Monday 5 October 2009

Karamanlis deserved to lose; did Papandreou deserve to win?

A powerful sense of surrealism hit me upon my return to Athens on Monday evening. For those unaware, national elections were held on Sunday: the opposition PASOK party received what amounted to a landslide victory, winning some 44% of the popular vote and a majority of 160 seats in Parliament. The ruling New Democracy (ND) party received some 33.5% of the vote, and 92 seats in Parliament (down from 151 in the previous government).

The results were unequivocal. Yet I watched the evening news in disbelief as successive ND worthies gave variants of the standard line: “We need to investigate the reasons of our failure.” “We need to engage in a dialogue as to what went wrong.” But aren’t these reasons obvious?

The past 5.5 years of the two Karamanlis administrations have been a litany of failure and lost opportunities. Kostas Karamanlis was elected with overwhelming support, precisely to implement the same electoral promises he has made in the most recent election:

• Reform and streamline public administration
• Reduce the public debt
• Eliminate corruption
• Improve public services, particularly in education, healthcare and public security.

Instead of using this mandate, it’s been business as usual:

a. A succession of corrupt practices, ranging from the improper re-selling of a structured bond to the Zahopoulos fiasco to the Vatopedi scandal to the Siemens corruption probe was essentially allowed to go unpunished. The public simply does not believe that “all cases have been sent to justice”, when it was obvious that not a single person has faced criminal prosecution, and the statute of limitations on crimes by politicians has been repeatedly used to provide immunity to key parliamentarians. No justice has been served. To this day, we still do not know who was responsible for the Vatopedi scandal, how much property was illegally “transferred” and what the government got back when it “froze” the deal.

b. Government debt rose from EUR 195.3 bln in 2005 to 237.2 bln in 2008, according to Eurostat. Taking into account government borrowing which has already occurred in 2009, debt is forecast to rise to between 108-110% of GDP by the end of this year: over EUR 260 billion.

c. In addition to heavy borrowing, there are high unfunded liabilities in pension funds, healthcare and salaries of temporary staff. IKA and OAEE (the two main insurance funds) stated that they needed at additional EUR 553 million to cover obligations in November – December. Hospitals owe over EUR 4 billion to suppliers (some estimates are as high as 6-7 billion). Some temporary staff in the public sector report that their salaries are 3-4 months in arrears. All this indicates that despite the high on-record borrowing, there are still large amounts of operational budget arrears which are not funded.

d. There has been no discernable fall in either public administration headcount, or rise in public administration efficiency. Some strong steps have been taken, such as budget consolidation, limited online interaction, privatisation of Olympic Airways, etc. But few core structural reforms have been made.

e. The Greek state educational system is irrational and uncompetitive against most of its OECD peers. The continuation of Article 16 and the issue of university asylum remain deadlocked. Greece is in violation of the spirit and letter of EU law on academic and vocational education, and shows no signs of addressing this in a coherent, systematic way. The fact that private higher education is unrecognised in Greece by the government is incomprehensible. The fact that primary and secondary education has among the shorted school hours and the most theoretical, centralised standards for curricula and teaching may have been acceptable in 1929, but is no longer acceptable today.

f. Public security has not improved. Complicated the situation is the influx of hundreds of thousands of undocumented immigrants who live in an illegal limbo, with no recourse to law and no means of support.

Karamanlis was elected in March 2004 to solve these problems. One of his memorable campaign lines at this time was “Η Ελλάδα εχει γίνει ξέφραγο αμπέλι” (“Greece has become a fenceless vineyard”). What has changed since then? Not much. Yes, there have been positive changes, but these are mainly at the periphery of public administration and national competitiveness. As a whole, his leadership has been a disappointment. He has never demonstrated a control over his own party, let alone the functioning of the government. Without this basic pre-requisite, it is impossible to take control of the issues and work systematically towards their solution.

For me, at least, it’s clear that Kostas Karamanlis justly deserved to lose this election. It is not at all clear to me, in contrast, that George Papandreou deserved to win it. His party, like Karamanlis’, suffers from the presence of party “barons”, many of whom have a long and painful history of blunders, errors and corruption. His political promises were nebulous, and often relied more on stringing positive adjectives behind a noun than offering any meaningful number or innovative policies.

Several leading PASOK members (and soon to be ministers) are Socialist academics with no real private-sector work experience, and a worrying willingness to re-insert the state in sectors “of strategic interest”, such as Olympic Airways or Hellenic Telecom. This ignores the disastrous consequences of government management of these companies in the past.

Yet Papandreou’s greatest problem is a lack of credibility. I don’t see how you can leave your walled villa, get into a chauffer-driven Lexus 4x4 each morning, and be driven downtown to practice Socialism. I don’t see how being leader of the Socialist International qualifies you to solve the problems of Greece’s public administration, since many of these problems date back to previous Socialist administrations. And I don’t see how the issue of corruption or the public debt or healthcare or education or any of the other pressing problems will actually be solved.

In my opinion, we’ve changed one outmoded political party for another. There do not appear to be any serious plans for meeting Greece’s obligations either under the Lisbon Agenda or the Stability and Growth Pact. Instead, it’s nice words, incremental promises to special interests, but no willingness to take the cross-party, clean-slate, cost-benefit approach which is critically needed to solve Greece’s problems.

My feeling continues to be that unless a totally new political party, indeed a post-ideological political movement is created, we will be arguing exactly the same questions four years from now.


  1. Hold on to your hats your in for a real ruff ride up ahead. I feel for you but I cannot reach you... good luck. C.

  2. Once again, a very clear, articulate and accurate representation and interpretation of the events in Greece. My question is, how can one verify the figures, how can one verify the actual scandals as they were portrayed to us by the media (in particular, Vatopedi, the role of Roussopoulos, what Zahopoulos actually did apart from jumping off his balcony and having an affair). We are obviously provided and will always be provided with part information, just enough to create sensationalism.
    We really need more transparency in this country, on all finances, donations, debts, public sector salaries, expenses etc etc.

  3. Eri, I agree 100%. One of the main difficulties in Greece is separating fact from fiction regarding government opertions.

    With Zahopoulos, I was interested by Alogoskoufis' promise that for the first time, all off-budget income from OPAP would be put on the government books. This implies that in the past, OPAP was turning over a share of their dividends for allocation at the discretion of the Ministry. Reporters dished up a lot of highly questionable spending.

    For Siemens: the scandal only broke because of the German government investigation, which in turn was prompted by a whistleblower.

    Greece needs to consolidate all income and expenditure on a single central government line - even for that of semi-governmental organisations such as OPAP or OSE, where the government has a majority stake - in line with GAAP.