Greece must rebuild its economic system and create a showcase for foreign investment
DESPITE THE serious condition of the Greek economy, and the severity of the measures introduced to rectify it, financial matters are not likely to be the principal preoccupation for voters in local elections next Sunday.
Reform of local and regional government and administration will transform the political and social landscape, but as yet there is deep uncertainty as to how it will be achieved.
The EU bailout of €110 billion, the austerity of cutbacks and tax increases affect everyone’s pocket. No one would deny that current voter feelings are linked to the overall economic situation which sees less money in one’s pocket and higher consumer costs. Many shops, bars and restaurants are going out of business, especially retailers in the big cities and towns, with a knock-on effect on unemployment.
The need for austerity is accepted by many, with a noticeable reduction in the number and size of street protests. The elections will be concerned with a huge agenda in other areas.
A year after the change of government, the support, or lack of it, for the ruling Pasok party will lay down a marker as to whether prime minister George Papandreou and his cabinet are judged to be making sense of much more complex factors. There are strong indications that citizens in general believe, at the very least, Papandreou understands the crisis and is doing his utmost to solve it.
Not only must Greece, with EU/IMF support, rebuild its economic system; it must create a showcase for foreign investment.
The overall dilemma is how to modernise without letting go of the essential “Greekness”. The economic crisis highlighted the fact that there is a much deeper social crisis. For months, Papandreou has been telling citizens that much, if not everything, has to change if Greece is to survive as a European entity. The fulcrum of debate is whether Greeks truly want to be European, which essentially means modernisation and rationalisation, efficiency and transparency.
These elections are not about Greece’s image abroad, but about Greece’s image of itself.
As Kathimerininewspaper put it: "Every institution, every group and every individual will have to redefine itself with regard to society as a whole."
Talk of “the rebirth of a nation” is widespread. Papandreou declares, “We are changing Greece.” At the same time he insists, “There is no intrinsic flaw in the Greek character – it’s not in our DNA to have these problems.” But many critics insist that it is the very Greekness of that DNA that has created the problems.
As Athens-based journalist Nikos Konstandaras observes, “The underlying cause is the absence of personal discipline, which has cultivated a mentality that anyone could do what they liked.” There is a fundamental problem here – Konstandaras says, “this mindless tolerance is not a manifestation of democracy: it undermines it.” But to a vast number of Greeks, freedom and democracy are identical.
An index of this is the reaction to the new ban on smoking in public places. The law was introduced on September 1st but is widely regarded as an intrusion into personal liberty. As William Mallinson, a former British diplomat now lecturing at the Ionian University, puts it: “The price of freedom is chaos.”
Papandreou has acknowledged that “the crisis derives mainly from the lack of transparency in state power and public life, and from a clientelism that has corroded everything”.
The Brookings Institution of Washington reports that bribery, patronage and other corruption cost €20 billion per year, or 8 per cent of GDP. Much of the clientelism stems from the “sins of the father”: it was under Papandreou’s father Andreas, prime minister in the 1980s, that the flawed system was created by vested interests influencing political decisions. Ostensibly, and to a large extent truly, this was a reaction to the right-wing exclusion of the lower classes – urban and rural – following the civil war and under the military junta, between 1967 and 1974.
The recovery has been a personal crusade by George Papandreou to highlight the self-delusion his father’s crusade inadvertently encouraged: cronyism, over-employment in the civil service, excessive consumer spending. The programme on which recovery is based involves four key elements: a fundamental reform of public administration, including a reduction of the 1,034 municipalities to 340; locally-based initiatives to stimulate economic growth; privatisation of state companies such as Hellenic Railways; and liberalisation and deregulation of restricted professions, including lawyers, pharmacists, engineers, accountants, architects, truck drivers and taxis.
Deregulation is one of the conditions of the EU/IMF bailout. No new licences for truckers have been issued since 1986: there are 34,000 licences, changing hands for as much as €300,000. With deregulation, these will become virtually worthless. This prompted last month’s truckers’ strike, which was faced down by the government.
Education is another area at crisis-point. Mallinson calls the higher education system “a farce” and “a scandal”. While there are some highly recognised research departments, the universities in which they are situated are judged to be bureaucratic and inefficient. Huge expenditure on third-level education is not achieving the results it deserves. Entrance standards are absurdly low and half of first-year students admitted they are lacking in critical skills, and do not even know how to take lecture notes.
Papandreou recently made it clear that if the third-level sector is not radically reformed, large numbers of young people will leave the country. In an August poll, 74 per cent of people aged 22 to 35 years said they would like to emigrate, and 42 per cent said they were actively seeking to do so. Employment prospects, on the minimum monthly wage (which has dropped from €700 to €590), depend on who you know.
It is reckoned that, on average, a family spends €200 per month subsidising a secondary school system that is, in theory, “free”. Outside the state schools, €1.6 billion per year is spent on private tuition in the frontistiria (tutorial colleges or “crammers”).
But the greatest anxiety concerns the reorganisation of local and regional government. In Corfu, for example, 13 municipalities are to be reduced to a single authority. The towns and villages remote from Corfu town are apprehensive that the decision-making at the centre will disadvantage them. It is unclear how this can be reconciled with the government’s policy of decentralising decision-making to local communities.
Whatever the outcome of these elections, and the political consequences, Greece is in a state of transition. If Pasok’s reforms are approved, Greece will move “forward”, but many aspects of “Greekness” may be left behind.
Richard Pine lives in Corfu where he is director emeritus of the Durrell School