GJIA: Professor Featherstone, your work on Greece’s austerity measures and the subsequent political fallout offers a detailed case study of crisis management. What are the key lessons the European Union should take from Greece’s experience, and how might these inform a more proactive approach to future crises?
Professor Featherstone: I think there are several lessons for the European Union, each on a different level.
From a policy philosophy standpoint, there is now an increasing body of opinion that accepts that the basic rationale behind Greece’s three bailouts was either wrongly calibrated or, perhaps more fundamentally, misconceived. The policies stemmed from ideas championed by figures like Alberto Alesina and others at Harvard, who promoted the concept of expansionary austerity. The Greek case demonstrated that austerity measures went too far. They did not have a catalytic effect on growth or provide a sustainable path to recovery.
For the European Union, this raises fundamental questions about its policy paradigm. Is the European Union a transfer union that provides financial support across member states, or is it simply a collection of countries that must bear responsibility for their own economic stability in a more ordoliberal, German-influenced model? The Greek crisis brought these tensions to the forefront.
Beyond that, there were also practical flaws in the design of the three bailouts. Some targets were too short-term, undermining the potential for an effective crisis exit. Other conditions were simply clumsy. A prime example is the second memorandum, which required Greece to fire 150 thousand public servants within a specific timeframe. But why 150 thousand? That figure was purely finance-driven, aimed at reducing the budget deficit, without considering what skills the Greek public sector needed or where those job cuts would be most effective. In that sense, it was desperately clumsy.
For the European Union, one clear lesson is that reforms should not be imposed in such a narrow and rigid manner. Instead of focusing solely on short-term financial targets, the European Union should take a broader approach, considering how public services function and how to improve their effectiveness.
The European Union has moved on since then. The bailouts were a product of their time. After COVID-19, we saw a very different response with the European Recovery and Resilience Fund, which distributed vast amounts of money to member states, particularly Greece. This reflected a fundamental shift in thinking about crisis management. Whether the European Union has truly learned the specific lessons of Greece’s experience, however, is another question.
GJIA: Building on this, there is an inherent tension between national policy autonomy and EU-imposed reforms. How can the European Union reconcile these competing demands to achieve both effective crisis management and respect for member states’ sovereignty, especially during crises, when these tensions become even more pronounced?
Professor Featherstone: A bailout scenario is at one extreme of this spectrum. It is a situation in which other member states effectively impose conditions on the bailout recipient. But in general, the challenge is less about direct imposition and more about how EU policymaking works, where common policies are adopted if a majority of member states approve them.
Member states, by joining the European Union, have already ceded elements of their policy autonomy to the European level. But when a country is in crisis, facing bankruptcy, as Greece was, the reality is that sovereignty is diminished. As the saying goes, beggars can’t be choosers. If you need financial assistance, those providing the money acquire the right to impose conditions. This is not unique to the European Union; it applies in any rescue scenario, whether it is the IMF bailing out Argentina or a similar case elsewhere.
The broader systemic issue is how the European Union structures its decision making. Is it just a collection of independent governments that sometimes cooperate? Or is it, in some ways, a quasi-federal system? I would argue the latter. And in any federal system, different levels of government have different competencies. The problem is that the European Union is still in an ambiguous space; it has a single currency but lacks the common governance structures typically seen in full federations.
GJIA: Many EU citizens, especially in Southern Europe, often struggle to understand how EU institutions function. How can the European Union address this challenge and build trust between its institutions and the public?
Professor Featherstone: The EU’s institutional structure is unique. It is not something people are familiar with from their national political experience. In every European country, you have a parliament with a government that is accountable to it. That is a system people understand.
But the European Union? The European Commission, as an executive body, is unelected. It does not fit the standard political model that citizens recognize. There’s no direct comparison to national governments, making it harder for people to grasp how decisions are made.
In the 1950s, when European integration began, the institutional structure made sense for managing coal, steel, and agriculture. But as the European Union expanded into areas like a single currency and large-scale financial transfers, that structure has proven too technocratic and elite-driven.
If the European Union wants to continue pursuing ambitious policies, it may eventually have to move toward an even more federal arrangement. That would provide a clearer and more understandable governance model. Of course, this is a huge political leap, and at present, voters across Europe are not ready for it.
But at some point, the European Union must resolve the gap between the scope of its policies and the legitimacy of its decision making. Right now, the institutional setup is a melange: a mix of intergovernmental arrangements, federal-like structures, and technocratic governance. That creates confusion, which in turn affects legitimacy.
The European Union has long relied on output legitimacy, the idea that if people like the policies, they will accept the system. In the past, this worked: farmers liked the Common Agricultural Policy, and consumers benefited from European Union trade agreements. But as policies have become more complex and controversial, simple satisfaction with outcomes is no longer enough. The system itself needs stronger input legitimacy, meaning citizens must feel it is representative and accountable.
GJIA: The Draghi Report proposed key fiscal and institutional reforms at a time of major political shifts across Europe. How do you see these changes shaping the implementation of the report’s recommendations?
Professor Featherstone: At best, only parts of the Draghi Report may move forward, and even then, probably not in the short term. The report highlights major structural dilemmas that have existed for decades: how to fund EU policies, how to handle debt accumulation, and whether the European Union should increase its own financial resources. Right now, I don’t see the political will to advance these discussions.
Macron in France is weak, and Germany is likely to elect a government resistant to increasing the EU’s budget or financial commitments in normal circumstances. Across member states, political divisions are growing rather than converging. So, in the next three years, the best the European Union can hope for is not to go backward. Over a longer horizon, perhaps seven years or more, there may be a revival of some of these ambitions, depending on global developments.
GJIA: With major elections in 2024, including in the European Union and the United States, how do you see these outcomes influencing EU policy and strategy?
Professor Featherstone: In the short to medium term, the European Union faces a very difficult path forward. There is no consensus on what direction it should take. Added to this is uncertainty over external factors, including how to respond to a potential second Trump administration, how to deal with China, and, most urgently, how to ensure European security.
When I studied European politics, historians often said that the father of European integration was Joseph Stalin. The fear of Soviet expansion drove Western Europe to cooperate. Today, we may be seeing a similar moment.
A shared threat, Putin’s aggression and the possibility of Trump rolling back NATO commitments, could force the European Union to rethink its security architecture. Trump’s instincts are unpredictable, but he’s no fan of the European Union and he berates Europe for not spending more on their own security. Britain, despite Brexit, remains critical to European defense. In reality, European military capability rests primarily with the United Kingdom and France. If the United States disengages, the United Kingdom and the European Union will have no choice but to work more closely together.
On economic policy, however, consensus remains elusive. Under current conditions, the European Union is unlikely to take a big step forward. The will is lacking. The system may require a crisis or major threat to create the conditions for progress.
GJIA: Thank you very much for your time.
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Kevin Featherstone is an Emeritus Professor at the European Institute and Professorial Research Fellow at the Hellenic Observatory at the London School of Economics, having directed the Observatory from 2002 to 2024. He has held visiting positions at institutions such as Harvard, New York University, and the European University Institute, and his research focuses on modern Greek politics and the European Union. His honors include the “Grand Commander, Order of the Phoenix” of the Hellenic Republic, an honorary doctorate from the National and Kapodistrian University of Athens, and Honorary Greek citizenship. Professor Featherstone has significantly contributed to debates on Economic and Monetary Union and euro-zone governance, and his work continues to offer thoughtful insights into EU policy and Greece’s political landscape.
This transcript has been lightly edited for clarity and length.
Interview conducted by Spyridon Spyromilios.
Image credit: Jebulon, CC0, via Wikimedia Commons
