The Iran deal is the hot topic now, but since I wrote on the subject recently in another venue, I thought I would address the Greek/Euro crisis. I can’t help but borrow a bit of Josh’s title on the subject because it describes so well the situation in Europe. A lot of people are piling in on the Europeans.  While I have not read all the analysis on the crisis, I suspect much of it is economically oriented.  Ben Bernanke, for example, thinks Europe is failing to uphold its end of the deal by delivering equitable economic growth. Stephen Walt thinks Europe is in for a tough time mostly for economic and security reasons: because of overexpansion (too many different levels of economic development), the collapse of the Soviet Union (no external threat), the Euro crisis, deteriorating regional security environment (Ukraine, terrorism and migrants)*, and the persistence of nationalism.

This last one piques my interest, because it suggests something about the construction of the European self (although Walt would never say that). It ties in with a narrative I have seen elsewhere. Paul Krugman wonders who will trust German good intentions in the future. The New York Times reports that in negotiations over the new Greek bailout Germany’s position as the engine of European integration has been damaged by displaying “what many Europeans saw as a harder, more selfish edge.” Threading throughout, at least to my reading, is a concern over the impact of the crisis on EU as a social collective. On that score, the handling of the crisis gives plenty of reason for concern.

To be sure, evidence from a variety of places from Iraq to South Sudan to the Balkans suggests that we don’t have a good handle from a policy standpoint on how to generate social cohesion. But we do have good theoretical and empirical work that does, and at the top of the list is Social Identity Theory/Self-Categorization Theory (social psychologist Michael Hogg calls the two the Social Identity Approach or SIA). SIA holds that social identity is grounded in three elements: ingroup ties, ingroup affect, and categorization. Ingroup ties are the ‘rational’ benefits of group membership: access to resources, material support, and so on. Ingroup affect is the emotional benefit that derives from group membership. Humans are self-esteem seeking, and social group membership is an important avenue for delivering feelings of positive distinctiveness. Finally categorization is the process by which individuals activate identity and sort themselves and others as in-group or out-group. On all three counts, but especially ingroup affect and categorization, the response by European leaders to the Greek crisis damaged an essential social underlying of the European project: collective European identity.

With respect to ingroup affect, the damage is pretty obvious. Greeks in particular, while they want to remain members of the EU and Eurozone for material reasons (ingroup ties), have expressed the belief that the ‘institutions’ in general and the Germans specifically have set out to humiliate them.   These discourses, in addition to eroding Greek positive distinctiveness, weaken the ingroup affect for all the members because the EU becomes not a place for shared positive distinctiveness but rather a source of negativity and diminution. This isn’t an argument for glossing over problems in the Greek political economy to preserve Greek sensitivities. Rather, the point is that European leaders could have reframed the narrative of the Greek crisis in ways that boosted positive distinctiveness for the entire EU project. I noticed in the weeks running up to the 17-hour marathon summit regular comments from EU policymakers regarding the intransigence of the Greeks leadership and the inadequacy of their proposals. This combined with and fueled popular narratives regarding ‘lazy,’ incapable, or intransigent Greeks. An alternative would have been to argue that the EU was working hard with Greece to chart a path for renewed Greek growth as well as set an example for the economic and political reforms that would move the EU into a vibrant future. The latter narrative does not let Greek leaders off the hook for badly needed reforms (i.e. addressing tax evasion) but does reconstruct the EU as supporting Greek efforts and positions Greece as a potential exemplar rather than deviant.

With respect to categorization, the damage is equally troubling. Rare were the claims that this is an ‘EU challenge.’ Rather, the common refrain focused on specific member states, notably Greece but also Germany as the bully/dispenser of tough medicine. These narratives activated categorizations focused on individual nation states. In so doing, they set up the Other as fellow states in the EU project, a deeply damaging dynamic. There is where Walt’s point about nationalism comes in. By establishing the relevant identity category as individual nation-states, European leaders empowered (and were pushed by) nationalism. This kind Self/Other categorization has pernicious and long-lasting effects, all of which undermine the fragile social fabric of the EU.

A final, somewhat unrelated point, is about the nature of value in this whole mess. My wife, Janelle Knox-Hayes has written on the nature of value in environmental finance. Relevant to my discussion here is the distinction between exchange and use value. Specifically, there has been tremendous focus on the exchange value aspect of the Greek crisis, which sets up a polarizing Self/Other relationship (creditor/debtor) that feeds into the dynamics identified above. What would have been more useful from a social identity standpoint is to mix non-polarizing conceptions of value into the conversation. Rather than issue increasingly large amounts of debt, EU members could instead focus on developing use value investments that could be cooperative rather than polarizing. In the Greek case, developing Greek solar power infrastructure and tying it into a EU-wide electrical system (with Greeks repaying the investment over time) would produce beneficial gains for all involved and have substantial positive medium term impacts on some pressing geopolitical problems confronting Europe (i.e. dependence on Russian energy resources).

*One does wonder how Walt can claim both the absence and presence of threat as a basis for European decline.