Does Populism Influence Economic Policy Making? The cases of Greece and Portugal

The Euro Crisis occurred in several European countries due to high government debt and institutional failures in 2008, leaving many unable to pay their public debts or maintain their budget deficits. During the crisis, a group of three institutions known as the Troika, played a crucial role when offering financial assistance to countries in need of a bailout. The financial assistance included mandatory austerity measures which in combination with the economic situation often resulted in social and political unrest among the citizens, with divided political leadership. Today, some of the most severely affected countries (PIIGS) have shown different economic outcomes after the crisis. Most prominent are Greece and Portugal. Studies show a rise of populist parties in Europe during recent years, as well as findings explaining its connection to financial crises. This study aims to study the connection, while exploring the possibility of populism influencing economic policymaking in the context of the Euro Crisis. The cases of Portugal and Greece are compared because of their similarity of severity of the crisis, but differentiated economic outcomes as well as presence of populism in their countries. The study finds that Greece’s populist party could influence the agenda and economic policies through short termism favoring simplistic solutions.