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June 18, 2013

Happy birthday, coalition

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Written by: Politis

By Nick Malkoutzis

It is one year to the day since Greece held its second general election in two months and third in three years. What better way to celebrate the occasion than trying to relive the uncertainty and tension we experienced during the summer of 2012? The leaders of Greece’s three coalition parties go into a meeting this evening with the future of their government less secure than it has been at any point during the 12 months. The cause of their dispute suggests that even if this crisis is overcome, deeper problems lie ahead.

The spark that threatens to burn the house down is the closure of public broadcaster ERT. Prime Minister Antonis Samaras, who ordered the shutdown, suggested over the weekend that the bigger picture in this standoff is that he is a reformer and the others, both in his government and in opposition, are not. But what does he really mean by reform?

His justification for closing ERT was that it was overstaffed, too expensive and a source of corruption. Greece needs a more modern broadcaster, along the lines of the BBC, it has been suggested. All of these things may be true to a greater or lesser extent but there has been no attempt by the government to back this up with any substance, just the standard smattering of platitudes.

For example, if ERT with its 2,700 employees is overstaffed, what would one say of the BBC and the 17,000 it employed last year? In what sense is ERT considered too expensive to run when its costs are covered by the 50-euro annual license fee, which has never been a cause for widespread public discontent? Perhaps Samaras believes this levy is too dear. What would be his view, then, of the £145.50 (171 euros) that British households have to pay for the BBC each year? Indeed, if the point of running a leaner ERT on less than half of the current revenues is to save taxpayers’ money, where is it that the government is hoping this money will be spent: On boosting demand or on the next tax hike? All of these points, though, ignore the essence of public broadcasting, which is primarily to provide a service, not to turn a profit. One only needs to look at the standard of much of private television and radio in Greece to see that public broadcasting is worth paying for. Whether we were getting value for money from ERT is questionable but that’s not the debate we’re having.

There were lots of people at ERT with fat salaries that couldn’t be tolerated, the government argues. Even in the best-run public broadcaster, there will be employees on much more substantial salaries than others. At the BBC, 65 percent of its senior managers earn between £70,000 and 130,000 (82,300 to 153,000 euros) – substantial amounts even by British standards. But then again, if the government is concerned about high earners, especially those on generous wages, why doesn’t it remove them? After all, in many cases, they are political appointees. Reports last week alleged that five people with links to New Democracy, PASOK and Democratic Left were appointed to the executive board of Thessaloniki-based ET-3 TV less than three weeks before the broadcaster’s closure was announced.

None of this is convenient for the discussion about reform but that’s mainly because there is no real discussion about reform. The move to shut down ERT is not about structural changes, it is about finding 2,000 civil servants to sack as quickly as possible to meet the troika’s targets. In April, Greece committed to removing the public sector workers as part of a series of pledges to get a bailout instalment of 2.8 billion euros. Samaras’s government gave its pledge that 2,000 civil servants would be gone by June. The troika arrived earlier this month to find that nobody had gone and Greece’s next tranche of 3.3 billion euros is still pending.

If this was about reform, the plan for the new broadcaster would not read so much like a hastily assembled collection of ideas and the government would not have reverted within days of closing ERT to studying an abandoned 2011 plan to overhaul the broadcaster – a scheme that New Democracy opposed at the time. If this had been properly thought through, perhaps in switching off ERT’s signal, the government would not also have taken the exemplary BBC World off Greeks’ screens as well. If it was about change for the better, there would be a more detailed assessment of what went wrong with ERT. Instead, it is much easier to sweep all that under the carpet, to pull the plug and start again with a new model which commentators suspect will continue to be under political control.

And so, we arrived at a sudden death for ERT – a decision that weighs on Samaras but also his coalition partners Evangelos Venizelos of PASOK and Fotis Kouvelis of Democratic Left, who failed to ensure that the overhaul of the public administration was the driving force behind this coalition. Instead of genuine reform, which involves innovation, planning and political commitment, we have ersatz change, which can be achieved by closing down one organization and opening another at a later date.

By accepting this as reform, we are able to close our eyes and ears to the voices from abroad, including journalists’ groups, the European Broadcasting Union, foreign media and diaspora organizations, who expressed alarm at the unprecedented decision to take the country’s broadcaster off air. We dismiss them as naive outsiders who don’t know enough about Greece or, in the extreme case of New Democracy MP Sofia Voultepsi, as international media that are owned by arms dealers.

We go to bed dreaming of reforms and wake up believing they are done. The fallout from the decision to close ERT, though, is the nightmare we weren’t expecting. Apart from its potentially calamitous political consequences, it also shows that this government and the country as a whole lacks purpose in what it is trying to achieve. Apart from being targets in the bailout agreement, there is an absence of clarity about what ultimate purpose these changes have, why civil servants are being fired or shifted from one department to another when there has been no comprehensive evaluation of Greece’s needs.

Even worse, there seems to be little idea of what will happen once these reforms are carried out. As economist Dani Rodrik pointed out last week, when the underlying conditions are unfavourable, the impact of these changes on the economy is limited. “Structural reform increases productivity in practice through two complementary channels. First, low-productivity sectors shed labor. Second, high-productivity sectors expand and hire more labor. Both processes are needed if the reforms are to increase economy-wide productivity,” he writes. “But, when aggregate demand is depressed – as it is in Europe’s periphery – the second mechanism operates weakly, if at all. It is easy to see why: making it easier to fire labor or start new businesses has little effect on hiring when firms already have excess capacity and have difficulty finding consumers. So all we get is the first effect, and thus an increase in unemployment”

So, a year on from the last general election, Greece is pursuing quasi-reforms that are likely to have a limited impact on its depressed economy. In the meantime, its decision makers are no closer to defining what kind of public administration and economy they want to shape. The progress that has been in a number of areas over the last few years is in danger of disappearing into this morass. Somehow, in this mess, three parties that fail to acknowledge these developments have managed to fall out with each other. Like any marriage that is based on denial, the future does not look promising. An awakening is needed if there are to be happier and more productive anniversaries ahead.

Originally published on Inside Greece on June 17, 2013, at http://insidegreece.wordpress.com/2013/06/17/happy-anniversary-how-about-a-reform/.






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