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ixChapter Two: It’s Mostly Fiscal? The European Dimensions of the Greek Crisis .84Section One: Contesting the ‘exceptionalism’ of the Greek crisis . 87Debt-fuelled clientelism: the ‘exceptional’ origins of the Greek crisis . 88The limits of emphasising Greek exceptionalism . 91Section Two: The limits to Greek modernisation: 1974-1989 . 94The era of ‘Metapolitefsi’: Challenges to Greek modernisation, 1974-1989 . 95Stabilisation through development: Greek modernisation strategy in the 1980s . 98Section Three: Greece adapts to Europe: ‘debt-led’ growth as a result ofEuropeanisation . 104Preparing for the euro: the emergence of a new modernisation agenda in 1990sGreece . 105Rethinking the origins of the Greek ‘debt-led’ model: Modernisation and EuropeanIntegration . 111Section Four: Greek modernisation in Crisis: the impact of European financialintegration in the 2000s . 116EMU membership: catalysing the Greek competiveness crisis . 116The changing dynamics of Greek debt: financialisation and externalisation . 119Conclusion . 122Chapter Three: Overheating Without Accelerating: The Portuguese Recession andCrisis .126Section One: Revolution and structural reform - Portugal 1974-1990s . 130Revolutionary instability: Portugal in the 1970s . 131The ‘European option’ and structural reforms . 134Section Two: Structural reform and ‘debt-led’ growth: Portugal 1990-2000 . 137Structural reforms and the growth of private indebtedness . 138The expansion of the non-tradable sector . 146Section Three: Recession and crisis – Portugal in the 2000s . 148Obstacles to productivity: Portugal and the immaturity thesis . 148Declining export competitiveness: the rise of China and the CEECs . 153Rethinking the Portuguese crisis . 158Conclusion . 160Chapter Four: The Decline of the Celtic Tiger and the Origins of the Irish BankingCrisis .163Section One: The Celtic Tiger: Contesting the link between export and debt-ledgrowth . 166Section Two: Export led growth: Ireland’s Celtic Tiger - 1987-2001 . 173The ‘Great Switch’: From economic nationalism to export-led growth . 174

xThe Celtic Tiger – 1987-2001 . 177The decline of Ireland’s export-led growth . 179A boom without a bubble: towards a new account of Ireland’s debt-led growth . 182Section Three: Rethinking the origins of the Irish banking crisis: 1986-2008 . 185The Irish Property boom: historical background . 186The neglected origins of the Irish banking crisis: Ireland’s adaptation to Europe 189Ireland’s debt-led growth as an outcome of European integration . 194Conclusion . 196Chapter Five: Bad Things Can Happen to ‘Good Pupils’: ‘Modernisation viaEuropeanisation’ and the Eurozone Crisis .198Section One: the eurozone crisis as an product of Europeanisation . 202Beyond non-convergence: Europeanisation as a catalyst of divergence . 204Building ‘the most competitive and dynamic economy in the world’: Europeanfinancial integration and the Single Market for banking . 206Section Two: ‘Modernisation via Europeanisation’: rethinking the asymmetry of theeurozone crisis . 213Beyond victimisation: modernisation via Europeanisation in the Europeanperiphery . 216The multiple outcomes of ‘convergence’: accounting for the asymmetry of thecrisis in the periphery . 225Rethinking the ‘design flaws’ of the European project . 230Conclusion . 233Conclusion.236Development of argument . 237Significance . 246Bibliography. 253

xiList of Tables and FiguresFigure 1.1 -Current account balances for Germany, Greece, Ireland and43Portugal (as a percentage of GDP)Figure 1.2 -German trade balances by country in billions of euros44(average figures from 2000-2012)Figure 1.3 -Portugal – consolidated claims in billions of US dollars47Figure 1.4 -Ireland - consolidated claims in billions of US dollars47Figure 1.5 -Greece - consolidated claims in billions of US dollars47Figure 1.6 -Spain - consolidated claims in billions of US dollars47Figure 2.1 -Greek government deficit/surplus in millions of national89currency (drachma)Figure 2.2 -Greek public debt as percentage of GDP, 1979-2012Figure 2.3 -Annual percentage growth rate of GDP in Greece at market90112prices based on constant local currencyFigure 2.4 -Current account balance of Greece (percentage of GDP)118

xiiFigure 2.5 -Total Greek central government debt (percentage of GDP),1201998 – 2010Figure 3.1 -Annual percentage GDP growth Portugal139Figure 3.2 -Portuguese private sector debt; consolidated, percentage of151GDPFigure 3.3 -Central government debt; total (percentage of GDP) for159Portugal; Annual – 1997 – 2012Figure 4.1 -Amount of FDI inflows (in US dollars) from the US to180IrelandFigure 4.2 -Percentage change in net employment in IDA supported181companiesFigure 4.3 -Ireland’s current account balance (percentage of GDP)182Table 3.1 -GDP growth and contributions of the main demand143components in 1995 – 2000 (annual average at 2005 pricesin Portugal)

1IntroductionAll happy countries are alike; but each unhappy country is unhappy in its ownway.Albert Jaeger, Senior Resident IMF Representative in Lisbon, 2015.One of the most striking aspects of the eurozone crisis is its asymmetric impact.Detrimental economic and political consequences have resonated across Europe, butperipheral member states have been affected more severely than others (Hardiman andDellepiane 2010, 473). Not only this, but individual peripheral countries have followeddramatically different paths to crisis. While the Greek state may have dangerously overborrowed and widened its budget deficit, Ireland was among the most fiscallyresponsible economies in Europe. While banks fuelled a property bubble in Ireland,Portugal was in the midst of a decade long recession. As an IMF economist playfullyput it, each unhappy peripheral country is ‘unhappy in its own way’ (2012).This thesis has two main purposes. First, I aim to develop an understanding ofthe origins of the eurozone crisis in the European periphery by conducting case studiesof Greece, Portugal and Ireland.1 The embattled Greek economy makes up just two percent of the eurozone. And yet, the shockwaves from its crisis have appeared to threatenthe disintegration of the entire European project. As such, whether the eurozone crisis isunderstood as mostly domestic or systemic in nature, it is vital that existing literaturereflects on the assumptions it makes about the crucial role of the periphery. Second, in1The island of Ireland technically comprises of two states: The Republic of Ireland and Northern Ireland.For the sake of convenience, throughout this thesis, I refer to the Republic of Ireland as ‘Ireland’.

2order for this explanation to be persuasive, this thesis aims to account for thedramatically different paths to crisis the periphery has followed. The crisis has beenand is playing out in very different ways across Europe (Bruff and Ebenau 2014, 4).This suggests an intellectual puzzle: why has the eurozone crisis appeared to manifest asa fiscal crisis in Greece, a recession in Portugal and as a banking crisis in Ireland? Toexamine these questions, this thesis traces the evolution of economic trajectories acrossthese three case studies in the decades before their respective crises.In order to examine these cases, I propose a framework based on a combinationof scholarship on Europeanisation and the Comparative Political Economy (CPE)literature on ‘capitalist diversity’. This proposed framework makes it possible to drawattention to the much overlooked ways in which domestic adaptation to Europeanintegration has been generative of precarious patterns of divergence across the Europeanperiphery. I develop the concept of ‘modernisation via Europeanisation’ to argue thatover the past number of decades, Greece, Portugal and Ireland have viewed their ownmodernisation in the mirror of a ‘one size fits all’ model of European development. Assuch, national and supranational efforts at promoting the convergence of member stateshave – paradoxically – propelled these countries towards crisis.The issue of asymmetry is becoming increasingly acknowledged as absolutelycentral to research into the origins of the eurozone crisis (Bruff and Ebenau 2014, 4;Jäger and Springler 2015, 1). Yet, I argue that existing literature has yet to adequatelytake up the challenge of explaining it. Instead, there has been a tendency, even inotherwise sophisticated analysis, to fall back upon, and reproduce, one of twoproblematic narratives of why the periphery was ‘hit hardest’ by the eurozone crisis.

3The first is a story about the ‘lazy Greeks’ and their fellow European ‘PIIGS’.2Much like their namesakes in the fairy tale, the PIIGS built their houses out of straw,risking the survival of the eurozone in the process (Dooley 2015a). As the story goes,Portugal, Ireland, and particularly Greece were unwilling to introduce ‘painful butnecessary’ reforms in the decades before the crisis hit; content to irresponsiblyreproduce patterns of fiscal profligacy, low efficiency and political immaturity (Bastasin2012,8; Lavdas, Litsas, and Skiadas 2013, 175).The second story offers a more critical take - casting Germany as the ‘big badwolf’ of the tale.3 While the above notions of peripheral ‘immaturity’ remainwidespread and influential, somewhat surprisingly, scholars have noted that narrativesexpressed in Western media have increasingly focused on the problems withGermany’s, rather than the so-called ‘PIIGS’, behaviour (Cross and Ma 2015, 1066;Adler-Nissen 2015). Germany has been portrayed as iron-fisted and intransigent (Crossand Ma 2015), as irrationally committing to its ordoliberal values even when thiscommitment threatens the very existence of the European project (Matthijs 2015).Germany is accused of ‘beggaring its neighbour’ in the European periphery in order toreproduce its export-led model of growth, and of uniquely and perhaps deliberatelybenefitting from the euro at the inevitable expense of its fellow member states(Lapavitsas et al. 2012). The centrality of Germany in the origins, escalation, andintractability of the crisis has become more and more commonplace in ongoing debates.By replacing one scapegoat with another, this narrative of peripheral ‘victimisation’aims to challenge existing assumptions by blaming the German ‘big bad wolf’ insteadof the ‘PIIGS’.A regrettable acronym for the so-called ‘deficit’ countries of Southern Europe and Ireland: Portugal,Ireland, Italy, Greece and Spain.3While Germany remains central to most research in this vein, some approaches emphasise the role of‘core Europe’ and/or of transnational capital classes.2

4These two narratives of the origins of the crisis in the periphery – labelled hereas the ‘immaturity thesis’ and the ‘victimisation thesis’ – have remained largelyundisturbed by alternative conceptions, and have strongly influenced much existingresearch on the eurozone crisis.4 I argue that this has contributed to two major gaps inthe literature. Firstly, existing accounts downplay the very different kinds of crisis theEuropean periphery has experienced. Pointing out, as scholarship relying onassumptions of immaturity does, that every peripheral country ‘failed to converge’ tellsus little about how and why these three specific kinds of ‘divergence’ emerged.Exposing the periphery’s collective victimisation by Germany or Western Europeexplains less still about these multiple paths.The second major gap relates to the agency of the periphery. While theimmaturity thesis reifies and pathologises peripheral agency (rendering it immature,incomplete), the victimisation thesis neglects it entirely – peripheral agency has beenstunted by the core. This problem tends to produce scholarly and political debates thatare pre-occupied with assigning blame (as Hänska 2015; Papadimitriou and Zartaloudis2014; and Ntampoudi 2014 all note). On the one hand, narratives of blame are clearlyevident in the conditionality of the European Union-European Central BankInternational Monetary Fund (EU-ECB-IMF) arrangements, as well as in the emergingEuropean institutional response to the crisis; all of which are marked by measuresdesigned to correct the immaturities of the peripheral states. This response has beenwidely admonished with even the IMF issuing an extraordinary apology for notrecognising the damage austerity would do to Greece (see Elliott, Inman, and SmithThis literature on the eurozone crisis is usually split into two levels (national and systemic level causes –see Matthijs 2015, 3), or sometimes sub-divided into different configurations of three or more (e.g. seeFouskas and Dimoulas 2013, 144 and Jones 2015). I argue that, regardless of whether a systemic ordomestic level approach is adopted, literature on the eurozone crisis tends to rely on either assumptions ofimmaturity or victimisation when it deals with the causes of the crisis in the periphery. Because anyaccount of the eurozone crisis will need to diagnose the crisis in the periphery, implicitly or otherwise,narratives of immaturity and victimisation are widespread. I will further develop this argument in chapterone.4

52013). Related to this, some have noted how public, media and political perceptions ofthe periphery, particularly Greece, as immature contributed to the notoriousprocrastination on the part of European elites in responding to the crisis, a serious errorthat raised the stakes of the crisis (Bastasin 2012, 7–11). Brazys and Hardiman (2013)have even noted how the very use of ‘heuristic labels’ such as the ‘PIIGS’ acronymhave actually contributed to negative market responses towards those states.On the other hand, transposed from academic to political discourses, narrativesof victimisation have contributed to the problematic rise of anti-German sentimentwithin Europe. Labels such as ‘Nazi oppressor and colonizer’ and ‘strict teacher’ vie forprominence against ‘immature pupil’ and ‘moral sinner’ (see Adler-Nissen 2015, 3;Dooley 2015). Roberto Orsi notes that

ii Summary Beyond Immaturity and Victimisation: The European Periphery and the Eurozone Crisis Neil Dooley Submitted for t