. Self-categorization of statements by individuals 4. Stages: a. Statements under inspection (concourse & Q-sample) b. Ranking of statements (P-Set & Q-sorting technique) c. Factor Analysis Q-Method Discover theworld at Leiden University Literature Concepts Lessons Conclusions 7 3ii. Concourse & Q-sample (2/5) - Universe of subjective communicability on Greece’s bargaining strategy - 3 types (natural/ready-made/hybrid) -Literature review & conceptual framework - 150 statements need to reduction to a manageable volume (Q-sample) - Quintessential political aspects of crisis-bargaining strategy (32): a. main mistakes and/or omissions b. politicking  information processing c. Euro’s institutional design d. Possibility of learning Q-Method Discover theworld at Leiden University Literature Concepts Lessons Conclusions 8  3iii. Sample of the Q-sample (3/5) 12. Without the threat of introducing a parallel payments system, the eurozone states would have not been willing to come up with a third rescue program. 23. The German negotiators were able to shift public opinion within Greece in favor of Berlin’s favored bailout agreement. 25. In 2015 investors had been very unconcerned by Greek default and therefore the market panics never came as expected. 30. Negotiators in a crisis situation do not have a great deal of time be reflective and, instead, must often improvise to find good interim solutions Q-Method Discover theworld at Leiden University Literature Concepts Lessons Conclusions 9  3iv. Q-Sorting technique (4/5) Insert Q-sorts into a software  Ken Q-Analysis Desktop Edition Q-Method Discover theworld at Leiden University Literature Concepts Lessons Conclusions 10  P-Set Factor 1 Factor 2 Policy Maker PASOK/KINAL- Former Minister 0,83x 0,18 Policy Advisor PASOK/KINAL (1) 0,64x -0,01 Policy Advisor SYRIZA (2) -0,11 0,52x Civil Servant (1) 0,14 0,74x Policy Advisor Nea Dimokratia (3) 0,49x -0,33 Policy Maker Potami 0,79x 0,04 Policy-Maker- Former Minister 0,39 0,53x Civil Servant (2) 0,52x 0,23 Policy Advisor MERA (5) 0,04 0,54x Civil Servant Discover (3)at Leiden University theworld 0,54x 0,21 11 4. Factor Analysis- Key Lessons Lesson 1 Lesson 2 Name of the Factor Eurogroup codes matter Doomed to lose Number of respondents 13/24 7/24 Highly positive Q-sort value (+3) (17) The fact that the first months (20) EU’s substantive advantage of negotiations were wasted on was its control over liquidity. In purely symbolic issues resulted in all bargaining situations, the a prolongation of negotiations, most impatient player has to which undermined the Greek make concessions. side’s bargaining power Highly negative Q-sort value (-3) (12) “Without the threat of (32) The conventional view that introducing a parallel payments the negotiated agreements system, the creditors would not predominantly reflected Germany have been willing to come up with s superior leverage is not correct. a third rescue programme.” (-3) (-3) %Explained Variance 20 14 Discover theworld at Leiden University Lessons 12 Literature Concepts Q-Method Conclusions 5. Discussion-Conclusion Douglass North’s theory at the forefront in both lessons Lesson 1: Importance of Eurogroup institutions as means to reduce transaction costs (insiders vs outsiders)  confirmation of Hennessy’s (2017) approach Lesson 2: Institutions are not destined to provide social efficiency but mirror the pre- existing bargaining power  Schimmlfening (2015) “The Eurogroup very much operates on ‘common codes’. Showing complete disregard (or lack of understanding) of these sends a powerful message that you are not in the game to find a mutually acceptable compromise. It also makes the job of Finance Ministers much harder towards their own internal audience (which in many cases was hostile to giving Greece more money or a better deal). Finally, Finance Ministers do not like it to be lectured. Never underestimate hostile human reactions by people who feel offended in such a context” Discover theworld at Leiden University Conclusions 13 Literature Concepts Q-Method Lessons Literature (1/4) 1. Bennett , C. J., & Howlett, M. (1992). The lessons of learning: Reconciling theories of policy learning and policy change. Policy Sciences, 25(3), 275-294. 2. Birkland , T. (2009). Disasters, Lessons Learned, and Fantasy Documents. Journal of Contingencies and Crisis Management, 17(3), 146-156. 3. Boin, A. (2008). Learning from crisis: NASA and the Challenger disaster. In A. Boin, A. McConnell, & P. 't Hart (Eds.). Cambrdige: Cambridge University Press. 4. Boin, A., 't Hart, P., Stern, E., & Sundelius, B. (2017). The Politics of Crisis Management: Public Leadership under Pressures, (2nd ed.). Cambridge: Cambridge University Press. 5. Catsambas, T. (2016). The Greek Economic Crisis: Myths, Misperceptions, Truths, and Realities. Mediterranean Quarterly, 27(1), 55-70. 6. Deverell , E. (2009). Crises as Learning Triggers: Exploring a Conceptual Framework of Crisis-Induced Learning. Journal of Contingencies and Crisis Management, 17(3), 179-18. 7. Hennessy, A. (2017). Good samaritans vs. hardliners: the role of credible signalling in Greek bailout negotiations. Journal of Common Market Studies, 55(4), 744–61. 8. Jervis, R. (1976). Perception and misperception in international politics. Princeton, NJ: Princeton University Press. 9. Levy, J. (1994). Learning and foreign policy: sweeping a conceptual minefield. International Organization, 48(2), 279-312.    Discover theworld at Leiden University 14 Literature (2/4) 1. Lim, D. J., Moutselos, M., & McKen, M. (2019). Puzzled out? The unsurprising outcomes of the Greek bailout negotiations. Journal of European Public Policy, 26(3), 325-343. 2. Matthijs, M. (2016). Powerful rules governing the Euro: the perverse logic of German ideas. Journal of European Public Policy, 23(3), 375–91. 3. McKeown , B., & Thomas, D. (1988). Q Methodology. New Delhi: Sage Publications. 4. Menno, F., & Quaglia, L. (2016). The Global Financial Crisis in Comparative Perspective: Have Policy Makers ‘Learned their Lessons'? Journal of Comparative Policy Analysis: Research and Practice, 18(5), 502-517. 5. Mintrom, M., & Norman, P. (2009). Policy Entrepreneurship and Policy Change. Policy Studies Journal, 37(4), 649-667. 6. Neustadt, R. E., & May, E. R. (1986). Thinking in Time: The Uses of History for Decision Makers. New York: Freedom Press. 7. McKeown , B., & Thomas, D. (1988). Q Methodology. New Delhi: Sage Publications. 8. Menno, F., & Quaglia, L. (2016). The Global Financial Crisis in Comparative Perspective: Have Policy Makers ‘Learned their Lessons'? Journal of Comparative Policy Analysis: Research and Practice, 18(5), 502-517. 9. Mintrom, M., & Norman, P. (2009). Policy Entrepreneurship and Policy Change. Policy Studies Journal, 37(4), 649-667. 10. Neustadt, R. E., & May, E. R. (1986). Thinking in Time: The Uses of History for Decision Makers. New York: Freedom Press. Discover theworld at Leiden University 15 Literature (3/4) 1. Papaconstantinou, G. (2016). Game Over: The Inside Story of the Greek Crisis. CreateSpace Independent Publishing Platform. 2. Pitsoulis, A., & Schwuchow, S. C. (2017). Holding out for a better deal: Brinkmanship in the Greek bailout negotiations. European Journal of Political Economy, 48, 40-53. 3. Putnam, R. D. (1988). Diplomacy and Domestic Politics: The Logic of Two-Level Games. International Organization, 42(3), 477-463. 4. Sabatier, P. (1987). Knowledge, policy-oriented learning, and policy change. Knowledge: Creation, Diffusion, Utilization, 8(4), Knowledge: Creation, Diffusion, Utilization. 5. Sabatier, P. (1988). An advocacy coalition framework of policy change and the role of policy-oriented learning therein. Policy Sciences, 21(1), 129-168. 6. Schimmelfening, F. (2015). Liberal intergovernmentalism and the euro area crisis. Journal of European Public Policy, 22(2), 177-195. 7. Schneider, C. J., & Slantchev, B. L. (2018). The Domestic Politics of International Cooperation: Germany and the European Debt Crisis. International Organization, 72(1), 1-31. 8. Staw, B. M., Sandelands, L. E., & Dutton, J. E. (1981). Threat-rigidity effects in organizational behavior: A multilevel analysis. Administrative Science Quarterly, 26(4), 501-524. 9. Stern, E. (1997). Crisis and learning: A Conceptual Balance Sheet. Journal of Contingencies and Crisis Management, 5(2), 69-86. Discover theworld at Leiden University 16 Literature (4/4) 1. Tsebelis, G. (2016). Lessons from the Greek crisis. Journal of European Public Policy, 23(1), 25-41. 2. Varoufakis, Y. (2017). Adults in the Room. London: Penguin Random House. 3. Varvitsioti, E., & Dendrinou, V. (2019). The Last Bluff: How Greece came face-to-face with financial catastrophe & the secret plan for its euro exit [in Greek]. Athens: Papadopoulos. 4. Watts , S., & Stenner , P. (2012). Doing Q Methodological Research: Theory, Method and Interpretation, (2nd ed.). Thousand Oaks: Sage Publications. 5. Zahariadis, N. (2015). Powering over Puzzling? Downsizing the Public Sector during the Greek Sovereign Debt Crisis. Journal of Comparative Policy Analysis: Research and Practice, 18(5), 464-478. 6. Zahariadis, N. (2016a). Bargaining power and negotiation strategy: examining the Greek bailouts, 2010– 2015. Journal of European Public Policy, 24(5), 675–94. 7. Zahariadis, N. (2016b). Values as Barriers to Compromise? Ideology, Transnational Coalitions, and Distributive Bargaining in Negotiations over the Third Greek Bailout. International Negotiation, 21, 473- 494. Discover theworld at Leiden University 17  Next week: Tham Discover theworld Discover attheworld Leiden University at Leiden University 18