So What Now?

For two decades and more, the European Union has been trying to get ‘ownership’ for structural reform in Greece.

Spending has been savagely throttled back. But there is no click, no reset, no moment on the road to Damascus, where the Greek government and Greek society ‘gets’ the need to change.

On the contrary, the discussion in Greece is largely about how to relaunch state spending. Some promise an early return to bond markets. Others want taxpayers elsewhere to pay. Others want to reclaim the right to print money; others hope to persuade the Eurozone to do it. Still others deal in miracles. Everyone agrees tax burdens are at their limit.

The reset is to understand that private initiative has to be the motor for recovery.This is not about government propping up traditional Greek enterprise in traditional ways. It is about  setting up a new model of partnership with enterprise, releasing the talents familiar to  the Greek diaspora. That  means changing the conduct of government.

The first necessity is to change the perception amongst investors, foreign and domestic, that the administration is unpredictable, impenetrable, even arbitrary. Not only does that discourage inward investment, it means some big name Greek companies are moving abroad to find the administrative competence and stability they need.

The second is to break up the trafficking of influence and insider information between the political and administrative world and the domestic world of finance and business, typically to the exclusion of outside interests. Companies thinking of doing business in Greece should not be under pressure to join in practices that would be unacceptable in their own country, in order to be competitive (of course this kind of trafficking happens everywhere, but the difference is to consider it illegal and actively pursue it in the courts).

The third is to remove the paralyzing frustration the State imposes on any person or company refusing bribery or wanting to avoid calling on influential connections. Complex ever-changing procedures cause endless delays. There is no enforceable obligation on the administration to respect timely due process. Quite often, conforming to the letter of the law gives no guarantee that the administration will not use discretionary powers to make new difficulties. That is why law abiding individuals and companies in Greece are seen as village idiots. Play by the rules, you lose.

What to do?

First, reinforce checks on the arbitrary exercise of power. After three long years, personal accountability for the collection and use of public funds is being put in place. The next step is to make people personally accountable for open government, including making sure that dialogue with stakeholders genuinely takes place and that legislative proposals are truly evidence-based. Making people accountable needs back-up by a ‘governance-auditor’ with real powers of public enquiry, similar to the way finance is audited.

Secondly, the Government’s anti-corruption strategy should combat not only corrupt payments, but equally strongly the trafficking (or trading) of influence and insider information. Many still think this is a normal way for the political world, the media, business and society to interact. That’s how it is: get used to it. This traditional attitude has to be confronted. The legal framework of anti-corruption laws may need to be revisited. Exemplary prosecutions are needed of blatantly corrupt trading of influence and insider information for private or corporate advantage.

Finally citizens and businessmen acting in good faith must be confident that they can deal with the administration quickly and simply. There should be zero tolerance of maladministration and no letup in the effort to strip out of legislation unnecessary formalities, unjustifiable constraints, and discretion for the administration to vary or interpret legal requirements. Why not launch a campaign where every week or every month bad practices are named, shamed, and corrected? A press campaign perhaps, better still, a campaign by Government backed by the highest level.

Robert Shotton, Economist