Policy design and domestic support for international bailouts

Abstract

Financial bailouts for ailing Eurozone countries face deep and widespread opposition among voters in donor countries, casting major doubts over the political feasibility of further assistance efforts. What is the nature of the opposition and under what conditions can governments obtain broader political support for funding such large‐scale, international transfers? This question is addressed by distinguishing theoretically between ‘fundamental’ and ‘contingent’ attitudes. Whereas the former entail complete rejection or embrace of a policy, the latter depend on the specific features of the policy and could shift if those features are altered. Combining unique data from an original survey in Germany – the largest donor country – together with an experiment that varies salient policy dimensions, the analysis indicates that less than a quarter of the public exhibits fundamental opposition to the bailouts. Testing a set of theories on contingent attitudes, particular sensitivity is found to the burden‐sharing and cost dimensions of the bailouts. The results imply that the choice of specific features of a rescue package has important consequences for building domestic support for international assistance efforts.

The politics of international redistribution: Explaining public support for fiscal transfers in the EU

“…This finding extends previous studies that have examined the association between cultural openness and support for EU transfers among German voters (Bechtel et al. , ; Stoeckel & Kuhn ). A core finding in our study is that in addition to noneconomic cultural orientations, economic left‐right positions are also important predictors of voters’ preferences on transfers.…”

Collective Identities, European Solidarity: Identification Patterns and Preferences for European Social Insurance

“…Recent applications of this method to solidarity research include the work by Bechtel et al . (, ) who investigated German attitudes towards Eurozone bailouts, and Gallego and Marx () who investigated preferences for alternative labour market policies in Spain. Building on the methodological insights of these contributions, as well as on actual policy proposals, we set up a set of synthetic models of European unemployment risk‐sharing that varies across six different dimensions.…”

Moral Hazard: German Public Opinion on the Greek Debt Crisis

“…Others make explicit moral arguments when they show that altruism inspires Germans to support aid for Greece (Bechtel et al, ), and fairness considerations shape bailout attitudes in cross‐national research (Bechtel, Hainmueller & Margalit, ). We build on these contributions by adding a more comprehensive understanding of morality to our investigation.…”

“…Equity directs individuals to focus on what Germany gets out of any deal, thus leading to bailout opposition and support for rigorous terms such as no debt relief or strict austerity for Greece. Bechtel et al () highlight the related equity concerns when they show that as Germany's relative share of contributions to a bailout package rises, support declines—even while holding constant the absolute contribution. Support rises when recipient countries agree to make additional spending cuts and thus bear some of the costs for their own recovery.…”

“…Fourth, fairness/reciprocity may be one of the most important moral considerations for bailout attitudes (Bechtel et al, ), but also one of the most indeterminate. Both sides in a bailout decision can make competing claims to fairness, and fairness itself is a contested concept.…”