Friday, 6 March 2009

The economic crisis needs consensus

The question of consensus has struck both European and Greek politics this week. An informal European Union summit aimed to settle major questions of whether, and under what circumstances, the EU should intervene to bail out banking systems and economies in eastern Europe. It also asked what model western European economies should follow to save jobs. The EU remains divided on these questions.

On March 5, Prime Minister Kostas Karamanlis summoned party leaders to seek consensus on how Greece will face the economic crisis. On this level, too, agreement failed.

A forlorn prime minister appeared on national television on the evening of his day of failed meetings to tell the nation essentially what he proposed to the parties: that his government considers saving the economy a national issue, not a political football.

He wants agreement on six points: Keeping fiscal discipline, paying down the debt, eliminating the deficit by cutting public spending, developing weak sectors of the economy and avoiding confrontation with unions over excessive demands.

The emphasis is on restraint, and for good reason. The General Accounting Office revealed on February 27 that Greece's debt stood at a staggering 262 billion euros at the end of the year, 24 billion more than the previous year and 12 billion more than forecast.

Pasok leader Yiorgos Papandreou, to whom this overture was chiefly aimed, said the economy needs to move in a different direction - one of development rather than defence. His party has produced a blueprint that emphasises taking advantage of Greece's strengths - its natural beauty, its history and the potential for renewable energy.

All these ideas are in the right direction, of course, and New Democracy has shown reluctance to pursue any of them imaginatively over five years. Only after the January 7 reshuffle did incoming Development Minister Kostis Hatzidakis declare green energy investments to be a priority. A March 1 VPRC poll published in Kyriakatiki Eleftherotypia showed that a majority of Greeks trust national policymaking over European in every major social and economic area - education, labour, immigration, social security, farming policy and tax policy - with the sole exception of the environment. Here, 56 percent trusted Brussels over 38 percent in favour of Athens. Clearly, New Democracy has disappointed bitterly in failing to clean up the country and exploit its green potential for both tourism and energy.

"Green development befits a country like ours, lacking an industrial tradition but having an abundance of natural beauty and history," said Papandreou in an interview published on March 1.

But to turn down national consensus in a time of global crisis on the basis of a green vision, however laudable, is to miss the point. Karamanlis essentially wants the opposition to stop fuelling unrealistic demands through its labour union representation and to back up the government in showing a well-advised restraint over public spending.

Pasok is refusing for three reasons that have nothing to do with green investment. One, consensus would deprive it of the biggest stick it has to hit the government with and hand it to Syriza; two, it is ahead of New Democracy in the polls and could squeeze close enough to victory to form a coalition government if Karamanlis calls elections; three, Pasok plans to do plenty of old fashioned populist spending on the back of taxes for the rich, so it is in no mood to join New Democracy's parsimonious club.

A GPO poll carried out for Mega television in the third week of February found high disapproval ratings for the way in which the opposition has been behaving with regard to the economy. Two thirds of voters think the communist party (KKE) and Syriza are not being helpful. Not far behind, Pasok garners a 57 percent disapproval rate. True, most voters think the government doesn't have a plan, according to the same poll; but more of them trust Karamanlis on the economy (42 percent) than Papandreou (37 percent).

Polls aside, it is unrealistic for Papandreou to expect that Brussels would treat him any differently than it treats Karamanlis. Both men speak on the strength of their economy and that, as Karamanlis says, has limited powers.

So far Papandreou and the other party leaders have adhered to the tried and tested confrontational style of Greek politics. In a political market that hasn't seen big voter shifts in two decades, parties are more concerned about preserving their base with the expected rhetoric than in reaching out and risking everything.

The sclerotic style of Greek politics is just as culpable as New Democracy's lack of imagination, however. In an interview with this newspaper, London School of Economics professor Kevin Featherstone rightly argues that Greece needs more bipartisan bills of the kind that eluded it on education. He also argues in favour of greater coordination across government departments, greater accountability and transparency. Only in this way will reform be brought into the realm of possibility. Both under Costas Simitis and under Karamanlis we have seen that the system is broken when it comes to the higher functions of long-term policymaking as opposed to business as usual.

The lack of trust across great, open stretches of the body politic and society undermine such consensus and coordination. It is a truism that crisis brings change. Will this crisis unite or further divide us?

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