Tag Archives: structural reforms

Midnight at the oasis

It’s a measure of the absurd situation that Greece and its lenders have got themselves into that it’s highly doubtful whether there is a single Greek MP or European official that believes the austerity package due to be voted through Parliament around midnight on Wednesday will contribute towards the country’s recovery.

Apart from the dewy-eyed optimists (it would be a shock if there are any of those left), there is unlikely to be anyone who has confidence that the 13.5 billion euros of spending cuts and tax hikes over the next two years will play a part in halting Greece’s incessant decline.

The 2013 budget foresees a primary surplus – the first in over a decade – of 0.4 percent of GDP on the back of the latest measures. While achieving this surplus is one of the milestones on the road to stability, there are serious questions about how it should be achieved. With approximately 9.5 billion euros of measures (equivalent to 4.5 percent of GDP) to be implemented next year, the program of cuts demanded by the troika makes a mockery of assertions by leading economists and even the International Monetary Fund managing director Christine Lagarde that frontloading will end up being destructive, not just counterproductive.

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A strange kind of freedom

The acquittal of journalist Costas Vaxevanis has been hailed by some as a victory for press freedom in Greece. It is certainly a success for Vaxevanis and the Hot Doc magazine he edits, and goes some way to vindicating his decision to publish a list of some 2,000 Greeks holding accounts at the Geneva branch of HSBC. Whether it strikes a decisive blow in favor of press freedom in Greece is open to debate.

The unusual amount of international attention this story has received and the prominence that some media around the world have afforded it has led to dust being kicked over the nuances involved. Context has suffered as much of the coverage fed the understandable human urge to look for heroes and villains. Goodness knows we have been short of heroes in Greece. Goodness knows we have had more than our fair share of villains.

However, the reality is that this story is not about a crusading journalist who blew a corruption scandal wide open. It is more complex than that. It is the story of an incompetent and, to a large extent, compromised system that was unable or unwilling to carry out one of the many basic functions it often fails to fulfill: to check if its citizens were cheating. Insult was added to injury when officials produced pathetic excuses to explain their failures. Addressing this problem will take much more than a magazine article. It requires a prolonged, consistent effort from the media and citizens to ensure failing institutions finally fulfill their designated role. If the media instead attempts to fill the position of these institutions, rather than targeting the vested interests that prevent their proper functioning, the situation will only be made worse.

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For reforms, don’t catch a cab

Greece is a world leader in structural reforms. Who would have thought it? Yet, this is exactly what newly published figures by the Organization for Economic Cooperation and Development (OECD) show. Greece comes top of the list in terms of applying the structural reforms the OECD has recommended during the last three years, ahead of other crisis-threatened countries such as Spain, Ireland and Portugal. Germany, Switzerland and Luxembourg take up the last three positions.

Before you wonder whether you’ve woken up in a parallel universe, there is a good explanation for Greece being in the vanguard of reforms: it had a lot of catching up to do. In terms of the labor market, for instance, Greece is currently adopting many of the policies that Germany turned to under the chancellorship of Gerhard Schroeder more than a decade ago, if not earlier. In terms of making structural changes to create a business-friendly environment, Greece is also years behind Ireland and other OECD countries. The list could go on.

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