Exploring Mechanisms of Idea Formation in the European Commission During Times of Crisis: Evidence from the Discussion on Debt Relief

This paper focuses on the inner workings of the European Commission while it was taking part in the Troika operations. Its aim is to unravel the mechanisms via which the European Commission formed its ideas during times of crisis. It will offer an in depth analysis of how Commission officials balance out the different inputs that they receive from inside and outside the organization and how they end up adopting a certain view regarding a new policy question. The empirical puzzle at the center of this study is the EC’s position regarding whether Greece should receive debt relief. At the beginning of the program the IMF, the EC and the ECB, were clashing over whether the Greek debt should be restructured. The realization of the Private Sector Involvement Scheme (PSI), only two years after the initial decision, signified the convergence of the Troika bodies but also a radical shift of preferences in a very radical and swift way despite the opposition of important stakeholders. These incidents lead us to pose questions vis-à-vis the formation and the change of ideas and policies inside international organizations. The paper draws material from grey literature sources, first and second-hand accounts of the events and from a limited number of interviews. The aim of this study is to offer insights on EU economic governance by analyzing how the EC adopts certain economic ideas but also how it ends up choosing its policy responses towards emerging crises. It will also make a contribution to the field of the ideational literature since it will locate concrete mechanisms of idea formation inside institutions during times of crisis. It will finally provide insights regarding the dynamics of principal-agent relationships inside international organizations since it will examine who sponsors what idea and whose ideas end up influencing the IO policies.