It's the Economy, Stupid?

The Eurozone crisis and economic situation in Greece is not letting up. The Greek government currently finds itself in an increasingly difficult political situation ‘after it was forced to accept draconian austerity measures as part of a bailout offer even harsher than the one a national referendum voted no to last week’ . This marks a dramatic U-turn by the Greek Government and has led to internal divisions within Syriza. The country’s former finance minister Yanis Varoufakis has also outlined how the austerity measures demanded of Greece by European creditors is likely to strengthen support for the extreme right-wing party Golden Dawn. Varoufakis also told the ABC that Golden Dawn could “inherit the mantle of the anti-austerity drive, tragically.”
In light of the comment made by Greece’s former finance minister Yanis Varoufakis, this article examines the relationship between economic crises and electoral support for the extreme right in Europe, drawing on quantitative analysis to investigate this relationship further. The article then outlines implications for the current Greek situation.
The Great Recession across the Eurozone
In autumn 2008, national economies were hit hard by the global financial and economic crisis of 2008-09. ‘The Great Recession’ as the economic crisis is commonly known started out initially as the bursting of a housing bubble and the subprime mortgage disaster that developed into a global economic crisis by September 2008. The economic slowdown began in Europe in the second quarter of 2008. Europe experienced the sharpest contraction in the first quarter of 2009. On average, EU member states experienced four consecutive quarters of negative growth from the third quarter of 2008 onwards. European governments responded to the economic contraction of 2008-09 by taking economic recovery measures, whereupon both the increase in debt and budget deficits arguably led to the fiscal crisis in 2010 and made drastic budget cut-backs necessary. The global economic crisis has proven to be the most severe since the Great Depression of the 1930’s and many European countries across the Eurozone have been directly affected by the crisis, with high levels of unemployment, bankruptcies, and widespread financial losses. In response to the economic contraction, the European Commission (EC) proposed a massive recovery plan of bailouts that featured a fiscal stimulus of €200 billion in 2009 and 2010.
Another major consequence of the global financial crisis has been a sharp increase in unemployment rates across the Eurozone. Figures 1.1 and 1.2 below depict a gloomy picture, with the empirical evidence showing that unemployment rates have increased and risen substantially since 2008. On average, EU countries witnessed a rise in unemployment rates by approximately 4% points. Moreover, unemployment rates fell on average across EU countries from 7% in 2008 to around 11% in 2014. However, when close attention is paid to individual countries, a gloomier picture is presented for individual EU member states with clear outliers shown in the data. Spain is a primary example, where the country experienced a substantial increase in unemployment from 8% before the economic crisis hit to a staggering 27% in 2014. A similar story is found for the unemployment rate in Italy, which rose from around 8% before the economic crisis hit to around 27% in 2014.
Figure 1.1
Unemployment rates in selected EU countries (FM>=1%) and group average

Note: FM= Fiscal Measures
Source: IMF, World Economic Outlook Database (own calculations)
Figure 1.2
Unemployment rates in selected EU countries (FM<1%) and group average
Note: FM= Fiscal Measures
Source: IMF, World Economic Outlook Database (own calculations)
Electoral Results: ‘It’s not the Economy, Stupid!’ A common theory in political science is the ‘economics breeds extremism theory’ which states that a contraction in macroeconomic conditions such as GDP, higher levels of inflation, and higher levels of unemployment is likely to result in parties of the extreme right coming to power. However, the idea that the economic crisis that hit Eurozone countries from 2008-2013 has resulted in a systematic rise in electoral support for the extreme right is unfounded. This relationship is largely predicated on the rise of fascism in the inter-war period, in both Weimar Germany and Italy. Scholars such as Cas Mudde have frequently shown that this connection is not borne out by empirical data and is too simplistic. Arguably, two notable cases spring to mind which lend further credence to the ‘economics breeds extremism’ thesis, with a number of media outlets and a section of academic scholarship arguing that the recent rise of Golden Dawn in Greece, Front National in France, and Jobbik in Hungary is largely due to the onset of the financial crisis and subsequent austerity in the Eurozone, with higher levels of unemployment, inflation rates, and contraction of GDP. France, Greece, and Hungary however appear to be the exception, rather than the norm. Recently though, the radical left-wing party Syriza has also entered government in Greece and outpolled its electoral rivals, with a decline in electoral support for Golden Dawn.
Furthermore, only 10 of the 28 EU member states (i.e. 36%) elected extreme right-wing MEP’s in the 2014 European Parliament elections and this further emphasizes the widespread variations in electoral support for parties of the extreme right. In turn, it is posited that this may lead voters to question the vitality of governing mainstream political parties and activate these respondents to vote for the extreme right. Conversely, countries such as Ireland, Spain, and Portugal who were hit worst by the economic crisis have not seen a rise in electoral support for extreme right-wing parties. Countries such as Spain have not seen a sharp increase to the extreme right, but instead have witnessed a surge in electoral support for the far left political party Podemos of late. This relationship is mirrored in Figure 1.3 and shows the relationship between the unemployment rate and the vote share for extreme right-wing parties at the 2014 European Parliament Elections. Widespread variations are shown for the relationship between the unemployment rate in 2014 as measured by Eurostat and the vote for the biggest extreme right-wing party (measured by % of electoral score) in the 2014 European Parliament Election. The scatterplot shows that Ireland, Portugal and Spain have the highest unemployment rates, yet have virtually no electoral support for extreme right-wing parties. Conversely, the countries which have experienced the highest levels of electoral support such as the United Kingdom, Denmark, and France have considerably lower unemployment levels in comparison. A similar trend also holds for other countries who have experienced increased levels of support for insurgent extreme right-wing parties. Similarly, extreme right-wing parties in Austria, Netherlands and Finland have achieved higher levels of electoral support, yet the unemployment conditions in these countries are by no far the worst in comparison to other Eurozone countries. Whilst Greece has an unemployment rate exceeding 25%, the Golden Dawn Party did not achieve higher than 10%, with the left-wing party Syriza gaining electorally. Though there are a variety of additional economic measures which measure unemployment, the harmonised unemployment rate in 2014 suggests that extreme right-wing support does not go hand in hand with the economic crisis or the ‘economics breeds extremism’ theory.
Figure 1.3 shows the percentage change in vote share for extreme right-wing parties in elections before the financial crisis (2005-2008) and during the financial crisis (2009-2013). A summary of the main findings can be found in Table 1 below. This graphic shows that there are wide fluctuations in support for extreme right-wing parties and does not appear to paint a picture of a systematic increases in electoral support for the extreme right as a result of the financial crisis. The Mudde (2013) graphic shows eleven countries have seen an increase in extreme right-wing support, and nine countries have not seen an increase. Support has declined substantially for the extreme right in Romania, Slovakia, Bulgaria, and Slovenia. Denmark, Poland and Bulgaria have also seen a sharp decline in support. The four countries with the highest percentage change in electoral support are Latvia (+6.9%), France (+9.3%), Austria (+13.1%), and Hungary (+14.5%) with Finland increasing to 14.9%. Support for Golden Dawn in Greece increased its support by +4.9%. It is interesting to note that Finland was one of the least affected countries from the economic recession, yet support for the True Finns party increased from 4.1% in 2007 to 19% in 2011 and the economic crisis was an important part of the electoral campaign and success of the True Finns Party. Arguably though, the Jobbik Party in Hungary has capitalized from economic distress alongside Latvia, with these Eastern European countries being hit hard by the economic crisis. Nonetheless, Figure 1.4 shows that the recent economic crisis has played a role in a number of countries, but that it is problematic to generalize the impact and subsequent rise of the economic crisis as a European wide phenomenon.

Figure 1.3- Change in percentage vote share for Extreme Right-Wing Parties in Elections before (Pre-Crisis: 2005-2008) and during (Crisis: 2009-2013) the financial crisis
Source: Mudde (2013)
Figure 1.4- The Unemployment Rate and Voting for Extreme Right-Wing Parties at the 2014 European Elections
Source: Afonso (2014)
Implications for Greece?
Clearly, the economic crisis and subsequent austerity has not yielded a systematic rise in electoral support for parties of the extreme right across Europe. France, Greece, and Hungary appear to be the exceptions, rather than the norm. Turning to Greece, the last decade has seen a radical transformation of the political landscape. Much has also been made about the electoral rise of Golden Dawn in national parliamentary elections in 2012 and the European Parliament elections in 2014. However, the radical left party Syriza stormed into power earlier this year, outpolling both Golden Dawn and their other electoral competitors. Arguably, the Greek electorate put their fath in a party that has consistently called on halting and reversing austerity and has taken a strong stance against the troika, consisting of the European Commission, the European Central Bank, and the International Monetary Fund. The implications of the current situation in Greece are huge and could impact the contemporary political landscape in a number of ways. The imposition of even tougher conditions , tight deadlines and economic insecurity could lead to a decrease in support for Syriza, combined with further gains for the extreme right-wing party Golden Dawn. The complicated economic situation may even involve renewed support for mainstream political parties, but the electoral threat of Golden Dawn looms on the horizon.
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