It is a week now that the main issue of reopening the greek program appears to have been resolved. Nothing has been really been agreed, except for a likely slight relaxation of this year's primary surplus target and that no policies shall be enacted with a fiscal impact. The rest is to be agreed, and effectively discussions for program 3 are now open and have a deadline of June 30, 2015.
The entire effort of the two protagonists, Varoufakis and Tsipras, has been on this issue, and this is logical. However, now comes the need to pull together the government and make it function in line with what has been explicitly or implicitly or tacitly agreed. Because the one clear message is "DO NOT GO ON A SPENDING SPREE" during these 4 months. This is the testing period for the government, and showing that it controls things and can deliver is of primary importance.
This is true on two fronts: the external, where many governments hope that Syriza will demonstrate total incompetence, hence they can then finish with Greece once and for all for fault. Other governments just hope that an obedient government will come to power, replacing Syriza. Nobody really wants a success for Syriza.
Then there is the internal front, where the real issue is. This is where success or failure shall be determined, because even if Greece is eventually forced to exit the euro or otherwise defaults without debt relief, the economy's performance shall determine the outcome for the country. Although there are some political and economic interests that oppose Syriza, that is not the main problem. The first is internal opposition within the party of Syriza. And the second is the total lack of managerial experience of yet another prime minister and minister of finance. The combination of these two seems catastrophic.
So what are we seeing on this front? The Syriza government is not functioning and its ministers seem to think that they can do whatever they want for 4 months. A clear policy for these four months needs to be established and followed strictly. There is only one thing to do: prepare and agree the new program. No resources should be wasted on other things. I will outline certain basic management concepts, including key confidence building actions, which I think would be useful particularly during this period:
1. Establish a clear management structure for the government's functioning with rules for and coordination of all actions and announcements regarding government policy. The present image is one of complete lack of coordination and management with a lot of confusion being generated on a daily basis. The issue of the prototype schools comes to mind.
2. Expectations' management: the government should refrain from doing or announcing things it cannot do or things that are contrary to its pre-election promises with respect to the majority of the electorate. Even minor such things can destabilize popular support and bring collapse. It is better to lose the support of 2-3 special interest groups such as e.g. the ERT personnel, than ridicule yourself as a government in front of the entire electorate by e.g. increasing the television tax - which used to be sufficient - to pay for them.
3. Putting together the details and the numbers of the new program, MOU #3 or, in politically correct words, the Agreement. No time or effort should be wasted on other things, four months is very little.
4. Put all effort in revealing and cutting wasteful expenditure. This should not be that difficult and has limited political cost, but requires a change of heart for most Syriza people.
5. Identify certain cases of real major tax fraud and corruption covered up by the previous governments with the purpose of maintaining a sense of fairness and political support while difficult real reforms are planned. This should be only too easy to do. Syriza should also demonstrate leadership and modernity by avoiding Mccarthyist tactics used in the past.
6. Restore basic faith in the tax/judicial system in line with pre-election promises. This will also help stop capital flight and restore small business confidence.
7. Stop the tax uncertainty, primarily for indirect taxes. This should also have a direct effect on consumption, which was affected in the last few months by the obvious impasse with the troika and the expectation of new taxes.
8. Take simple cheap measures for the humanitarian crisis. This is probably the only one being implemented but its costs and financing seem unclear.
Failure to achieve what needs to be achieved, without ideological fanaticism, is a must if the country is going to come out of the mess of the last decade.
Failure to achieve what needs to be achieved, without ideological fanaticism, is a must if the country is going to come out of the mess of the last decade.
Interesting suggestions. Now, about 1.5 months later, it seems both sides expect that delay will weaken the other side in negotiations and that, when faced with some deadline, the other one will give in. For European governments the biggest gamble is not the money needed to rescue Greece but the impact on other (south) European governments and societies many of which face elections soon.
ReplyDeleteThe sad thing is that Syriza is giving the battle to preserve some (small) social benefits and (large) state expenditure without any fundamental (nor any left-wing) changes in the overall system that brought us here. In particular, they do not touch the banking / financial sector that has its own share of responsibility in the Greek crisis.