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The future aint what it used to be.Facets of the Crisis (economic, social and

political) impact and responses developed

in the Greek case

Nikos Papadakis

Associate Professor & Head of the Dept Political Science

University of Crete

Member of the UNDP/ RCPARAdvisory Group

1st Roundtable in the framework of the Regional Forum on

Governance Reforms in the aftermath of the economic crisis - taking

stock of crisis impact and responses

Chisinau, Moldova, 6- 7 July 2010

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I. Whatwentwrong? Sketchingthehistorical

background. Someinsightson Stateand Politics

II. Prometheusbound

Thefiscalcrisis:aspects,facetsandfigures

III. Beingimbalanced,gettingunstable:backtopolitics

IV. Isthereanyfutureleft? Policyproposalson PAR

andGovernance.

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I. What went wrong?

Sketching the historical background.

Some insights on State and Politics

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On the historical background

of politics and political culture

of the 3rd Hellenic RepublicPreliminary remarks on the Greek Polity

- Political System subjected to a Presidential Parliamentary Democracy- Focal constitutional point: The popular sovereignty as the corner stone of thepolity:

Onthehistoricalbackground

- Essentially monocultural state buildingand recent (2 decades) transition tomulticulturalism

-(ex?) positive stance vis--vis Europeanization and European integration (Lavdas &Papadakis 2003)

-Europeanization as a key-challenge, consisting of interactions between Europeanand domestic political and socio-economic patterns,

..but on the other hand

-Strong clientelism tradition (combined to patrimonial modalities), affecting bothactive politics and patterns of governance

- a stillborn civil society subjected to power politics and protest discursive practices

N

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Slide 4

N1 Netbook, 7/3/2010

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Greeks have traditionally expressed an interest in politics andat the same time used to appear to possess a rather positive viewabout/on politics (in fact, much more positive than the view takenby respondents in other Southern European states Italy,Portugal, Spain- see Lavdas & Papadakis 2003), howevercombined with comparatively low levels of overall citizen

satisfaction (see Demertzis 1997: 107-121, Contogeorgis 1998).

According to a rather old but still existing explanatory framework,the rather exceptional, superficially controversial (evenunderdeveloped) conception of the public character of the political(namely the privatization of the public- see Charalambis &Demertzis 1993: 223) can account for the fact that Greek political

culture is characterized by a merging of the public and the private[] That is why the Greek [interest in politics] is really not paradoxical. Provided that politics is regarded in private terms,there is no antithesis between high political interest and lowpolitical efficacy (Charalambis & Demertzis 1993: 224).

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Tradition proved powerful enough: Since the very first

state-building period, the tendency towards a stronger

process of state-building pushed for a centralized statewith strong executive and rationalized administrative

structures prevailed over the retaining of power tolocalities and subsequently led to more centralizedgovernmental structures.

.

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State interventionism and

political cultureIt can be argued that the particular mix of individualism and decreased stateinterventionism which came to characterise developments in various West

European contexts failed to become the dominant pattern in the development of themodern Greek state (see Lavdas & Papadakis 2003, Lavdas 1997, Papadakis 2003).

Despite the (positive) impact of the arise of the 3 rd Greek Republic (which alteredthe whole context) and the subsequent empowerment of tolerance, the constantinstitutional building, the rapid Europeanization, the mixture of state interventionism

and clientalistic politics, the changing stimuli (see Lavdas 1997, 2000b) and thediverse conceptions of politics (including distributive coalitions in Olsons terms)formulated new discursive practices and constituted a complex and multi-layered

political culture in Greece.

On all these grounds, civil society has never developed enough means to operate asa counter-balance mechanism to distorted administrative practices, while morallydirected individual economic actions (in Amartya Sens terms- Sen 1987),

encouraging the emergence of digressive types of moral action, as the epicurism(welfarism- see Gravaris 1999) were usually undermined by bureaucratism and lackof institutional trust combined to established and legitimated corruption. Greekskept on working harder and harder, salaries were practically frozen, a lot of success stories contributed in the overall development, new and promisinginstitutions were built.yet bureaucracy wasnt defeated, the State didnt change,corruption survived, evidence-based policy making was never established as the

prevailing policy-planning paradigm, modernization got delegitimized, PAR is still inquest and the economy was de-stabilized.

Is the crisis (apart from being a nightmare) Hellenic Republics last chance?

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The State reform: a brief

history of failures

Huge, complicated and eminently centralized State.

.justifying the constant request for a major state retreat and anefficient public administration reform (dozens of missed

chances). .with not any remarkable success. On the contrary, complicated

legislation and regulatory framework, too many laws andoverlapping control-mechanisms (i.e. a powerful but bureaucraticAudit Court usually acting as a sort of Supreme Court) kept onincreasing the administrative costs and undermining any attempt

to reduce bureaucracy and empower simplification An un-sufficient Local State (high rates of corruption),intermediated by interest politics, power politics and institutionallyand operationally depended on the Central State, its patterns andmodes of governmentality

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ThegeneratorsofregulationsinGreece

Source: Stefopoulou,Ministryofthe Interior,2008

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What about the human

capital in Public

Administration? Lack of needs-assess tradition related to any systematic public-

servants reskilling

Bureaucratic, complex and sometimes inefficient institutional

framework concerningHRM and HRD

Attachment in the hierarchical relations and entrenchment of dutiesand competences, combined with an incomplete development of

personnel as a result of too little use of incentives,job descriptions

and management by objectives (see Moustakatou, High Level AG

forPAR, 2008),

Low effectiveness of training to support the structural andinstitutional changes in PA

No tradition in management by objectives and performance

appraisal (linked to wages and other incentive)

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II. Prometheusbound

Thefiscalcrisis:aspects,facetsandfigures

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Preliminary remarks

The Greek fiscal crisis is the outcome of a combination of high debts and fiscal deficits.

Greek economy is considered probably the most complicated and encumbered case, among theSouth Economies (Portugal, Ireland, Greece and Spain) troubling EMU.

Searching for the causes of the recent fiscal crisis, one could share Domenico Lombardis

argument that the Greek crisis was triggered, but not originated by the recent global financialcrisis.Greece's membership in a currency union left the country with no monetary andexchange rate policies to manoeuver, which further escalated concerns among marketparticipants (Lombardi 2010).

Of course, both the assymmetries and palinodes within EU and EMU regarding the mode and theextent of support to the Greek economy (mainly because of the German resistance to vastmajoritys approach to the Greek case and its initial request for harsh penalties to EU aidrecipients such as Greece) and the subsequent inability of the euro area countries to agree early

enough to a rescue-plandeepened the debt-crisis and the speculative pressures to the Greek economy.The lack of timely action underscored early European reactionswhile the euro area partnersshowed little willingness in the beginning, to come forward with help (Lombardi & Mark 2010)made the bailout-danger more explicit than ever.

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The Greek fiscal crisis in

numbers: leading figures.

The debt crisis in Greece threatened the stability of the European financial system. In fact, a sufficientreaction to the Greek debt crisis became a stake directly related to the self-preservation, even thesurvival, for the entire EMU. A supportive financial mechanism was developed by the EU, theEuropean Central Bank and the IMF in order to prevent the Greek economy from total collapse.

Greece will be paying an interest rate to the IMF and the other euro area countries

for the EUR 110 bn (that is, about $145 bn) package that will be disbursedin a three-year periodstarting from May 2010.

On April 23, 2010, the Greek government requested that the EU/IMF bailout package (made ofrelatively high-interest loans) be activated. IMFs responded "prepared to move expeditiously on thisrequest". The size of the first bailout-package was 45 billion (Bloomberg 2010). Despite the fact thatthe Greek debt rating was decreased to BB+ (a junk status) by Standard and Poors (27 April) andthe responding decline of the stock markets worldwide and the Euro currency to thisannouncement (BBC 2010), the activation of the bailout-package and the enactment of a series ofmeasures by the Government provided both Greek economy and euro zone with a substantial relief.What has also followed, was an almost 1 trillion financial security package, outlined by EU for M S

economies-at-risk.

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ThenewGreekGovernmentwasforcedtotakedrasticausterity

measures(Brookings Institute2010). Thesemeasurescontributedin

persuadingthelastremainingholdout (namelyGermany),tosignontoa110

billioneurobail-outpackageforGreece.Theabovementionedmeasuresinclude

onthespendingside,

decreaseonpublicsectorsalaries andraisingoftheretirementage,

andontheincomeside,

increaseintaxes andmajorchangesconcerningthetax-legislation

andthesubsequentstatus-quo,mainlyaimingatconfrontingtax

evasionandreducingrelevantprivileges.

Additionally,thenewGreekGovernmenthasalreadyplannedandproceededin

implementingmajorstructuralandinstitutionalreformsconcerningthe Public

AdministrationandtheLocal State,towardstherationalizationofthe State-

operation,theactivedecentralizationofthe State,thepromotionand

establishmentoftransparencyandefficiencyinmanyaspectsandfacetsofthe

Public Sectoraswellastheenhancementofmeasurableproductivity.

CopingwiththeCrisisimpact: Austerity

Measuresand StructuralReforms

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Remarks on the social impact of

the crisis- the unemployment

factorAccording to the National Statistics Service, Greek unemploymentsoared during the first three months of 2010.

The state of play regarding the diverse parameters of unemployment ishighlighted on the following table.

The social cost of unemployment rates increase is inestimable, due tothe multifaceted nature of the relation between unemployment, socialexclusion and social disadvantaged groups:

The more vulnerable a group is, the more exposed to the

unemployment-risk it gets. People entering the labour market for thefirst time, women, long-term unemployed, people looking for a job formore than one year, social disadvantaged groups, young people, arethose mainly affected by the ongoing labour-market crisis.

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TAXONOMIC CATEGORIES FIGURES REMARKS

1 Unemployment rate

(end of Q1 2010)

11,7 % According to other

estimations rose to 12,1 %

2 Unemployment in total numbers 586,767

(people in Greece are

currently unemployed)

3 Increase within a year 25,8%

Female unemployment 15,5%

4 percentage of newly unemployed people (was 23.6% Itconcerns those people

who entered the labour

market for the first time in

the same period 2010)

5 percentage of long-term unemployed - or the

percentage of people looking for a job for

more than one year

44,6% Higher than ever in the

recent history

6 Youth unemployment (15- 29) 22,3% Comparatively extremely

high

7 Youth female unemployment 27,4% Deepening the gender-

imbalance and

undermining any gender

mainstreaming initiative

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III. Beingimbalanced,getting

unstable:backtopolitics

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In the aftermath of the Greek fiscal crisis, the current political discourse isdominated by the impact of the crisis and the patterns for facing it, whilethe public sphere is dominated by a generalized criticism against the political

personnel, triggered by part of the mass media and contextualized in

Poll: Citizens on the Crisis

Source: Kapa Research & To Vima (4 July 2010)

http://www.tovima.gr/default.asp?pid=2&ct= 32&artId=341308&dt=04/07/2010

On the other hand, the majority seems to understand and agree (to acertain extent) the necessity for the austerity of the measures takenby the Government (49%) and keeps largely trusting the Prime

Minister Giorgos Papandreou.

anger; 35,5

dissapointme

nt ; 33,3

fear; 21,1other; 10 anger

dissapointment

fear

other

fear, anxiety and lack of trust andconfidence in the political system.

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Dividedwefall.

Confidenceinthepoliticalsystem,majorpoliticalpartiesandpoliticalpersonnelisgettingrapidlydeconstructed:

52% never trust governments in Greece, while40% trust them only partially and occasionally

(according to a Public Issue-Poll on Institutions & Political System,

recently conducted and published

in the newspaper Kathimerini- 13 June 2010

http://news.kathimerini.gr/4dcgi/_w_articles_politics_1_13/06/2010_404433)Thepolitical-opportunitystructureopensagain(inCharlesTillysterms),newchallengers

raisetheirissues,independentlyonthesystemicpatterns,andsubsequentlysymbolicand

corporealrecoursesaremobilized(provingnew-Institutionalismapproachinsuchcases):

72% ask for an extended refresh of the political personnel(according to another recent poll, recently conducted by Pulse- 13/ 06/ 2010)

Theblameforthecrisisanditssocialimpactiswillinglyattributedtotherelationship

betweenpolitics,interestgroupsand(established)corruptionwithinthe StateandthePublic Sector:

65% believe that corruption in politics and state is always tooextended while

72% argue that the most direct cause forthe crisis lies onthe use of the public income/money which wastraditionally wasted, because of corrupted or

inefficient politicians(accordingtotheabovementionedpollby Public Issue)

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Obviously, the fiscal crisis is resulting in a multi-parametric social crisis andit is reproduced as both a representation and legitimization crisis..Within the above-mentioned context, the major challenge is the one related tothe actual demand for an extended and multi-faceted reform of the political

system, the electoral legislation, the state itself and undoubtedly the mode ofgovernenance. Expressis verbis governmentality per se.

The Greek Prime Minister has already undertaken the mission to proceed instructural reforms, aiming at fostering transparency, enhancing the Local State,increasing accountability, eliminating corruption and decentralizing the State. Two

of the major reforms, based on new Law-acts (Kallikratis on the LocalAdministration and Diaygeia on transparency and accountability) areexplicitly aligned with the abovementioned promise.

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IV. Isthereany futureleft?

Policyproposalson PARandGovernance.

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Seeking for a paradigm shift:lessons learned, recommendations

developedOn all these grounds, the actual stakes for the ongoing Greek PAR are crystal clear:

- to meet citizens needs,

- to contribute in combating corruption,

- to prevent Greece from costly compliance failures,

- to relieve citizens from administrative burdens,

- to improve quality of public policies and to fill in the implementation gaps and

- to build confidence between the State and the Citizen.

Measuringthecostofbusinessstart-up(bureaucracyvseffectiveness)

The above-mentioned regulatory status

quo is under reform at the moment.The reform promoted by the Ministry of

Economy and Competitiveness moves

towards simplification and cutting of the

administrative costs

Source: Stefopoulou2008

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Developing crisis (effective) responses, what is actually needed is a smaller Stateand a more flexible, rationalized and operational, Public Administration and atransparent operation ofPublic Services. These presuppose:

- a less complex regulatory framework and respective institutional arrangements(focusing on reducing administrative burdens everywhere and strengthening theLocal State):i.e. The Kallikratis new regulatory and operational framework, redraws the map ofGreece's local government including a new structure for the municipalities andregions, that are becoming fewer in number and covering a larger area, having morepowers, funding, and staff in order to gain in efficiency, transparency and opennessto society". The plan foresees municipalities being be cut down to 333, or 343, whileprefectures will be abolished and replaced by 13 peripheries.

- Initiatives to re-build the operational balance between executive and legislative,aiming (among others) at filling in the implementation gap in key-areas

i.e. The Government has recently presented and the Parliament voted the new Law-Act on Pension System (accompanied by the reform on labour market and relations)in order to re-build the pension system. It aims at making the debt-riddencountry's pension system more rational and ensure its long-term viability.

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- newpatternsofinstitutionalbuildingcombinedtocapacitybuilding

- extendeduseofe-governance(focal-pointoftheongoingreformprocessbythe

Government)

-betterregulationalignedwithprocedures-simplification

-enabling benchmarking & performance budgeting, while demising unsustainable and

insufficient norms

-change of government's architecture and operation, aiming at improving inter-ministerial coordination and fine tuning in policy planning and implementation

- policyimprovementbasedonimpactassessmentandexternalsupportinthese

initiatives(yetpolicyandsocialcoalitionsareratherdifficulttoachieve,becauseof

thecurrentoverallpoliticalstatus)

Couldsuchgoalsbemetwithinthepresentcontext?

Conditio sine qua non is, among others, a more rationalized public sphere, theestablishment of horizontal consensus within society (where the main prerequisite is

immediate outcomes produced by some of the abovementioned policy- initiatives) a

new electorate legislation reducing MPs dependence on media and interest groups,

clear regulations against corruption, initiatives towards the strengthening of civil

society and a new set of check and balances between the central state, the local state

and the social partners (based on an effective interface between public consultation

and decision making process)

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References

BBC (2010), Greek bonds rated junk by Standard and Poors. London: 27-4-2010Bloomberg (2010), Greece Asks EU to Trigger Bailout Agreement, 23 April 2010, http://www.bloomberg.com/news/2010-04-23/greece-asks-eu-

imf-to-activate-bailout-deal-that-may-test-euro-stability.html

Charalambis, D. & Demertzis, N. (1993), Politics and Citizenship in Greece: Cultural and Structural Facets, in Journal of Modern GreekStudies, 11, pp. 219-240.

Contogeorgis, G. (1998). Political Science in Greece. To Vhma twn Koinwnikwn Epistemwn, 23, pp. 7-64 (in Greek).Demertzis, N. (1997), Greece, in R. Eatwell, ed., European Political Cultures: Conflict or Convergence?London: Routledge.Gravaris, D. (1999) The relation between ethics and economics on A. K. Sen, in Isopoliteia, 3 (2), October 1999, pg 275- 298 (in Greek).Lavdas, K. A. (1997), The Europeanization of Greece: Interest Politics and the Crises of Integration. London / New York: Macmillan / St.

Martins Press.Lavdas, K. A. (2000b), Reconceptualizing Politics: Concepts of Politics in Modern Greek Political Culture. Paper for ECPR Joint Sessions,

Workshop on The History of Political Concepts: A New Perspective on European Political Cultures. Copenhagen: 14-19 April.Lavdas, K. & Papadakis, N. (2003), Context, Process and Strategy in the Use of Memory: Remembrance, Neglect and Erasure in Greek Neo-

Nationalism, paper for ECPR Joint Sessions, Workshop on Politics and Memory, Edinburgh March 2003.Lombardi, D. (2010), The Greek Debt Crisis and Europe's Reaction (web chat moderated by David Mark), in The Brookings Institution, 26

May 2010, http://www.brookings.edu/events/2010/0526_greek_crisis_chat.aspx

Moustakatou, V. (2008), Human resources policy in Greece: Options for reform in the OP Public Administration reform 2007 2013, Paperpresented in the Meeting of the High Level Advisory Group on PAR. Athens, 26th September 2008

Papadakis, N. (2003), Diversity and Legitimacy: Multicultural awareness, social- educational integration and issues of political stability andlegitimacy, in D. MEYER-DINKGRAFE (ed.), European Culture in a Changing World: Between nationalism and Globalism. Aberystwyth:ISSEI & Un. ofWhales.

Stefopoulou, E. (2008), Regulatory Reform in Greece, Paper presented in the Meeting of the High Level Advisory Group on PAR. Athens, 26thSeptember 2008Sen, A. (1987) On Ethics and Economics, Oxford, Blackwell.

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..thank you for your kind attention