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Monday, 14 February 2022

Crisis, reform and the way forward in Greece - A turbulent decade’

On 09 February, SEESOX hosted the second seminar of its 20th Anniversary Seminar Series. It addressed the issue of reform, focusing on Greece, a country that agonized over this notion during the recent years of its protracted economic crisis. The seminar built on the recently published book ‘Crisis, Reform and the Way Forward in Greece - A Turbulent Decade’ and the panel included Jens Bastian (Independent Economic Analyst, based in Athens), Michael Mitsopoulos (Hellenic Federation of Business) and Calliope Spanou (National and Kapodistrian University of Athens). It was chaired by Othon Anastasakis.

Calliope Spanou, the editor of the book, began by inviting us to move beyond the narrative of the economic crisis and the problems it exposed in Greece, and take a look at the wider challenges that lie ahead. She first explained the rationale behind the book and how it was conceived. The aim was to assess the extent to which the protracted crisis in Greece revealed (or not) resilience and led to deeper changes. In this context the book offers a reflection on the dialectics of stability and change and of external pressure and domestic agency. The perspective is forward looking: to examine the degree to which Greece is currently better equipped to deal with a global sociopolitical environment characterized by consecutive crises, the ‘new normal’ as the book’s authors call it.

In the remainder of her presentation, Spanou focused on public administration to illustrate (the limits of) Greece’s reform capacity, namely, its ability to endogenously set reform goals and to design and implement corresponding policies. Public administration in Greece, characterized by a series of structural problems, has been held responsible for many of Greece’s ills. Thus, horizontal reform became necessary. Making more specific reference to two critical domains, i.e. 1) budgeting, and 2) human resources management she concluded that the results were unbalanced. Regarding budgeting a coherent management system was introduced, and new instruments were developed under the auspices of the general accounting office of the Ministry of Finance, which assumed a central role. Overall, fiscal transparency was strengthened. Regarding human resources management, new digital tools were put in place and the whole technological infrastructure was upgraded with positive results. However, reform fell short in bringing the needed changes. Even less efficient was reform in terms of policy substance. In this domain, the status quo was largely reproduced. For instance, mobility remained individually centered and not in the interest of the service, while depoliticization was not implemented. The more recent appointment of ‘permanent secretaries’, who sit across the politically appointed general secretaries in Ministries, represents a potentially important step towards strengthening the civil service but will have to be tested against future government alternation.

Michael Mitsopoulos focused his talk on structural changes that have come as a result of reforms and which can be game changers going forward alongside more sustainable growth models. In particular, he focused on spatial planning, licensing and auditing; all of these had played a negative role in the past by preventing investment going to the productive parts of the economy. In recent years, a big reform in spatial planning was implemented with the aim of designating land uses to more than 60% of the country. At the same time, uncertainties and conflicts in the design of the spatial law machinery were removed. This was complemented by a simplified licensing environment and more efficient audits. At a period when funds are being made more available in Greece in the context of NextGenerationEU, those changes could facilitate the restoration of the productive capacity of the country through the growth of the private sector. At the same time, the easier it is to start a business, the higher is also the possibility of failure. In recent years a comprehensive framework for a second chance was established in Greece, with the aim of dealing with possible business failure. Taken together, these changes could, in Mitsopoulos’ view, provide significant opportunities for Greece in the future, especially if coupled with a strong agenda for improving corporate governance.

Jens Bastian focused on the sustainability of the reform process in Greece. He explored how the reform debate has developed in recent years, drawing attention to continuity but also to change, with the implication of new agents, as well as the engagement with new policy areas. In his presentation he made reference to three issues. The first is the narrative of green finance in Greece. One institution that is proactively participating in this debate is the Central Bank of Greece. It is providing policy advice on what needs to be done through its newly established climate change sustainability center. The aim is twofold, to ensure that climate related risks are incorporated in banks’ risk assessments, and to contribute to the framing of climate change reforms in Greece- all within its operational mandate. The second issue concerns the country’s potential for recovery in the post covid 19 environment. Greece is going to be a major beneficiary of the NextGenerationEU program. In the national plan submitted by the Greek government, almost 40% of the allocation of funding concerns reform initiatives targeting climate change. The government’s plan was informed by a report commissioned from the economist C. Pissaridis (LSE). Given Greece’s successful absorption of EU funds in the 2014-2020 period and the agenda of the current national plan, Bastian was “guardedly optimistic” regarding Greece’s ability to implement the significant volume of funding that is expected to flow to the country. However, he was more pessimistic in terms of the country’s demographic outlook, which will in the next few years compel Greece to begin a discussion on a number of other reforms that appear unpopular at the moment, e.g. if the legal retirement age has to be increased again. 

Manolis Pratsinakis (SEESOX Onassis Fellow)

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