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

The future ain’t 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/ RCPAR Advisory Group
I. What went wrong? Sketching the historical
background. Some insights on State and Politics

II. Prometheus bound

The fiscal crisis: aspects, facets and figures

III. Being imbalanced, getting unstable: back to politics

IV. Is there any future left? Policy proposals on PAR

and Governance.
 I. What went wrong?
Sketching the historical background.
Some insights on State and Politics
 On the historical background
of politics and political culture
of the 3rd Hellenic Republic
Preliminary remarks on the Greek Polity

- Political System subjected to a Presidential Parliamentary Democracy

- Focal constitutional point: The popular sovereignty as the corner stone of the
polity:

On the historical background

- Essentially monocultural state building and recent (2 decades) transition to
multiculturalism
-(ex?) positive stance vis-à-vis Europeanization and European integration (Lavdas &
Papadakis 2003)
-Europeanization as a key-challenge, consisting of interactions between European
and domestic political and socio-economic patterns,
…..but on the other hand
-Strong clientelism tradition (combined to patrimonial modalities), affecting both
active politics and patterns of governance
- a stillborn civil society subjected to power politics and protest discursive practices
 Greeks have traditionally expressed an interest in politics and
at the same time used to appear to possess a rather positive view
about/on politics (in fact, much more positive than the view taken
by respondents in other Southern European states – Italy,
Portugal, Spain- see Lavdas & Papadakis 2003), however
combined 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 (even
underdeveloped) 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 low
political efficacy’’ (Charalambis & Demertzis 1993: 224).
Tradition proved powerful enough: Since the very first
state-building period, the tendency towards a stronger
process of state-building pushed for a centralized state
with strong executive and rationalized administrative
structures prevailed over the retaining of power to
localities and subsequently led to more centralized
governmental structures.
.
 State interventionism and
political culture
It can be argued that the particular mix of individualism and decreased state
interventionism which came to characterise developments in various West
European contexts failed to become the dominant pattern in the development of the
modern Greek state (see Lavdas & Papadakis 2003, Lavdas 1997, Papadakis 2003).

Despite the (positive) impact of the “arise” of the 3 rd Greek Republic (which altered
the whole context) and the subsequent empowerment of tolerance, the constant
institutional building, the rapid Europeanization, the mixture of state interventionism
and clientalistic politics, the changing stimuli (see Lavdas 1997, 2000b) and the
diverse conceptions of politics (including distributive coalitions in Olson’s 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 as
a counter-balance mechanism to distorted administrative practices, while “morally
directed individual economic actions” (in Amartya Sen’s 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 lack
of institutional trust combined to established and legitimated corruption. Greeks
kept on working harder and harder, salaries were practically “frozen”, a lot of
success stories contributed in the overall development, new and promising
institutions were built….yet bureaucracy wasn’t defeated, the State didn’t change,
corruption survived, evidence-based policy making was never established as the
prevailing policy-planning paradigm, modernization got delegitimized, PAR is still in
quest and the economy was de-stabilized.
Is the crisis (apart from being a nightmare) Hellenic Republic’s last chance?
 The State reform: a brief
history of failures
 Huge, complicated and eminently centralized State….
 ….justifying the constant request for a major state retreat and an
efficient public administration reform (dozens of missed chances)
….
 ….with not any remarkable success. On the contrary, complicated
legislation and regulatory framework, too many laws and
overlapping control-mechanisms (i.e. a powerful but bureaucratic
Audit Court usually acting as a sort of Supreme Court) kept on
increasing 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 institutionally
and operationally depended on the Central State, its patterns and
modes of governmentality
The generators of regulations in Greece

Source: Stefopoulou, Ministry of the Interior, 2008

 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 concerning HRM and HRD
 Attachment in the hierarchical relations and entrenchment of
duties and 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 for PAR, 2008),
 Low effectiveness of training to support the structural and
institutional changes in PA
 No tradition in management by objectives and performance
appraisal (linked to wages and other incentive)
 II. Prometheus bound
The fiscal crisis: aspects,
facets and figures
 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 the
South Economies (Portugal, Ireland, Greece and Spain) troubling EMU.

Searching for the causes of the recent fiscal crisis, one could share Domenico Lombardi’s
argument that the Greek crisis was triggered, but not originated “by the recent global financial
crisis….Greece's membership in a currency union left the country with no monetary and
exchange rate policies to manoeuver, which further escalated concerns among market
participants” (Lombardi 2010).

Of course, both the assymmetries and palinodes within EU and EMU regarding the mode and
the extent of support to the Greek economy (mainly because of the German resistance to vast
majority’s approach to the Greek case and its initial request for harsh penalties to EU aid
recipients such as Greece) and the subsequent inability of the euro area countries to agree early
enough to a rescue-plan
deepened the debt-crisis and the speculative pressures to the Greek economy.
The “lack of timely action underscored early European reactions…while the euro area partners
showed little willingness in the beginning, to come forward with help” (Lombardi & Mark 2010)
made the bailout-danger more explicit than ever.
 The Greek fiscal crisis in
numbers: leading figures
I. The estimate about Greece ’s
public debt: €300-320 billion,
equal to 115% of GDP
Entering the EMU the dept was up to 106,6% (but decreased at 2003 to 102,4%). The national budget spending
versus income produced proves a major imbalance. The debt that accumulated now reflects that the country
owes far more than it is earning.
In addition, the fact that the Greek economy is mainly based on the public sector ends in inelastic public
spending and major difficulties to cost-cutting (the Public Sector represents 40% of GDP, while tourism and
maritime are a vital-source - since Greece attracts more than 16 million tourists each year, contributing 15%
to the GDP, while the maritime sector generates more than 7% of the GDP)

III. Over the next two years (2011 and 2012),

€130-160 billion will be required
for debt repayment.

III. Deficit revised was up to

13,6% (beginning 2010)
but it decreased 38,7% during the period January- May
2010

IV. Unemployment: The rate is increasing (still much more less than the Spanish case but it keeps on
increasing):
unemployment rose to 11,7%
600.000 unemployed (we’ ll back on this issue)
 The Greek fiscal crisis in
numbers: leading figures
.
The debt crisis in Greece threatened the stability of the European financial system. In fact, a
sufficient reaction to the Greek debt crisis became a stake directly related to the self-preservation,
even the survival, for the entire EMU. A supportive financial mechanism was developed by the EU,
the European 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 disbursed
in a three-year period starting from May 2010.

On April 23, 2010, the Greek government requested that the EU/IMF bailout package (made of
relatively high-interest loans) be activated. IMF’s responded "prepared to move expeditiously on this
request". The size of the first bailout-package was €45 billion (Bloomberg 2010). Despite the fact that
the Greek debt rating was decreased to BB+ (a “junk” status) by Standard and Poor’s (27 April) and
the “responding” decline of the stock markets worldwide and the Euro currency to this
announcement (BBC 2010), the activation of the bailout-package and the enactment of a series of
measures 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 MS
economies-at-risk.
 Coping with the Crisis impact: Austerity

Measures and Structural Reforms

The new Greek Government was forced to take “drastic austerity

measures” (Brookings Institute 2010). These measures contributed in
persuading the last remaining holdout (namely Germany), to sign on to a 110
billion euro bail-out package for Greece.The abovementioned measures include
on the spending side,
• decrease on public sector salaries and raising of the retirement age,
and on the income side,
• increase in taxes and major changes concerning the tax-legislation
and the subsequent status-quo, mainly aiming at confronting tax
evasion and reducing relevant privileges.

Additionally, the new Greek Government has already planned and proceeded in
implementing major structural and institutional reforms concerning the Public
Administration and the Local State, towards the rationalization of the State-
operation, the active decentralization of the State, the promotion and
establishment of transparency and efficiency in many aspects and facets of the
Public Sector as well as the enhancement of measurable productivity.
 Remarks on the social impact of
the crisis- the unemployment
factor
According to the National Statistics Service, Greek unemployment
soared during the first three months of 2010.

The state of play regarding the diverse parameters of unemployment is

highlighted on the following table.

The social cost of unemployment rate’s increase is inestimable, due to

the multifaceted nature of the relation between unemployment, social
exclusion 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 the
first time, women, long-term unemployed, people looking for a job for
more than one year, social disadvantaged groups, young people, are
those mainly affected by the ongoing labour-market crisis.
 TAXONOMIC CATEGORIES FIGURES REMARKS

1 Unemployment rate 11,7 % According to other

(end of Q1 2010) 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% It concerns those people

who entered the labour
market for the first time in
the same period 2010)
5 percentage of long-term unemployed - or the 44,6% Higher than ever in the
percentage of people looking for a job for recent history
more than one year
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
III. Being imbalanced, getting
unstable: back to politics
 In the aftermath of the Greek fiscal crisis, the current political discourse is
dominated by the impact of the crisis and the patterns for facing it, while
the public sphere is dominated by a generalized criticism against the political
personnel, triggered by part of the mass media and contextualized in
fear, anxiety and lack of trust and
confidence in the political system.
other; 10 anger
fear; 21,1 anger; 35,5
dissapointment
fear
dissapointme other
nt ; 33,3
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 a
certain extent) the necessity for the austerity of the measures taken
by the Government (49%) and keeps largely trusting the Prime
Minister Giorgos Papandreou.
 Divided we fall….
Confidence in the political system, major political parties and political personnel
is getting rapidly deconstructed:
52% never trust governments in Greece, while
40% 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)
The political-opportunity structure opens again (in Charles Tilly’s terms), new challengers
raise their issues, independently on the systemic patterns, and subsequently symbolic and
corporeal recourses are mobilized (proving new-Institutionalism approach in such cases):
72% ask for an extended “refresh” of the political personnel
(according to another recent poll, recently conducted by Pulse- 13/ 06/ 2010)
The blame for the crisis and its social impact is willingly attributed to the relationship
between politics, interest groups and (established) corruption within the State and the Public
Sector:
65% believe that “corruption in politics and state is always too
extended” while
72% argue that the most direct cause for the crisis lies on
the use of the “public income/money which was
traditionally wasted, because of corrupted or
inefficient politicians
(according to the abovementioned poll by Public Issue)
 …..united we stand (?)
Within such a context, who is
25
gaining in popularity, power and
positive political visibility?
The governing socio-democratic 20

party (PASOK) still rules the polls, PASOK

while citizens seem to trust the

15
Prime Minister.

But on the other hand, according to New Democracy

10

recent (June 2010) polls, the two

Greek leading parties can count on 5
the support of just about 40% of the Communist Party
voters, while 8 months ago they got SYRIZA
77,4% in total. In addition, smaller 0

parliament parties do not increase New Democracy Communist Party LAOS SYRIZA
their power, not even their
popularity.
Who’s winning then? In systemic
Obviously, the fiscal crisis is resulting in a multi-parametric social crisis and
it is reproduced as both a representation and legitimization crisis…..
Within the above-mentioned context, the major challenge is the one related
to the actual demand for an extended and multi-faceted reform of the
political system, the electoral legislation, the state itself and undoubtedly the
mode of governenance. Expressis verbis governmentality per se….

The Greek Prime Minister has already undertaken the mission to proceed in
structural 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 Local
Administration and “Diaygeia” on transparency and accountability) are
explicitly aligned with the abovementioned promise.
 IV. Is there any future left?
Policy proposals on PAR and Governance.
 Seeking for a paradigm shift:
lessons learned, recommendations
developed
On 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.

Measuring the cost of business start-up (bureaucracy vs effectiveness)

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: Stefopoulou 2008

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

- a less complex regulatory framework and respective institutional arrangements

(focusing on reducing administrative burdens everywhere and strengthening the
Local State):
i.e. The “Kallikratis” new regulatory and operational framework, redraws the map of
Greece's local government including a new structure for the municipalities and
regions, that are becoming fewer in number and covering a larger area, having more
powers, funding, and staff in order to gain in efficiency, transparency and openness
to society". The plan foresees municipalities being be cut down to 333, or 343, while
prefectures 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-ridden
country's pension system more rational and ensure its long-term viability.
……
- new patterns of institutional building combined to capacity building
- extended use of e-governance (focal-point of the ongoing reform process by the
Government)
-better regulation aligned with procedures-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
- policy improvement based on impact assessment and external support in these
initiatives (yet policy and social coalitions are rather difficult to achieve, because of
the current overall political status)

Could such goals be met within the present context?

Conditio sine qua non is, among others, a more rationalized public sphere, the
establishment 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)
 References

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Bloomberg (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 Greek
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Nationalism”, paper for ECPR Joint Sessions, Workshop on “Politics and Memory”, Edinburgh March 2003.
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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”, Paper
presented 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 and
legitimacy, in D. MEYER-DINKGRAFE (ed.), European Culture in a Changing World: Between nationalism and Globalism. Aberystwyth:
ISSEI & Un. of Whales.
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September 2008
Sen, A. (1987) On Ethics and Economics, Oxford, Blackwell.
…..thank you for your kind attention