The politics of debt in Europe


Order Description


You are the political advisor of the new finance minister of Seldonia. The parliamentary representation of the political parties is as follows.

Table 1: Seldonian Parliament

Party Orientation National Assembly Senate
Freedom Centre-right 100 120
Socialists Centre-left 90 70
Our Seldonia Agrarian 10 20
New Left Ex-communist 20 10


The Freedom Party has formed a minority government as a coalition proved impossible. The Socialists and New Left are both ideologically hostile to the Freedom Party but will not co-operate because
of the New Left party’s record under the communist regime. The budget must be passed by a plurality of those voting in the National Assembly. The Senate cannot veto the budget but can delay it for
three months. Seldonia is a rich country with no history of default, but has been badly hit by a sudden financial crisis. Figures Two, Three, and Four provide official recent statistics and
projections. Please advise the minister on a fiscal strategy for the next three years by filling in the budgetary figures in Table Two and justifying the plan with particular reference to the
country’s credibility in the bond markets and the political interests of the Freedom party.