In the Eurozone crisis, the ‘communicative discourse’ of EU leaders has served mainly as part of a mass process of persuasion (see, e.g. Mutz et al. 1996) through which they seek to communicate with both the markets and the people on the results of the coordinative discourse in the effort to convince them of the necessity and appropriateness of their decisions. The problem here is that the discourse may work at cross-purposes. Communication about new bailout initiatives that might calm the global markets can easily inflame the national publics of Northern Europe while comforting Southern Europe, or vice-versa. Increasing the complexity of the discursive interactions in this communicative sphere is that it involves multiple interlocutors at different levels. Agreements within the coordinative discourse among EU leaders may be complicated not only because hard to legitimate to national publics but also because EU leaders bring their national publics' policy concerns to the table. The results are then communicated through the media to the markets, possibility increasing their panic, and to the people, possibly reinforcing their resistance to any proposed solutions. Finally, the markets themselves may respond directly to the coordinative discourse, when it is communicated by the specialized press or in online venues by experts and think-tanks, as well as to EU leaders' actions or, more likely, non-action.
Speaking to the Markets
EU leaders' communicative discourse to ‘the markets’—representing individual investors, pension funds, traders, and bankers using a wide range of financial instruments to bet with or against the euro, national sovereign debt, national banks, and national and European companies—has been singularly bad. One problem has much to do with how the two level institutional structure of the EU affects the discourse. A cacophony of EU leaders' voices tends to follow any given coordinative negotiation among EU leaders, as they step out of their closed-door meetings to address the international press as well as their own national press, often spinning the coordinative discourse differently from what they actually said or agreed in the meetings. And the media in turn may further distort what went on through simplification or taking a statement out of context.
EU institutional leaders' discourse is different from that of EU member-state leaders, since they tend to think more about the markets or the people generally as opposed to national constituencies. The EU Commission has little clout with the markets, but the ECB is naturally a major player. As Jörg Asmussen, a German member of the Executive Board of the ECB noted, central bank communication is all about creating trust and managing market expectations. And this has become more difficult because of ‘market communication versus political communication’, since ‘messages that are necessary and legitimate in public debate can be completely unsuited for market communication and exacerbate tensions’. To illustrate, he used the example of Chancellor Merkel's political discourse legitimating her turnabout on the first Greek bailout, insisting that ‘the future of the Euro is at stake’, which led to the newspaper headlines, ‘Merkel questions survival of Euro’, that in turn sowed panic in the markets (Asmussen 2012).
One of the main problems for EU leaders generally with regard to the markets is that they constantly give the markets new ideas to panic over. For example, when the German Chancellor insisted that bank creditors should also share the pain under the more permanent EMS to start in 2013, the markets for the first time considered the possibility that they would have to take losses, and immediately intensified their pressure on Ireland and other Southern European countries. No amount of subsequent reassurances by European leaders that ‘haircuts’ for creditors would apply only to bonds emitted after 2013 could stop the run on Ireland, which by the end of November 2010 had to seek protection under the EFSF. Meanwhile, Portugal for similar reasons had to ask for protection under the EFSF by spring of 2011, while Spain, having managed to hold off the markets through austerity program after program, finally asked for loans directly to its banks from the EFSF in summer of 2012.
Another part of the problem has been not just that EU leaders' initiatives did not do enough; it is also that they consistently came late. Actions, or lack thereof, are also a form of silent communication signaling EU leaders' unwillingness or inability to rescue member-states at risk of default. The Greek tragedy, in its many acts, was poorly handled. Had the Greek rescue arrived in January or February 2010, when the Eurozone debt crisis started, or even in March rather than May, the markets might have been reassured and the EU may not even have had to come up with the loan guarantee mechanisms for the other countries at risk (Jones 2010). This said, had the EU rescued the CEECs two years earlier, in 2008, rather than sending them to the IMF, the markets might not later have worried about a possible Eurozone debt default. The neo-liberal ideas about ‘moral hazard’ that had stopped the EU from rescuing the CEECs effectively created a ‘market hazard’, by signaling to the markets that they would not necessarily intervene to rescue their own member-states (Schmidt 2010). And once the markets got the idea that government debt was not completely safe, which followed Dubai's insolvency problems in 2009, it was only a matter of time before the Eurozone's weaker member-states with less competitiveness and higher deficits would become a target.
Speaking to the People
EU leaders have not done much better in terms of their speaking to ‘the people’. The people can be understood here as consisting of national and European electorates, interest groups, members of civil society and social movements, public intellectuals as well as the ‘informed publics’ (Rein and Schön 1994), and ‘strong publics’ (Eriksen and Fossum 2002) of opposition parties, members of legislatures, and political commentators. EU leaders' discursive interactions with the people are generally mediated by the media, which act as the main transmission belt for information, reporting, commenting, and critiquing EU leaders' press conferences, speeches, declarations, and actions, as well as the responses from informed publics and ordinary citizens.
In Germany, for example, Chancellor Merkel's discourse in the months before agreeing to the first Greek bailout and creation of the EFSF seemed to go along with the tabloid press that castigated the ‘lazy Greeks’. Her discourse, which also rejected any ‘transfer union’, fueled a nationalistic, media feeding-frenzy that opposed any bailout because it would make ‘good’ member-states liable for the debts of ‘bad’ ones. And there was no mention here of the ways in which Germany itself had benefited from consumption in other European countries, with current account surpluses that were partly responsible for the deficits in other countries, as noted earlier.
This anti-Greek, anti-action discourse made Merkel's about-face, with her political discourse ‘to save the Euro’ on 10 May 2010, all the more difficult to legitimize. When Merkel came out on national television to explain her decision, she offered a very thin, economic argument maintaining that, ‘the future of Europe depended on the bailout’ and ‘it was essential to maintain the stability of the euro’. The move was deeply unpopular. Critics like the conservative newspaper, the Frankfurter Allgemeine Zeitung (11 May 2010) announced that: ‘All of the principles of monetary union have been sacrificed’. In order to appear more credible, therefore, Merkel's government became the defender of the most rigid interpretation of the Stability and Growth Pact, calling for draconian punishment of offending Eurozone members. The subsequent ‘six pack’ and ‘fiscal compact’ that German leaders insisted upon pushing through have been as much about trying to convince the people at home that the Euro would be German as it was to convince the markets that the EU was resolving its problems. Finally, it has only been very recently that the Chancellor has been making a strong positive case in Germany for EU level solutions, for example, when she insisted in a speech to the CDU's annual conference that ‘not less Europe but more’ was the answer to the crisis, since Europe had likely entered its ‘most difficult hours since World War II’ (New York Times, 14 November 2011).
In France, by contrast, Sarkozy's message of maintaining solidarity was largely positively received, and he was seen as something of a ‘White Knight’ riding to the rescue of Greece, by contrast with Merkel, as Europe's new ‘Iron Lady’ (Crespy and Schmidt 2012). However, his slow turn to a stability discourse, with an emphasis on austerity, was increasingly contested over time, contributing to his loss of the presidential elections to opposition candidate Hollande, who argued for growth and opposed the fiscal compact. Once President, however, Hollande shifted his own communicative discourse into one much more in tune with that of his predecessor and Merkel, as he proposed and then passed an austerity package that went much farther than anything Sarkozy had implemented, on the grounds that France had to maintain its credibility with the markets and regain its credibility with Germany by becoming more competitive while meeting the terms of the fiscal compact. The irony is that in so doing France is likely to go into recession, thus losing credibility with Germany.
In Italy, the replacement of Italian Prime Minister Silvio Berlusconi with Mario Monti in November 2011 was significant not just for Italy—by making it almost immediately more credible with the markets—but for the EU, in being the first to challenge ordo-liberal orthodoxy by arguing for growth. In Italy, Monti engaged in a much more positive discourse about the EU, claiming for instance that: ‘You will never hear me ask for a sacrifice because Europe asks for it, just as you will never hear me blame Europe for things that we should do and that are unpopular’. (New York Times, 5 December 2011). Monti, in fact, was at least initially brilliant at speaking to the markets, the people, and to EU leaders all at the same time. In his end-of-year 2011 press conference he spoke to the Germans, by describing himself as the ‘most German of Italian economists’, to the markets, by claiming that Italy was now moving with the winds behind it ‘to the north-west, towards Brussels and far from Greece’, and to fellow EU leaders as he insisted that ‘the turbulence is absolutely not over’ and that more had to be done (Financial Times 29 December 2011). With the election of Hollande, moreover, the two of them, plus Prime Minister Rajoy of Spain, constituted a new discursive coalition pushing for growth policies. From the middle of his year in power on, however, his discourse to the people began to sound more hollow, mainly because he was unable to carry out many of the more ambitious reforms as a result of resistance from the parties in parliament, while citizens were paying with higher taxes, lower pensions, and high unemployment.