Friday, 23 January 2009

We are tired of the governments we deserve

The year has not opened auspiciously. Greece is facing zero growth after years of outperforming the eurozone. Its fiscal indiscipline during times of plenty can only worsen now that pump-priming social spending is called for. That spending began with half a billion euros' worth of distress funding to farmers which, as this edition went to press, they were rejecting as insufficient.

The unexpected defenestration of former finance minister Yiorgos Alogoskoufis from the cabinet (he sent holiday greetings cards to financial correspondents, some of which arrived after his removal) led many observers to declare the beginning of a handout season. (Alogoskoufis' trademark had been his determination to tame Greece's runaway public spending). That, in turn, led to the theory that the handouts would double up as pre-election goodies.

Newspaper editorials even discussed the prospect of Prime Minister Kostas Karamanlis going for a triple election this year. Under this scenario, he would hold an election post-Easter which, given the government's disadvantage in recent polls, he might well lose. The opposition, however, would, in theory, not win power outright, leading to a hung parliament. That would open the way for further elections in June under the new election law, to coincide with Euro-parliamentary elections. These would, according to the same theory, give New Democracy a crucial extra ten seats' bonus and tip it into power.

One need hardly point out the tenuousness of this mirage, let alone the pointlessness. Should new Democracy attempt to fast-forward through two elections simply in order to reach the 50-seat bonus rather than the 40-seat bonus that remains in force for the next election, it would most likely arrive more or less where it is today politically, but with a great deal of public money and time spent.

Given the roughly five-point disadvantage he finds himself in, Kostas Karamanlis is likely to continue to do his job, which is what majorities in all the polls want him to do (after all, he still trumps opposition leader Yiorgos Papandreou on a personal approval basis). No government is going to be terribly popular for the next couple of years as the world weathers its most serious financial crisis in at least a generation, so Karamanlis will hardly be the odd man out.

Navigating those two years will not be easy, though. Merely maintaining state social services like healthcare and education will be an achievement. The government already owes pharmacists about 80 million euros, and health funds owe private doctors about 1.5 billion euros. These debts caused rebellions last autumn, and nearly made it necessary for people in need of healthcare to pre-pay for it.

Cashflow is an issue for the public sector because Greece suffers from a great deal of accrued debt and a lack of competitiveness relative to other countries, leading to an imbalance of trade - we import a great deal of things we cannot make. Although two bond sales this year have been oversubscribed, our lack of dynamism could, at some point, impact on the country's ability to raise cash.

Times of crisis are also times of change. Greece could use the lean years to become more competitive.

At his inauguration, US President Barack Obama raised a battle cry. "Our journey has never been one of short-cuts or settling for less. It has not been the path for the faint-hearted, for those that prefer leisure over work, or seek only the pleasures of riches and fame. Rather, it has been the risk-takers, the doers, the makers of things..."

Greece now needs a similar battle cry. It is time to rebuild the country not only materially but morally, so that the interests of those without privilege are served as well as those with prospects. This means greater transparency, accountability and meritocracy - values that are designed to make society more competitive by drawing out their strongest elements. But they have to come from the top.

Among Obama's first initiatives were to order federal agencies to be more responsive to requests for disclosure under the Freedom of Information Act, and to order Guantanamo Bay prison closed within a year in the interests of justice. Obama is putting into practice his professed belief that allowing government to be bound by the rule of law and more open to its electorate are not weaknesses but strengths.

Most of the time people labour patiently under the government they deserve. That is what Greece has been doing at least since the restoration of democracy in 1974. Occasionally, however, people get a leader better than they deserve. It happened to Greece with the election of Eleftherios Venizelos, who had to form a schismatic administration in the middle of the First World War to represent a country too divided to appreciate what it had in him. It has just happened to the United States.

Can some of Obama's exceptional character rub off on Europe, and Greece? Karamanlis may be no Obama, but a time of crisis, and the right advice, could conceivably force his hand to do something unexpected, such as abolish the law curtailing ministers' legal responsibility for their acts while in office; or make public the proceedings and reports of parliament's Audit Committee, which exercises oversight over party accounts and MPs' tax declarations; or even institute e-procurement, whereby anyone can see tenders for public procurement as ministries receive them, and judge the winning bid on its merits. The list could go on.

We can only hope that Karamanlis one day considers doing something which gives the many hope and the few discomfort.

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