Tuesday, 10 June 2014

Sweeping reshuffle punishes ministers for lack of growth and hope

The Greek government announced a sweeping reshuffle on Monday, replacing the finance minister and seven other ministers, and retiring all but one.

The reshuffle comes in the wake of a poor showing in European Parliament elections two weeks ago, in which the left wing opposition topped the conservative and socialist coalition by four points.

It also comes almost exactly two years since the coalition came to power promising growth, but implemented cutbacks amid continued recession. The Greek economy lost about a tenth of its size in that period.

Prime Minister Antonis Samaras called the new cabinet a "completely new formation". Swearing-in ceremonies were planned on Tuesday afternoon.

The opposition left Syriza party issued a statement saying, "Nobody believes that the reshuffle will affect today's policy... what the country needs... is a government that will stop acting as a local enforcer of creditors' interests."

There was no immediate comment from the departed seven: finance minister Yannis Stournaras, development minister Kostis Hatzidakis, interior minister Yannis Mihelakis, education minister Konstantinos Arvantitopoulos, health minister Adonis Georgiadis, culture minister Panos Panayotopoulos and government spokesman Simos Kedikoglou. Public order minister Nikos Dendias was moved to development.

Stournaras was a technocrat whose departure to pursue the post of governor of the central bank was widely speculated upon. His tenure has been a success in terms of balancing the budget last year, and even producing a surprise 2.9bn euro surplus. He managed to oversee the first multiple-year bond sale in four years in early April. However the pain of squeezing enough taxes out of a recessionary economy to produce that result produced widespread criticism of the government.

Hatzidakis made no discernible impact as development minister - a liability for a government that came to power promising growth over austerity. His one legislative effort, a fast-track bill for starting new businesses unveiled with great fanfare in February, was put under wraps again following a period of public consultation and never re-emerged.

The Hellenic Federation of Enterprises, Greece's industrial chamber, found last February that Hatzidakis had done almost nothing to eradicate more than 171,000 laws, ordinances and regulations hamstringing free enterprise.

Growth is expected to return to Greece this year (the budget predicts 0.6 percent) but that is not attributed to Hatzidakis.

The post was a tough one to begin with. Greece has suffered a cumulative 25 percent recession in the last six years. Early figures suggest that the recession is slowing faster than expected, to -0.9 percent in the first quarter against a forecast -1.1 percent. And the Greek branch of Manpower, the recruiting agency, expects an eight percent growth in employment in the third quarter, the strongest forecast since 2008.

"The government at least recognises mistakes and injustices," wrote Vasilis Korkidis, president of the National Confederation of Greek Trade. "The government must address overtaxation, the settling of market debt, liquidity, social security, the restarting of a social dialogue and the establishment of a just and friendly business environment."

Georgiadis proved surprisingly competent in cutting healthcare and pharmaceutical spending by at least two billion euros over two years (about a third of the ministry's budget) without suffering a complete collapse of public healthcare, but long strikes by pharmacists and doctors led to shortages of medicines and long queues at clinics. During his tenure he managed to create a network of primary healthcare centres to relieve hospitals, but most of his energy was spent simply maintaining system functionality. His departure may have had less to do with inefficiency and more to do with his association with austerity.

Arvanitopoulos also oversaw an unprecedented reduction in education spending - amounting to 40 percent of the higher education budget alone - and was associated with austerity. He, too, was plagued by strikes by middle and high school teachers and almost daily demonstrations against cutbacks outside his ministry. But he also came in for criticism for an uneven implementation of a 2011 law introducing more transparent governance in universities and polytechnics.

Kedikoglou's fate was probably sealed on June 11 last year, when he announced the closure of public television. It has been seen as one of the government's worst mistakes, producing international criticism as a move against freedom of speech. The government eventually replaced the public broadcaster but it was months before it could produce current affairs content again. This, together with the prosecution of an independent publisher have tarnished the conservatives' image as pursuing a more closed society.

Dendias was initially seen as a success for clearing undocumented migrants off the streets and putting them into detention centres. Rising unemployment and crime attributed to economic migrants were seen as problems of the first order when the government came to power in 2012. He also oversaw the creation of an efficient new asylum service to cope with a stream of political refugees from war-torn regions in Africa and the Middle East. However, he is seen as the mastermind behind a conservative plot to destroy the far-right Golden Dawn politically by prosecuting them legally as a criminal organisation. If such a plot ever existed, it clearly failed. Golden Dawn raised its share of the popular vote by a third to take 9.4 percent in Euroepan elections. 

Whither the economy? 

Gikas Hardouvelis comes to the finance portfolio with crisis experience. He was the key economic advisor to prime minister Loukas Papademos in November 2011-March 2012, when politicians briefly lost control of the government and the former central banker was sworn in as premier. Papademos and Hardouvelis steered Greece through its darkest crisis period, when its exit from the Eurozone was at its most likely. They negotiated a 103bn euro writedown of debt in the private sector, and a second facilitation loan worth 170bn euros, of which 48bn was earmarked for bank recapitalisation. This job done, they handed power to an interim government which oversaw back-to-back elections in May and June. 

Hardouvelis was borrowed from Eurobank, where he served as chief economist for a decade. He now faces a new slate of problems. The International Monetary Fund said in its fifth review released on Tuesday that "a number of challenges remain to be overcome before stabilisation is deemed complete and Greece is on a sustained and balanced growth path." It listed those problems as weak exports, a "mountain of bad debts" in high street banks, fiscal gaps in state financing in 2015-16 and a public debt that "remains very high."  

In his last interview with Al Jazeera last September, Hardouvelis said that the debt acted as a deterrent to investment in an economy that was undercapitalised. He saw Greece's best chance of reversing this in a debt-equity swap. 

"We owe at this stage over $288bn to our European partners, and everybody is asking how to get rid of that wolf that scares investors. The best way to do it is to say, ‘let’s swap debt for equity, and come in and invest’. Land is the easiest thing to do… take a rocky island for 100 years... I don’t see any other solution." 

That debt has now risen to over $400bn. Paying it down would take a lot of land. 

Sunday, 8 June 2014

Violence mars Greek university education

This article was published by Al Jazeera International

Shortly after 10pm on April 2nd, an unidentified group walked onto the campus of the University of Macedonia in northern Greece. The group’s members, about a dozen strong, were carrying motorcycle helmets and short crowbars. They were looking for students from the conservative youth movement, who had earlier argued with a left-wing student over where to place campaign posters ahead of student elections. They found them barricaded in a store room.

“A female voice said ‘they’re in here’,” says Yiorgos, a second year business student, who was in the room. “One of them kicked the door open and the five of us boys heaved against it to keep it shut.” The attackers swung a bronze fire hose nozzle like a ball-and-chain to smash through four layers of drywall, and eventually broke into the room.

“They were shouting ‘we will kill you, we will slaughter you, you’re finished’,” says Antonis, another of the besieged students. “They hit us with crowbars and stockings filled with batteries, which they swung around like lassos.”

The attackers remained on campus for three quarters of an hour. Yiorgos suffered a fractured finger as he protected his head from the blow of a crowbar. Antonis suffered a fractured skull. A third student needed stitches to the back of his head and a fourth suffered a broken nose. What none of them can understand is why police refused to intervene.

Before the attack started, the conservative youth office on campus called the authorities. “They said they couldn’t enter the campus without an order from the chancellor,” says Antonis. “We then called the chancellor but he was in Scotland on a business trip. We then called the deputy chancellor and he called the authorities. By the time the police got here the perpetrators had gone.”

Police refused to comment on the incident pending the result of an official investigation; but it appears that they failed to follow the law.

Greek higher education campuses used to enjoy a legal status known as asylum. Police could only enter them following a joint invitation by the university chancellor, the head of administrative staff and the elected head of the student body. In practice, however, such invitations were extremely difficult to secure because student representatives, as a rule, boycotted the vote.

Asylum was abolished three years ago because campuses had become a haven for fugitives from justice, including petty criminals, drug addicts and undocumented migrants. Yet police are still reluctant to enter because their presence is deemed politically unseemly. Universities are still seen as society's counterweight to authoritarianism, so the law is not always applied.

The roots of sacrosanct status

The view of universities as sanctuaries from regular civil law enforcement goes back to 1973, when a military dictatorship then ruling Greece brutally suppressed an uprising at the Athens Polytechnic with tanks and armed police. Students had merely claimed the right to elect representatives to university bodies, but they shook the regime. Democracy was restored the following year, partly thanks to the student movement.

Like much of Europe, Greece lurched politically to the left in the early 1980s. The Polytechnic generation came to power with the socialist party in 1981. It swiftly established asylum as part of an education law that introduced the election of university chancellors by the student body – a level of democracy unheard of in most university systems.

“Instead of freedom we administered - or didn’t administer - our licentiousness, the tendency of most Greeks to feel free of the constraints of the law,” says Thanos Veremis, professor emeritus of political history at Athens University.  

Violence is usually political, and peaks at student elections or in the run-up to chancellorship elections.

“The people who take [violent] action belong to the extreme, non-parliamentary left,” says Sakis Ioannidis, the head of the conservative youth movement, ONNED, using an elaborate term for anarchists. He believes that such a mix of people attacked the movement’s students at the University of Macedonia, where victims heard their attackers shout “long live anarchy!” 

ONNED has since asked for the creation of a dedicated campus police force that will act preventively and liaise with police. 

Broader reform stymied

Such a force might stem much of the opportunity for violence but not the desire, believes Spyros Amourgis, professor of Architecture at California State University and the Athens School of Fine Arts.

“Violence occurs when there is no [student] satisfaction and no student culture,” he says. “Most of our students don’t study what interests them, but what will bring them money.”

Amourgis decries the utilitarian Greek attitude to education. “Our universities don’t develop personality. For the most part they are injections of knowledge,” he says. “When you’re interested in your studies, you care.”

The culture of disillusionment is perhaps most evident at the anarchists’ den in the basement of the Athens University of Economics and Business. A painted banner above it reads, “Welcome to the kingdom of the ‘competent’, where success is always written in euros.” Beneath is a gun shooting somebody’s brains out.

University reform has been a top political issue for a decade. Greek universities score poorly in international rankings; until a few years ago they had no external evaluation and did not qualify for European funding; the democratic measures introduced in the 1980s were quickly subverted - faculty appointments, chancellorship elections and even some student admissions became tightly controlled by parties.

A first reform wave in 2005-7 introduced external evaluation and scaled back party influence in chancellorship elections. A second law in 2011 introduced university Councils to manage finances and appointments transparently.

The latter hasn’t been properly implemented, says Vaso Kindi, a philosophy professor who sits on the newly formed Council at Athens University. “The law calls for a separate legal entity that will take possession of all the university’s assets, and which the Council selects a CEO to lead. The chancellors don’t want this entity to be formed,” says Kindi.

The result is that the university’s revenue from properties sometimes remains uncollected. For instance, the Athens University Council found uncollected rents worth $2.4million, in some cases going back to 2000. 

Athens University remains so opaque that the public administration inspector, a transparency watchdog, has asked the financial fraud squad to audit it. Prime Minister Antonis Samaras asked for all university discretionary accounts to be audited. “None of this has happened. No-one wants to disturb anything. That’s the bottom line,” says Kindi.

And the bottom line is indeed affected. “Who is going to donate money to a university that operates in this fashion?” she asks.

The ability to attract private donations is increasingly at issue. Last year, Greek higher education received $1.3bn from the state, a 40 percent drop over two years. That put higher education spending at 0.56 percent of GDP, compared to an EU27 average of 0.91 percent. The government shut down two regional universities and eliminated some 400 departments. Universities were allowed to raid up to 40 percent of their endowments to top up operating costs.

Public education funding is now set to drop again by almost a quarter over the next two years.

Even if transparency prevails and donations flow, enormous reforms remain undone, which hurt the economy as a whole.

Greece is the only European Union member that still doesn’t recognise other member states’ degrees automatically, dishonouring its signature on the Bologna Accords.  Re-qualifying in Greece can take years, and sends many of the brightest Greek graduates back overseas.

Greece is also the only EU member that doesn’t recognise degrees issued by non-state colleges or by the franchisees of EU universities on Greek soil. Article 16 of itsconstitution preserves higher education as an exclusive object of the public sector and doesn’t allow fees in public institutions. 

The result is a public university system that shuns innovation and an atrophied private college system that is shedding jobs McKinsey, the consulting firm, estimates that Greece is losing $9.5bn in seven key sectors, including potential education exports, because of its rigid laws. 

Even Greeks seem to be running away from their universities.  They make up the third-largest nationality of EU students in British universities after the German and French, but the largest by far in proportion to population.

Some progress in governance is due this month, when the last remaining chancellors elected under the old, party-dominated system are to be replaced; and prime minister Antonis Samaras announced on May 7 that he will pursue a constitutional amendment to recognise non-state university degrees.

Will this succeed? His deputy, socialist leader Evangelos Venizelos, is the man who torpedoed that very reform in 2007. Even if Samaras prevails, he needs bipartisan support and the left is invested against reform.

Vasilis Vasilopoulos, a fourth year IT student at the Athens University of Economics and Business, is loyal to EAAK, the United Independent Left Movement, a non-parliamentary group. He explains the left’s view of university reform succinctly: “[The government’s] only goal is to destroy free, public education. They want a smaller university by reducing the number of enrolments and a less democratic university by autocratically controlling the administration.” Samaras would appear to have his work cut out for him. Trends suggest that the Greeks who can afford to will study abroad for years to come.