Securities markets and political securitization: The case of the sovereign debt crisis in the Eurozone

Introduction

Angela Merkel has frequently been cited in articles on the processes and effects of current attempts to cope with the sovereign debt crisis in Europe – and rightly so. There is hardly any other political figure who would more persuasively embody a political logic according to which political-economic issues of the day are declared vital concerns for the viability of the European project. Her statement that ‘If the euro fails, Europe will fail’, repeated several times since 2010, enshrines an understanding of political dramatization that, in the international relations literature, is known as ‘securitization’. According to Ole Wæver (1995, 1996), one of the key proponents of the concept, securitization occurs in a speech act articulated by a more or less important political person or organization – the so-called ‘securitizing move’ (Wæver, 1995: 75). If effective, that move shifts a given political question or a whole policy field out of the area of normal political communication and deliberation, turning it into a question vital for the viability and the survival of the polity in question.

Within this historical and conceptual context, this article seeks to address two issues. First, notwithstanding the fact that the sovereign debt crisis in the Economic and Monetary Union (EMU) had its origin in international bond markets, where the bonds of some Eurozone member states stopped circulating, little interest has been shown so far in the ways securities markets become entangled in practices of securitization in the sense of the ‘Copenhagen School’. The article, by engaging with recent research on the ‘security/finance nexus’ (Boy et al., 2011: 115), argues that the political securitization of the Eurozone has been interacting with another set of practices labelled securitization – namely, the production of financial instruments, such as government bonds, which became the semantic focus of political securitization.

Second, within this argumentative scope, the article aims to show the impact of financial securitization on the unfolding of cross-cutting political securitizations in the EMU – for instance, supranational securitization (as epitomized by Merkel’s statement); institutionalized securitization (as embodied in the rapid formation of ‘rescue’ instruments like the European Financial Stability Facility [EFSF] and the European Stability Mechanism [ESM]); and national securitizations (such as the resistance of the Tsipras administration in Greece to accept political conditions as a prerequisite for access to rescue funds). My argument is that bond markets, through their particular way of producing communications in the form of price signals, supported some securitizations while impairing others, thus affecting the structure of the field of securitizations.

By tracing the ways the sovereign debt crisis in the Eurozone was negotiated through ‘securitizing moves’ on different levels, the article makes a case for a consideration of market processes on the opportunity structure of political securitization processes. Furthermore, the article contributes to the more general debate on the role of audience in securitization: through a juxtaposition of a political collectivity audience and a financial one (lacking a political constituency), the securitizing move and the political audience become co-constituting representations of political collectivities into which financial audiences now have the capacity to intervene, at times problematically.

The security/finance nexus

The ‘security/finance nexus’ (Boy et al., 2011: 115) is an emerging field of research addressing the interrelatedness and mutual constitutiveness of modern finance and the modern polity’s (usually the nation state’s) security and its cultural and political-economic constitution. This nexus has grown out of a more general interest in recent decades in the ways that modern political alliances, identities and understandings have been forged by economic practices and flows, such as the circulation of money (Gilbert and Helleiner, 1999; Peebles, 2008). The literature on the ‘security/finance nexus’, in turn, asks more specific questions about how modern polities and societies seek to secure their political viability and existence through heuristics, instruments and resources that stem from financial institutions and flows.

Many contributions in the security/finance field are interested in interrelations that focus mainly on the emergence of novel financial instruments and corresponding calculative practices and devices, like ‘risk’, as they become entangled with notions of political governance, political imagination and indeed security. In her seminal handbook article, Marieke de Goede (2010) distinguishes three connections between finance and security. First, securitization in the financial sense stood at the beginning of the modern polity and an emerging urgency regarding national security. It crucially included the invention of financial instruments like stocks that accompanied the emergence of an institutional structure exploiting the European colonies up to the symbolic role that money and financial circulation played in the dissemination of ideas of modern statehood and nationhood (Gilbert and Helleiner, 1999). Recently, Nina Boy (2014, 2015) has traced the common genealogy of modern political collectivity and sovereign debt, arguing that both rely on an effacement of their substrate: nations in that they deny critical interrogations as to their cultural or historical substance in any arena, and sovereign bonds in that they escape the critical interrogation of their collateral.

De Goede (2010: 107) depicts a second strand of common genealogy in ‘shared technological histories of finance and security; for example, the algorithmic decision-model deployed both in war situations and in the financial markets’. This strand expands into current parallels between everyday financial practices (like using bank accounts, placing donations or sending remittances) and security calculations of the state articulated as data mining or the closing of accounts. Boy et al. (2011) pose the more general question of the circulation of heuristics between financial institutions, like banks, and those government authorities that are in charge of security threats like anti-terrorist measures (see also Amicelle, 2011; and Favarel-Garrigues et al., 2011).

Finally, membership in the international community is increasingly regulated and controlled by financial and monetary institutions like the International Monetary Fund (IMF) or the World Bank (De Goede, 2010: 108). This points to the epistemological problem that concepts of political security are in part modelled on financial and insurance heuristics, as in risk analysis (Boy et al., 2011; Hagmann and Dunn Cavelty, 2012). More recently, and with a view to the handling of the sovereign debt crisis in Europe, it has been suggested that those institutions curtail and condition states’ claims to full sovereignty, such as autonomous budgeting, if such states’ bonds are regarded as not creditworthy by international bond markets and rating agencies (Langenohl, 2015).

These studies contribute to furthering our understanding of the financial ‘basis’ of modern polities, of their governance rationalities and of their imaginary constituencies. Yet surprisingly little research has been done so far into how markets themselves – that is, not so much value tokens like bonds and shares or calculative devices like risk assessments etc., but rather a certain mode of circulation (Knorr Cetina, 2007) – form part of the security/finance nexus. ¹ Financial securities and rationalities are mostly seen as helping to constitute the modern state and, vice versa, the state’s security rationality has been depicted in security practices it borrows from financial and insurance rationalities, such as, for instance, ‘engineering and econometric risk analysis’ (Hagmann and Dunn Cavelty, 2012: 84). The state thus tends to be represented as an institution and an imaginary, fully capable of putting financial tokens, devices and heuristics to the use of political security.

This sits uneasily with the abundant indication that financial markets escape the rationality of the polity. Financial markets tend to develop dynamics of their own that escape institutional frames and social and political rationalities – especially those of the political system (Knorr Cetina, 2007; Davis, 2009). The one characteristic that distinguishes securities markets, and more generally financial markets, from other markets is probably the absolute priority that they place on the functioning of a pricing mechanism based on the play of supply and demand. Economic sociology has repeatedly demonstrated that price formation in markets that are embedded in the production-based economy is affected by social closure, political intervention or normative conventions (Fligstein, 2002). In contrast to this, financial markets are institutionalized in such a way that their modus operandi is based on a purely mathematical function of pricing which in turn presupposes liquidity – that is, a constant circulation of value tokens. ² What is thus particular to securities markets is that their institutionalization guarantees that pricing is solely based on the mathematical fluctuations of supply and demand within a general availability of liquidity (Knorr Cetina, 2007; Langenohl 2010).

Thus financial markets, due to the ways they become institutionalized, may attain a dynamic of their own that undermines political capacity of governance other than an enhancement of competitive markets. This argument should be considered in the context of current studies on the security/finance nexus, in order to highlight the interaction between political security and financial securitization. I suggest that the price mechanism as the core component of securities markets be attended to, in order to flesh out the ways in which financial securities relate to projects and practices of political security beyond a smooth co-constitution of security and finance. Projects and practices of attaining political security, I will argue, might be understood as acts of securitization whose significance does not reside in an unproblematic interlocking of modes of political governance and financial logics, but rather in a tension between them. In order to prepare this argument, I will discuss approaches in international relations that address securitization as an act related to the polity, and link these approaches to securitization in the financial sense.

Securitization as a dramatizing speech act

Securitization theory can be traced back to research from the 1980s that sought to challenge naturalistic or essentialist understandings of political security. In contrast to the notion of security as it appears in the mainstream of international relations (see Huysmans, 2006, for a critique), it was proposed that security demands are not a natural answer to a vital threat to the polity, but a matter of semantics. From this perspective, political issues become issues of political security – that is, they become ‘securitized’ by dint of semantic processes (Wæver, 1995, 1996; Buzan et al., 1998). Thereby, the CS variety of securitization focuses on ‘speech acts’ launched by interested political actors or organizations. Securitization relies on the performative potential of speech acts to create symbolic realities that then also become effective in non-symbolic ways. The academic and political intention was to recast security policies not as a response to objective threats, but as political-societal constructions to be scrutinized for their symbolic and political potentiality (Guzzini, 2015).

As is known, the Copenhagen School’s understanding of securitization found its critics. First, in response to the emphasis on declarative and performative speech acts, Wæver and Buzan were criticized for not accounting for practices of securitization that operate under the radar of explicit and dramatizing speech acts (Balzacq, 2011). The process of turning a political issue into one of securitization, it was argued, is much more due to concrete practices of control, policing or reconnaissance than to official speech acts that aim to dramatize a policy concern (Bigo, 2006). It was argued that the understanding of what constitutes a security issue mainly hinges upon routine practices that unfold their own normative and prescriptive effects (Leander, 2010). I wish to bracket this strand of critique for the purpose of this article, the aim of which is to address the effect of securities markets precisely on acts of political securitization – that is, speech acts that have been quite effective in declaring the sovereign debt crisis in the Eurozone an existential matter for Europe.

Second, critics held that the Copenhagen School concept of securitization hinges upon a notion of persuading an ‘audience’ that a given policy issue is related to security without, however, giving detailed explanations of what these audiences are, or what their power to vindicate or reject attempts at securitization consists in (Balzacq, 2005, 2011; Balzacq et al., 2015). While the Copenhagen concept is a speech act-theoretical one that, at least for some readers, implies some notion of performativity, all critics agree that it says comparatively little about the conditions of the efficacy of securitizing speech acts. ³ This critique is of central concern for the present article, since a re-evaluation of the notion of audience informed by such critiques can contribute to conceptualizing the particular ways in which securities markets can have an impact on the securitization of policy issues.

Securitization: Speech acts, audiences and discourse

As mentioned, the notion of ‘audience’ employed by Copenhagen School scholars was met with criticism as to the vagueness with which the concept has been introduced. On the one hand, this pertains to the question of what comprises the relevant audience for a given securitizing move (Balzacq, 2005, 2011; Balzacq et al., 2015). On the other hand, and more fundamentally, it encompasses the question of the circumstances under which a securitizing move can hope to be effective (Huysmans, 1998, 2006; Stritzel, 2012).

Concerning the first question – that of the nature of the relevant audience for a given securitizing move – it is obvious that, under conditions of a democratic political order, many audiences may find themselves addressed by such a move. For instance, Balzacq (2005: 184, 189f.) has named ‘the public’ as a typical addressee for securitizing moves; however, he also points out that, while the public may be able to grant ‘moral support’ to the act, the latter might find itself in need of ‘formal’ support by institutional bodies, ‘for instance in the form of a vote by a Parliament, Security Council or Congress’ (Balzacq, 2005: 185). Audiences may thus be manifold, from informal closed meetings to institutional structures, such as the parliamentary debate, to the general, mass-mediatized public (Stritzel, 2012). Moreover, securitizing speech acts may address different political constituencies, ranging from the local or regional to the national and, in the context of the European Union, to the supranational (Wæver, 1996, recently revisited under the term of ‘macrosecuritization’; Buzan and Wæver, 2009). Third, for all these frames and levels of constituency, what makes an audience an audience is its potential to vindicate or refuse a securitizing move. As Williams (2003) has pointed out, the securitizing move can be effective only on condition that it is accepted, vindicated and supported by a relevant audience, and not refused.

However, Williams’s argument needs more careful attention than to assert that audiences can support or refuse securitizing moves. Rather, it points towards a relation of signification unfolding among the securitizing move, a response to it, and the collectivity that both the move and the response claim to refer to. Williams (2003: 515–524) argues that the Copenhagen School model of securitization shuttles between a Schmittian and a Habermasian pole. On the one hand, the securitizing move can be read, and has been read (Van Munster, 2005: 4), as declaring a ‘state of exception’ through which the securitizing actor or institution claims extraordinary competences and authority for itself. This reading implies that audiences are (at least as a rule) passive and subservient (a view held by Balzacq, 2005: 189–190). On the other hand, Williams (2003: 522–523) points out that in democratic societies, any securitizing move may be challenged by a critical audience that engages in political deliberation. The question is then about how this shuttling of audience roles and positions might be interpreted, and on what analytical level. My suggestion is to read both the securitizing move and the audience response as claiming a representativeness for an underlying collectivity, even if that claim is substantiated in different ways.

The securitizing move, on the one hand, makes such a claim as part of its condition of possibility. Vuori (2011: 110) asserts that the securitizing move’s conceptual logic hinges solely upon the ‘felicity conditions’ in Austin’s sense of the utterance, and not on any empirical audience response. Seen from the viewpoint of representativeness, this means that representativeness is already embodied in the speech act itself. A securitizing move that does not claim political representativeness for a collectivity is not only ineffective; it is unthinkable. It thus presupposes an ‘audience’ – or rather, a political collectivity – for which it can then claim to be representative. The empirical audience response, on the other hand, as it enters into (critical) negotiations about the securitizing move, signifies an incomplete match between the securitizing move and the political collectivity it claims to represent. In other words, while the securitizing move cannot but claim representativeness for the collectivity it addresses, audience response points to qualifications and incompleteness in that claim.

This constellation indicates the presence of a political collectivity that is always already implied in the securitizing move, but which at the same time introduces a sense of contingency in the representativeness of the securitizing move for that political collectivity. What emerges is a field of political (and often tense) entanglement that binds the securitizing move back to the stipulation of a political collectivity whose substance it claims to represent – but, as the audience responses remind everyone, not in an uncontested way. We thus gain a picture of a dynamic co-constitution of the validity claims of securitizing moves and audience responses. Securitizing moves invoke and symbolically shape a political collectivity faced with a moment of intense politicity and urge. Audience response refracts the securitizing move through its (critical) negotiation, validating the securitizing move’s referent object (the political collectivity), while at the same time pointing to the contingency and incompleteness of the securitizing move’s claim to represent that object. I intend to show that it is this space of negotiation, opened up by dynamics between securitizing moves and audience response, that becomes the point of entry for effects of financial securitization. In order to prepare this argument, we must now turn to the second question raised in the literature, namely that of the effects of ‘context’ on the securitizing move.

The Copenhagen School concept of securitization is semantic insofar as it is interested mainly in the rules and effects of speech acts. However, not all aspects of semantics can be subsumed under the notion of speech act. Securitization scholars have debated the semantic dimension in securitization that is not co-terminous with the speech act but serves as its enabling context. For instance, Buzan et al. (1998: 33) suggest a ‘grammar of security’, firmly located within the speech act theoretical design of the original Copenhagen School theorization. Comparing securitization to other performative acts like naming ships, it was argued that securitizing moves follow certain rules – the said ‘grammar’ – that formulate their ‘felicity conditions’. As Vuori (2011) has pointed out, the original Copenhagen School theory identified speech acts with the illocutionary dimension of an utterance, so that it was sufficient if the securitizing move followed the ‘grammar’ for it to count as performative, effective or successful. In contrast to this, Balzacq (2005) introduced a broader notion of discourse that included not only the performative dimension of securitizing moves (in the sense that they required the acceptance and ‘support’ of an audience, and only under that condition could count as being ‘successful’), but also a discursive understanding of the context of securitizing moves: ‘The semantic repertoire of security is a combination of textual meaning – knowledge of the concept acquired through language (written or spoken) – and cultural meaning – knowledge historically gained through previous interactions and situations. Taken together, these two kinds of meanings form a frame of reference through which security utterances can be understood’ (Balzacq, 2005: 183).

In contrast to Balzacq, Huysmans (1998: 228) suggests a post-structuralist notion of ‘discursive formation’ borrowed from Michel Foucault. According to this notion, securitization is not a speech act but rather the invocation of an historically crystallized ‘thick signifier’ of security that unfolds its meaning only within the signifying structures of how security became semantically constituted in modernity, namely as ‘a cultural practice of establishing a meaningful life in the face of death’ (Huysmans, 1998: 234). In other words, securitization is part of a discursive structure that ‘becomes self-referential. It does not refer to an external, objective reality but establishes a security situation by itself’ (Huysmans, 1998: 232). In a recent attempt to bring together a differentiated notion of discourse, such as the post-structuralist one, with a notion of strategic and power-based agency that is more typical of mainstream international relations, Stritzel (2012: 550) has suggested turning attention not only to the ‘power of discourse’ to constitute symbolic worlds, but also to the ‘power in discourse’ – that is, ‘the sociopolitical resources and power positions of actors, their political struggles and processes of authorization at specific moments in time to create, challenge, change or amend existing meaning structures, potentially establishing new discursive hegemonies in history’.

This debate is insightful because it clarifies that the context of securitizing moves is often framed in terms of discourse. Not only in Huysmans’s (1998) post-structuralist notion of discourse, but even in those accounts that present themselves as strictly oriented toward strategic action (Balzacq, 2005; Stritzel, 2012) does security-related discourse retain a certain logic of its own. This logic of discourse, I suggest, can be best understood if juxtaposed with the saliency of securitizing moves – in particular, their constitutive entanglement with audience response. Unlike speech acts, discourse does not aim to address any particular audience or to co-constitute, together with that audience, any political collectivity. This is not to say that discourse is all-powerful, as a certain critique of post-structuralism implies (Stritzel, 2012), but only that its structure of validation is not based on a relationship with an audience.

The notion of discourse suggested here thus follows that of Huysmans (1998) in its orientation toward Foucault. According to Foucault (1991), discourse consists of rules that frame and circumscribe the field of statements that can be made about a given issue without, however, necessarily eliciting any particular statement. It is a mode of problematization rather than problematizing, let alone dramatizing or securitizing, statements. It is unobservable as such, but has to be reconstructed from the sets of empirical statements that it enables. In the absence of an audience that would have the capacity to affirm or reject it, it formulates universalistic ‘truths’ that address no one in particular but claim merely to state something about something. Yet, in contrast to Huysmans, I emphasize not so much the inner and self-referential structure of security-related discourse, but rather the universalism of its structure of validation, which is decoupled from any audience response. This applies, for instance, to the coverage of the EMU crisis by parts of the press discourse, in particular economic reports and prognoses that presented themselves as ‘objective’ accounts of the detrimental effects of the crisis and the ways in which it threatened financial stability in the Eurozone. The universalism inherent in this discourse does not enter into a relationship of symbolic political co-constitution with the securitizing move, but merely claims to state what is going on. This has important consequences for a reassessment of securitizing moves. The argument that discourse does not address any particular collectivity but instead claims to represent universal truths manoeuvres discourse into a conceptually ambivalent position vis-à-vis the securitizing move. The logic of discourse might interfere with the logic of the symbolic co-constitution of the political collectivity emerging from the entanglement of the securitizing move and the audience it invokes precisely because the logic of discourse has no conceptual resonance with the very idea of a particular audience.

This section has argued that the Copenhagen School model of securitization may gain from a conceptual clarification that specifies the Copenhagen School audience model as a model of the symbolic political co-constitution of securitizing move and audience response, and complements the concept of the securitizing move with that of security-related discourse. This provides the conceptual platform from which to embark on an analysis of the role of financial markets in securitization. Many securitizing moves as well as security-related discourses stand in connection to financial market movements that accompany alterations in the ways policy issues are turned into matters of political security. It is common wisdom that financial markets respond to changes in the macro-political landscape, for instance in international relations, but also in economy-related policy fields, and even in allegedly dry policy fields such as budgeting (Geisst, 2002). However, so far there is no conceptual framework that would allow for systematically relating financial markets to strategies of securitization, and to reconstruct the ways that financial securities markets may not only respond to and support, but intervene in, political securitization. The next section is dedicated to making a related suggestion, starting from the conceptual distinction between the securitizing move and security-related discourse.

Securities markets and their responses

It was argued in the previous section that the major conceptual distinction between securitizing moves and security-related discourse consists in the presence or absence of an entanglement with an audience whose response symbolically co-constitutes a political collectivity together with the securitizing move. Securities markets now complicate this distinction between speech act and discourse, forming a particular type of audience that at the same time displays characteristics of a discourse. It is my intention to put this complication to conceptual use.

First, securities markets do form an ‘audience’ that must be conceived as responsive to potential securitizing moves – markets can and do react to securitizing moves. However, the type of response markets give is empirically very different from the response of a political collectivity audience. Market audiences express their response not through a semantic statement, but by way of changes in the valuation of particular securities, or of the market in general, that consist of the accumulated effects of individual actions – that is, trades (Langenohl, 2010; Kaedtler, 2014: 179). Therefore, even as market audiences respond to securitizing moves, it can never be ascertained semantically that any change in the valuation of securities definitely results from one particular securitizing move.

Second, the constituency of a market audience differs structurally from other audiences. Talcott Parsons and Neil J Smelser (1956), in their effort to conceptualize the economy from the perspective of a norm-centred sociological theory, pointed out that virtually all economic roles are stabilized through normative expectations based on membership of different social groups and organizations, like the family or the company. From this perspective, economic behaviour is never purely egoistic and utility-oriented but, as any social action, it is embedded within a network of roles and obligations. However, Parsons and Smelser also note that this is not the case for the role of the financial investor. The ‘investment role’ does not systematically come with membership of any diffuse or concrete collectivity, but instead ‘is generally independent of membership [of] any diffuse collectivity, such as kinship, ethnic, religious, or political (in the sense of ‘party’) groupings’ (Parsons and Smelser, 1956: 234). Thus, his or her actions are not necessarily committed to any collective concerns. Investors form a market audience that markedly differs from other audiences that may find themselves addressed by securitizing moves: unlike the latter, whose audienceship and response symbolically co-constitute a political collectivity together with the securitizing move, a market audience never enters into such a relationship of co-constitution of a collectivity.

Third, market responses have a tendency to attain a discursive validity structure. As mentioned above, market responses have no semantic structure but instead consist of pricing signals that form as the cumulative effect of individual acts of trading (Langenohl, 2010). However, these pricing signals might very well relate to existing security-related discourse. Like discourse, prices address no one in particular, but instead present themselves as universalist ‘statements’. Prices are not issue-specific – that is, they do not explicitly relate to some political concern in particular, but instead circumscribe the rules that regulate what can(not) be said concerning particular issues. For instance, the rising interest rate for a given government bond makes no claim regarding the performance of this or that particular political process or project of the government in question, but circumscribes the ways in which all these processes or projects must relate to the risen interest rate. Furthermore, prices cannot be semantically affirmed or refuted, as is the case with securitizing speech acts. Briefly put, price signals have the tendency to shut down discussions and negotiations because they present a kind of universal ‘evidence’ that claims for itself immunity against negotiation.

Securities markets are thus conceptually located in a terrain between, and at the same time beyond, securitizing speech acts (and their audiences) and security-related discourse. Markets may and do respond to securitizing moves, yet not in the sense that they would co-articulate a particular collectivity together with the securitizing move, but in the sense of a signal formed by the accumulation of individual investors’ actions whose roles are not circumscribed by membership of any political collectivity. Price signals, in turn, attain a discursive quality: they do not address a particular audience, do not relate to specific political or security issues, and thus are capable of claiming universality for their structure of validation. Through this mechanism of validation, at the core of which lies the socially and technologically institutionalized price mechanism, securitizing moves may be discursively universalized. Thus, they may be conceptualized as mechanisms that are capable of transforming securitizing speech acts into security-related discourse. Conversely, absent market responses may weaken a securitizing move’s persuasiveness, leaving it, as it were, suspended without any traction with the market audience. Market responses become part of a security discourse that, in turn, conditions the plausibility of further securitizing speech acts. For instance, once securities markets have responded to a securitizing move (say, a call for a general mobilization on the side of a minister of defence) with a general loss in securities’ valuation and a rise of the gold price, those markets amplify a discourse that makes the effectiveness of further securitizing moves more likely.

In the preceding section, it was suggested that discourse can unfold a logic that is never fully co-terminous with the securitizing move or the audience response (that is, of the relevant constituency) because its structure of validation is independent of any response whatsoever. This logic is also inherent in market responses to securitizing moves; or in other words, what gives those ‘responses’ a genuinely discursive logic is the circumstance that they do not require any audience to validate or legitimate their statements. Thus, securities markets cannot be fully synchronized either with securitizing moves or with responding audiences, but intervene in both. In order to exemplify this dynamic, and to contribute to the discussion about pressing issues of securitization in the context of the security/finance nexus, I will now turn to a brief analysis of the role of the bond markets in the political securitization of the sovereign debt crisis in the EMU.

The securitization of sovereign debt in the Eurozone

The form that the financial crisis took in Europe, as opposed to in the USA, lent itself much closer to ‘classical’ securitization, because the crisis was framed in terms of defaulting states, not defaulting banks. Although banks had to be saved in Europe as well, most attention was attracted by several new institutions on the level of the EMU that were devised to save Eurozone member states from sovereign default. Also, unlike in the case of the financial crisis in the USA, the main ‘referent object’ (Wæver, 1996: 107) of worries concerning the economic future was not interbank financial circulation but, more specifically, the survival of the euro currency. The euro was securitized by political figures claiming to speak for the European Union and to various audiences. ⁴ The primary referent object of securitization in the financial crisis was the political project of Europe, epitomized by its single currency.

The securitization of Europe was not without precedence. Already in 1996, Wæver had depicted a securitization of the political project of European integration, where the project of an ever-closer political integration of the EU was securitized through the invocation of ‘fragmentation’ as the inevitable consequence of stalled integration, referring to ethnic cleavages dramatized by some political actors mainly in Eastern Europe and to a new insistence on national cultural identity in some Western European states. These tendencies of fragmentation were then securitized by EU-level political actors, who invoked the threat of a failure of the European integration project and demanded as a consequence the deepening of intercultural communication and exchange throughout Europe. Wæver (1996: 109) thus identified several cross-directed waves of securitization. A similar multidirectional dynamic of securitizing moves and counter-securitizations can be found in the debate about the sovereign debt crisis in the EMU, and will be unpacked in the following section.

The securitization of European integration concerned demands for a tightening grip on state budgeting, thus addressing the national governments of the states concerned. On the level of public rhetoric, this securitizing move, which turned out to be receiving significant support from some national audiences in the EMU (e.g. Germany, but also Central and Eastern European countries; see Vilpišauskas, 2013: 371 and Maatsch, 2014), was mainly based on a parallelization of state budgets and household budgets, and claimed that neither private households nor states could sustainably live beyond their means. ⁵ This rhetoric was backed by a wave of ‘institutionalized securitization’ (Buzan and Wæver, 2009: 267; Buzan et al., 1998: 27–29) – that is, by a variety of institutional measures that claimed emergency priority for themselves. First, the EFSF and ESM were set up as ‘rescue umbrellas’ that would provide governments unable to raise their budget on the bond markets with emergency lending. These new institutions were set up astonishingly rapidly, partly sidelining usual EU and EMU practice (Hennessy, 2014). Moreover, the securitizing move resulted in a strict conditionality on the availability of EFSF and ESM funds, imposing tight spending controls and rigorous debt service on receiving states. The design of these conditions and the control over the funds was relegated to the European Commission (EC), the European Central Bank (ECB) and the IMF, who all contributed to the emergency lending (the ‘Troika’, later called ‘the institutions’). The process, therefore, can be termed an institutionalized supranational securitization: new institutions were hastily formed in response to the perceived threat of EMU disintegration that operated outside the ordinary political process, and imposed on near-defaulting EMU governments the urge to constantly expose the relation between their public debts and their collateral (Langenohl, 2015). This tended to sideline national political collectivities as audiences responding to the securitizing move, instead framing them as recipients of measures.

In line with this, the EMU’s securitizing move was backed by the election of governments in some near-defaulting states (notably Italy and Greece) that were termed ‘technocratic’ by their critics, in that they gained their legitimacy mainly from the imperative to fight against sovereign default and for the country to remain in the EMU. Greek Prime Minister Samaras warned the opposition that Greece might ‘fall into chaos’ if austerity measures were not taken (Handelsblatt, 2012), thus effectively denying the response of parts of the national audience as being co-constitutive of the European collectivity; in other words, of legitimately questioning the EMU’s securitizing move. In terms of securitization theory, this might be called a ‘macro-securitization’ (Buzan and Wæver, 2009) – that is, a process in which national securitizations become aligned with supranational ones from which they gain their legitimacy. ⁶

The legitimacy of these ‘technocratic’ governments dwindled as the crisis proceeded and austerity measures were put in place. The context for this development was a ‘growing public interest in what takes place in the EU and Eurozone and the negative sentiment towards centralized solutions of the Eurozone crisis [that are] becoming increasingly important as a constraint of European integration and supranational solutions to the Eurozone crisis’ (Vilpišauskas, 2013: 369). This growing public interest might be regarded as an attempt to regain the position of a critical audience to the EMU’s securitizing move, aligning national concerns about the effects of uniform austerity measures with concerns about the direction of EMU policies in general. ⁷ It was, therefore, a counter-securitization, the most impressive example of which was the formation of Syriza, and its success at two parliamentary elections in 2015. In May 2015, Prime Minister Alexis Tsipras warned that after a forced Greek exit from the Eurozone, resulting from the lack of support of the EU, the ECB and the IMF, financial markets would turn their disruptive forces against other EMU member states (Die Welt, 2015).

To this counter-securitization, the EMU and national actors, in particular Germany, responded with an insistence on the securitization of the euro, which was juxtaposed with the nation-centric view that allegedly characterized the Greek standpoint. The Syriza government’s criticisms and suggestions were attributed to a ‘populist’ strategy incompatible with the integration project of Europe and the euro, thus effectively denying the Greeks a legitimate audience position. ⁸ Greece was constructed as a recipient of necessary measures, not as an audience critically engaging with the supranational securitizing move. ⁹ Moreover, 2015 was characterized by repeated summits between EMU, ECB, IMF and Greek government representatives, which became publicly framed as scenes of decision, or even moments of fate for the EMU as a whole. The point about these summits was not only their decisionist rhetoric common to securitizing moves (Williams 2003; Van Munster 2005), but also that they installed a dividing line between supranational institutions (EC, ECB, IMF) and national government representatives.

Thus the securitization dynamic was this: The securitizing move claiming the EMU and the EU as a referent object of securitization was articulated by political actors and institutions formally representing the EU (like EC members) and being attributed as having paramount significance for European politics (like Angela Merkel). These moves addressed primarily a supranational European audience, not national ones, although the securitizing move gained support from some EU member states’ representatives. Moreover, the securitizing moves notably refused to address national constituencies in states identified as hazardous for the viability of the Eurozone. These constituencies were seen as recipients of measures decided upon at the supranational level, not as audiences endowed with the legitimacy to critically assess the supranational securitizing move. Attempts were made to install ‘technocratic’ governments in those states, which engaged in an attempt at macro-securitization: they tried to legitimize the implementation of austerity measures through aligning national security with the supranational securitizing moves. They were met with criticism and, as in Greece, were overthrown, partly on the basis of a counter-macro-securitization, which aligned the fateful effects of the austerity measures with more general detrimental tendencies in EU governance. This counter-move was reacted to by the supranational institutions – most notably in 2015, when the EC, the ECB and the IMF put pressure on the Syriza administration in negotiations over rescue funding for Greece – through a juxtaposition of legitimate supranational security concerns with what was framed as illegitimate populism. What dynamized the different and cross-cutting securitization processes was thus the struggle over the question of whether single nation-states can be allowed to perform legitimate audienceship to supranational securitizing moves. In the following section I will argue that this struggle has been affected by securities markets, in particular the markets for government bonds.

Market interference in political securitization

Bond markets played a decisive role in framing the financial crisis as a sovereign debt crisis, and hence as a crisis of national governments in the EMU. Warnings that sovereign bonds of some EMU member states were hardly circulable anymore (Donnelly, 2014) and climbing interest rates for such bonds contributed to setting the stage for a confrontation between the EMU as a whole and the governments of some of its member states. Securitizing speech acts – namely that governments might find themselves bankrupt – and discursive articulations – changes in bond marketability – blended together in an amalgam of speech act and discourse in which one vindicated the other, a structure of validation that Jürgen Kaedtler (2014: 179, author’s translation) has termed the ‘volonté générale of the financial community’. This peculiar articulation of speech act and discourse was to become typical for market impacts on the dynamics of securitization in the EMU. For instance, the power of rating agencies (Gocaj and Meunier, 2013; Kaedtler, 2014) stemmed precisely from the ‘performativity’ of their speech acts, warning, for instance, against a further devaluation of Greek sovereign bonds. Also, bond markets were accredited with the task of judging the viability of a country’s financial turnaround, for instance when it came to reissuing Irish, Portuguese or Spanish government bonds after a period of time under the ‘rescue umbrella’ of the EFSF and ESM (Vaara, 2014: 508–509). In all these instances, the response of the market, consisting in rate changes, attained a discursive quality – that is, it was not deemed to depend on the support by or legitimation through particular audiences: the market, or so it appeared, spoke for itself, if through its rating agencies. ¹⁰

This entanglement between securitizing speech acts and the discourse of the market response intervened in the dynamic of the cross-cutting political securitizations found on various levels in the Eurozone. The market discourse had, in particular, two effects that impacted on the opportunity structure for political securitizations in the course of the crisis. First, bond markets were accredited the function of setting benchmarks for the intensity of the threat to the financial stability of the EMU. ¹¹ This happened typically through bond rate developments rendered by price signals that were then translated into ratings by rating agencies. More specifically, especially after the European summits held frequently between 2010 and 2015, the bond markets and the ratings were framed as judgments signalling the market efficacy of the political programmes and measures decided upon in those summits. ¹² Bond markets thus took on the function of matrices, benchmarking the case of sovereign default. This had the effect of objectifying securitizing moves, the result being that there was little leeway for political actors to deny the urgency of the situation, which in turn hindered attempts at counter-securitization, for instance, by governments of affected states. In short, default benchmarking performed by the bond markets, and interpreted by the rating agencies, directly supported the supranational securitization of the Eurozone as a whole, while delegitimizing representatives of those states who were represented as causing the problem. This happened at the expense of alternative ways of framing the problem, so that national governments could do little to resist the securitizing move directed against their national economies by the supranational level.

Second, the same default benchmarking installed an order of observation of the crisis that privileged comparisons between the affected national economies. The developments of interest rates for sovereign bonds in different EMU member states were constantly monitored and compared. This contributed to transmogrifying the financial crisis in Europe into a series of national problems of EMU member states. In the case of Italy, for instance, Tognato (2014) has argued that the urgency with which the development of sovereign debt marketability was publicly discussed, constantly monitoring the spread between interest rates for Italian and for German bonds, could be paralleled with a quasi-religious invocation affecting the core of societal identity constructions. What happened was a ‘societal securitization’ that took issue with the financial, but also cultural, credibility and creditworthiness of an Italian identity in the face of the sovereign debt crisis, and in constant comparison with another nation’s seemingly much stronger identity and creditworthiness. Again, this privileged securitizing moves on the supranational level, because the national constituencies were framed not as legitimate audiences to a counter-securitizing move by a national government, but as constituting the problem in the first place. This removed further leeway for negotiations between the national and the supranational levels of political constituency regarding the securitizing move.

Thus, the bond markets’ discourse decisively privileged supranational, EMU-level securitization, while at the same time disenfranchising counter-securitizations, especially if coming from national governments on behalf of their political constituencies. To be sure, this did not prevent national oppositional movements, as in Greece, from successfully challenging ‘technocratic’ governments which had fully absorbed the supranational securitizing move (as was, and remains, the case in Italy). However, it does mean that the struggle over the definition of which and whose security was threatened was tilted by the bond markets in favour of the supranational level. ¹³

To sum up this section, I want to recast the conceptual argument presented in the preceding sections against the background of the empirical case of the securitization dynamics in the framework of the sovereign debt crisis in the EMU. Securities markets intervene in the dynamics of political securitization by dint of a peculiar ambivalence that characterizes their articulations, and which has been conceptualized here as a middle ground between an ‘audience’ response in the Copenhagen School sense, and a discourse whose structure of validation operates independently of such audience response. In the case of the Eurozone crisis, the international bond markets produced discursive articulations in the form of changed interest rates, which in turn informed the spread of the different member states’ bonds. These articulations presented themselves as independent of any audience’s approval, support, or even response as such, and instead took the form of a volonté générale of the global financial market. The market discourse was, however, coupled with speech acts in the Copenhagen School sense that were uttered by institutions and actors affiliated with the financial markets, such as the IMF or rating agencies, which took up the securitizing move performed by supranational EMU actors and supplemented it with the seemingly self-explicatory validation of the bond markets. The markets thus amplified the securitizing move of EMU actors, while disenfranchizing counter-securitizing moves by national governments.

Conclusion

This article has made the following contributions to enabling a more nuanced understanding of the share of securities markets with respect to processes of political securitization. First, the article has attempted to bring together investigations concerned with the security/finance nexus with the more general debate about securitization, following the Copenhagen School’s intervention in international relations which has taken place since the early 1990s. Making this connection places an emphasis on the political logic of securitization as theorized by the Copenhagen School that markedly differs from the financial logic of securitization – an argument that has so far tended to be sidelined by the fact that the finance/security literature favours accounts of how finance and political security become co-constituted.

Second, this article has argued that securities markets escape the logic of the securitizing move. They indicate no political collectivity, and their responses never directly comment on securitizing moves, because their articulations follow a discursive logic as opposed to a speech act logic. Because market responses emerge from the pricing mechanism, they do not form as genuinely representative of a market audience but as the accumulation of individual responses.

Third, however, securities markets do react to securitizing moves, and may empower and amplify them. They are not immaculate concerning the business of political securitization. Copenhagen-style securitization is, arguably, fairly commonly observed in democratic societies, as are critical audience responses to securitizing moves. Securitization is thus important beyond security because it lays bare the mechanisms through which negotiating power over the representation of the political collectivity is allocated. As securitizing moves and audience response enter into tense negotiations over their legitimacy to represent the political collectivity, they have the potential to keep each other in check. Securities markets are bound to skew this dynamic. In the case presented here, market articulations amplified the securitizing moves at the supranational level while dislocating audience responses from the national level.

The reconstruction of this process adds to our understanding of how liberal capitalism is hooked up with practices of political securitization. Mark Neocleous (2008: 11–38, 76–111) has argued that liberal capitalism systematically produces states of insecurity that are then used as an alibi for providing security through seemingly ‘necessary’ emergency measures. In the case discussed in this article, the role of securities markets in the dynamic Neocleous describes was to provide those emergency measures, and the securitizing moves demanding them, with the ‘evidential’ grounds on which they could claim necessity.