Trust and Crisis Management in the European Union: An Institutionalist Account of Success and Failure in Program Countries

This book addresses and explains the divergent economic and political outcomes of the financial
crisis in the eight European Union member states which needed a bailout program: Cyprus,
Greece, Hungary, Ireland, Latvia, Portugal, Romania and Spain. Looking at crisis management as
a series of relationships where cooperation is essential, this book focuses on the essential role of
trust during the process. It argues that the presence or absence of trust during the negotiation
and implementation of the bailout program leads to self-reinforcing cycles of success and
failure. The analysis of these eight countries also explores the institutional sources of trust – it
shows that a commitment to limited government is associated with both economic success and
resistance to populism. The final chapter considers the implications for the future of the EU and
calls attention to the importance of strengthening domestic institutions in order to bridge the
gap between concerns over moral hazard and expectations of solidarity.