PIIGS from one crisis to another: dependency, endurance and influence
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PIIGS from one crisis to another: dependency, endurance and influence

BRICS+ and “flying” PIIGS: have we wiped the slate clean? (part 2/3)


Thanks to Iran, Egypt, Ethiopia and the United Arab Emirates joining BRICS1 – which became BRICS+ – on January 1st 2024, the GDP of this partnership2 now exceeds that of the G7 members (Banque de France Bulletin, 9 January 2024).

As for PIIGS3, the countries criticised in the past for their poor economic management, their economic growth rates in 2023 were higher than those of France or Germany (Peralta, 19 June 2023).

How can we incorporate this new situation? What effects will these changes have on the global and regional order? What challenges do they represent for existing international institutions? Will the traditional organisations be able to adapt? To shed light on the dynamics that are currently redefining the planet’s geopolitical landscape, this tripartite study undertakes to analyse the operation of the BRICS+ and PIIGS groups of countries, their heterogenous make-up and their importance in international relations, while comparing them to devoted multilateral structures such as the United Nations (UN), the International Monetary Fund (IMF) and the European Union (EU). Focusing on BRICS+, it highlights the growing influence of new members, which are remodelling the world order according to an ever-increasing multipolarity. At the same time, it examines the economic and political challenges faced by PIIGS and their impact on European cohesion. Finally, it evaluates the tensions between the emerging groups and the established institutions (UN, IMF, EU) by providing tangible examples of cooperation and conflicts of interest (the reconsideration of the dollar’s place in global exchanges, the creation of a second EBRD4, etc.). This study concludes by considering the need to adapt the multilateral organisations to new geopolitical realities.

Following an initial consideration of BRICS+, this second part will be dedicated to PIIGS. After recalling the origins of the group, it will explore the economic and political challenges faced by these countries, focusing in particular on the issues linked to the stability and operation of the EU. We will illustrate our point using some of the measures obtained recently by this group from the Institution (for example, the post-COVID European recovery policy).

Introduction: the birth of a not very flattering acronym

The acronym PIGS (then PIIGS)5 appeared in the 1980s to designate Portugal, Italy, Greece and Spain (then Ireland), countries whose levels of debt were above the European average and whose budgetary decisions to resolve this issue were considered dubious by the Union’s bodies. However, it has been more frequently used since the 2008 financial crisis, by European bankers and creditors as well as British and German journalists. For example, Anselm Küsters and Elsa Garrido, two history researchers, have described the lobbying led by Die Zeit to discredit the countries in question, by analysing the 2,443 articles mentioning Spain published by the German weekly over a 50-year period (Küsters & Garrido, 2020).

This acronym, based on the initial letters of the countries targeted, is clearly pejorative, even mocking. Recalling the word “pigs”, it highlights the poor economic management of these countries while implicitly stressing that the rest of the EU members were forced to provide financial aid under the name of solidarity mechanisms, particularly during the 2008 crisis. At the same time, this term PIIGS implicitly promotes the virtuous financial conduct of the other countries, the “top of the class”, led by Germany.

PIIGS on a drip (2008-2020)

The subprime crisis, 2007-2008: highlighting common structural problems

The 2008 financial crisis was triggered by the collapse of the US mortgage market, particularly due to the excessive securitisation of “subprime” loans. The main European banks were heavily exposed to these toxic products, which led to a crisis of confidence in the global financial system (Milesi-Firretti & Lane, 2010). As a consequence, Europe was profoundly affected by the crisis. Some of the Eurozone countries, notably Greece, Spain, Portugal, Ireland and, to a lesser extent, Italy, were particularly affected because of their structural weaknesses (structurally high unemployment, a banking system poorly prepared for crises, lack of competitiveness) and their high levels of debt (public debt for Greece, household debt for Spain).

The slow rebuilding of PIIGS (2010-2020)

From 2008, the five countries in “Club Med”6, another equally derogatory nickname given to PIIGS, benefited from European aid, including a financial bailout plan, with Greece the first beneficiary in 2010, followed by Ireland, Portugal and Spain. These plans aimed to stabilise the financial markets and prevent a sovereign debt crisis.  The European Central Bank (ECB) implemented an accommodative monetary policy as of 2015 (low interest rates, sovereign bond buybacks) to support these countries.

From 2014 onwards, PIIGS also enjoyed reinforced financial supervision from the EU to prevent banking crises and guarantee the stability of the European financial system. Finally, the EU provided them with a social assistance package, putting social security nets in place from 2017, with the aim of protecting the most vulnerable citizens from the consequences of the economic crisis.

In exchange for this aid and the support of the EU, PIIGS were encouraged, on the one hand, to launch structural reforms from 2013 to improve their economic competitiveness, their employment market and their financial governance (Duman, 2018). On the other hand, they were urged to reduce their budgetary deficits from 2011, through the implementation of austerity measures and fiscal reforms to restore balance (reductions in public spending, increases in taxes and reductions in public sector salaries).

The results of these measures were mixed. Since PIIGS maintained levels of debt above the agreed standards during the 2010-2018 period, their reputation at the end of the crisis remained strongly tarnished. In some cases, such as for Ireland, the “PIIGS” designation itself seems to have constituted an obstacle to recovery, with creditors doubting the capacity of this group of States to cope (Brazys & Hardiman, 12 December 2014).

Throughout the 2010-2020 decade, these countries were kept on a European drip, under Franco-German impetus. As each of the members was treated separately during the different aid-related discussions, none of them had the sufficient weight to counteract the decisions taken in Brussels, Berlin or Paris.

PIIGS and the COVID-19 pandemic: an unexpected European take-off

Bottom of the class? The pandemic: a pivotal moment and the first “concerted” actions

Among other things, the COVID-19 pandemic led to the travel ban, then restriction, putting a stop to tourism (travelling and holidays were impossible), an area that was nonetheless a major asset for the PIIGS countries (Sepúlveda, February 2023). We might have thought that this would particularly affect these economies, usually more fragile than the others, but they joined forces to stand out and to speak with one voice within the EU.

Undoubtedly used to making an effort, PIIGS thus preferred proactiveness and initiated certain action plans rather than having them imposed upon them by the ECB and other EU countries (Germany, France, etc.). Together then, these countries pleaded for a collective and solidarity-based response to the crisis from the EU, by using all the tools available through European governance, guiding them towards priorities closer to their own requirements.

Economic activity initiative

Among the main initiatives they worked on was a common EU economic recovery plan, called NextGenerationEU, with a €750-billion budget. A large part of this was intended for the countries that were the hardest hit by the pandemic. In addition, they managed to obtain specific funds to support the most vulnerable sectors, such as tourism and industry, via the EU’s Recovery and Resilience Facility.

Financial solidarity initiative

The SURE Initiative, providing direct aid to workers and companies affected by the pandemic, and the temporary easing of budgetary rules, were two other measures obtained by PIIGS enabling them to spend more to address the health urgency.

Health solidarity initiative

Their collaboration also led to reinforced health policy coordination. As part of the COVAX mechanism, and thanks to the European Medicines Agency, PIIGS helped to guarantee fair and equitable access to the vaccines, since none of them had manufacturing status. Moreover, their populations experienced a very high mortality rate (Italy, Spain). As a consequence, it was crucial for the group’s members to encourage a shared “vaccine production and purchasing” health policy. Thanks to these joint efforts, PIIGS obtained significant EU support to alleviate the economic and health impacts of the pandemic.

PIIGS and the pandemic: endurance that paid off

This close collaboration with the European institutions enabled PIIGS to obtain a set of measures from the EU to mitigate the pandemic’s effects on their economies and their health systems, thus reinforcing solidarity and cohesion within the Union. It should also be noted that PIIGS paradoxically benefited from a more lenient scenario at the end of the COVID-19 pandemic. In fact, as less industrialised countries, they were less exposed to the consequences of slowdowns in supply chains, on the one hand. While, on the other hand, they benefited greatly from the “carpe diem” effect leading to a tourism boom immediately after the lockdowns.

War at the gates of Europe and the fruitful PIIGS partnership (2022-2024)

The Iberian exception and the coming reform in the European electricity market

The economic sanctions decided against Russia following the invasion of Ukraine severely affected EU members, which depend greatly on Russian gas and oil. In particular, this has led to higher electricity bills for European citizens.  As, for several years, the electricity and gas markets were coupled in order to obtain more advantageous prices.

However, the geopolitical situation has provoked the opposite effect. Spain and Portugal have worked within the EU to obtain what is called the “Iberian Exception”, which is based on a “gas price cap” (from 15 June 2022 and extended until the end of 2023, following EU authorisation) limiting the operating costs passed on to the wholesale electricity market by gas-fired power plants. According to the first estimates, “Decoupling the electricity market from the gas market has allowed Spain to reduce its electricity bills by between 15 and 20%, as it has obtained authorisation from Brussels to temporarily reduce the share of gas in electricity production” (Spanish Presidency, Council of the EU, 16 October 2023).

PIIGS now intends to keep their leadership so as to push through this exception and thus completely reform the Europeanelectricitymarket (La Tribune, 9 January 2023).

Recognition of the State of Palestine: another diplomatic aspect

On the diplomatic front, we should note Spain and Ireland’s initiative to have the EU recognise the State of Palestine (Gomez, 10 April 2024), hoping to rally the largest possible group behind them so as to make progress on this subject. Norway’s decision to jointly recognise the State of Palestine, announced on the 22nd of May, can be seen as a sign of relative success of this undertaking. The Portuguese Parliament also voted in favour of a resolution recognising the Palestinian Nakba, at the end of 2023. As a result, we can expect other diplomatic initiatives from PIIGS in this area.


PIIGS are still very far from having the influence of BRICS+ and will probably never have their ambition or their capacity (if only because of their name). Nevertheless, we have seen how, in 20 years, this group of countries has evolved from a mocking acronym, whose influence within the EU was non-existent or very weak, to an alternative to the Franco-German couple, with even a form of leadership on certain one-off decisions (the Iberian exception, which could lead to the complete reform of the European electricity market).

They now have some of the highest growth rates in Europe (over the 2022-2024 period) and employment prospects are somewhat more favourable in these countries than in Germany or France. This is a change in scenario that the markets are clearly reflecting by provoking a convergence between what PIIGS are paying for their debt and what Germany is disbursing. It is hard to say how long this situation will last; however, we can see that EU growth is now much more balanced. Perhaps it is time for PIIGS “to start giving their northern neighbours a lesson”, even in the diplomatic field (Ordóñez, 13 November 2023).

The main question is now: how can the momentum gained by PIIGS last over time? And it breaks down into a set of underlying questions, including: what structural changes are these countries going to make to their economies? How are they going to use this leadership to influence certain political or economic directions within the EU? Will PIIGS transform by creating autonomous bodies and a legal existence?

  1. Formerly BRIC, this acronym designates the group of countries made up by Brazil, India, China and South Africa ↩︎
  2. We have decided to talk about BRIC (which became BRICS, then BRICS+) as a “group” or a “partnership”, as per the definition given during the 2023 meeting in South Africa. https://brics2023.gov.za/evolution-of-brics/ ↩︎
  3. Acronym designating Portugal, Italy, Ireland, Greece and Spain ↩︎
  4. European Bank for Reconstruction and Development ↩︎
  5. To remain consistent, we have decided to keep the acronym PIIGS (including Ireland) throughout the article, as Ireland is – even more so today, with the recognition of the State of Palestine – a stakeholder in the collective initiatives. ↩︎
  6. Another name given to PIGS. See in particular: https://www.lexpress.fr/economie/les-etats-unis-et-le-royaume-uni-vont-ils-adherer-au-club-des-pigs_1387938.html ↩︎