Category: comparative politics

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Its all Greek to me.

There is a political rhythm to the Greek economic crisis. We spent a long weekend on Santorini dodging strikes–Tuesday was the transport workers, Wednesday was the wharfies, Saturday was the May Day demonstrations. Next Wednesday there is a general strike. Our timing has so far been impeccable. We took a ferry last Thursday, so missed the wharfie action that paralyzed Pireus and left a bunch of cruise ship passengers stranded. We returned on Sunday evening so missed the May Day demonstrations that disrupted the Metro rail. We fly to Samos this upcoming Thursday, so will miss the general strike as well. Fingers crossed that nothing happens next Monday, when we fly back. Given recent strike patterns, Monday is due for one so our luck may run out (not that getting stuck on Samos is a bad thing). But we are getting the hang of the flow of things and look forward to seeing how the general strike goes. Although the foreign press has focused on some violence, the reality is that it is only small groups of anarchists who are clashing with the police, and most of them are teenage students. The unions and other civil associations are led by grey haired folk who may have been prone to street action two or three decades ago, but who now are just trying to protect their collective livelihoods (although two banks were attacked by petrol bombs last night, the usual anarchist and Marxist-Leninist suspects are being blamed).

What is interesting about the unfolding of the Greek economic crisis is how ignorant most foreign observers are about its root causes. Most focus on inefficiency and waste in the public sector and the supposedly indolent Greek way of life, which even if true has its causes in something other than the Greek psyche (as some allege). Let me explain.

In the 1950s a strain of developmentalist thought emerged called modernisation theory that claimed that the problem of Latin America and the Mediterranean Rim was a lack of Anglo-Saxon Protestant values resultant from the mix of rigidly hierarchical religious cultures (Catholic, Muslim or Orthodox) and warm climates. The general drift of this “theory” was encapsulated in the so-called Iberian or Mediterranean Ethos: a culture of indulgence, indolence, patronage, clientalism and fatalism structurally rooted in a benign climate that allowed for easy shelter and food production. If only the Greeks, Italians, Spaniards and Portuguese (which actually is not on the Med) had to live in cold climates where survival depended on industry and resourcefulness–then they would have developed the “proper” entrepreneurial values that would have allowed them to develop along the “proper” lines of the Anglo-Saxon world. In other words, backwardness is a function of culture and climate.

Leaving aside the fact that there are plenty of temperate climate locations where entrepreneurial spirits have flourished, and plenty of cold climates where it has not, or the fact that lumping together whole regions in a culturalist explanation is ignorant at best and racist at worst, or that the notion of one universally ‘proper” form of development is both, this discredited canard ignored the structures of economic and political power (many overtly shaped by foreign intervention) that emerged in these regions and which were not reducible to either climate, religion, or civic culture.

By the 1970s modernisation theory was shown to be profoundly flawed. On a scale of over-determinism (when not cultural supremecism), it is up there along with the “warm water port” theory of imperialism. Yet, in recent years, and specifically with relation to the Greek crisis, it has been resurrected in revamped fashion as an explanation for developmental failure. Inspired by neo-liberal thought, the neo-modernisation thesis is that countries with “too much” state involvement in the economy are prone to political nepotism, rent-seeking, corruption and inefficiency. That makes for a lazy, supplicant, and favour-seeking society. The key to development lies in reducing the role of the public sector so that private enterpise can flourish. The private sector is seen as THE panacea for developmental retardation, and elites in places like Germany believe that the Greeks need to accept this.

While there may be some truth to the need for private sector leadership,  the root causes of the current Greek crisis are, again, not as simple as the overbearing role of the state, nor is the solution simply a matter of reducing it.

As I mentioned in the previous post, Greece has an underdeveloped private sector. But–and this is a very big but– the weakness of  the Greek private sector preceded rather than followed the advent of the modern Greek state, and the private sector never attempted to become the motor force for the entire society. If one considers the nature of internecine conflict in Greece dating back two  milenia (for the historically disinclined, please think about Athens and Sparta, or better yet, the Peloponnesian Wars), one realises how parochial local, sectoral and island interests can be.  That worldview continues today. Greek private industry, such as it is, has little concern about contributing to the public good. 

In light of Greek capitalist myopia and parochialism, the recipe for social peace has rested on the public sector being used as a means of absorbing excess labour (along with emigration). The labour market and welfare systems are two-tiered: there are few protections for workers in the private sector outside of employer generosity or union strength, while the public sector adheres to ILO standards. Tax-evasion is a national sport, but the problem is not with individuals but with politically-connected corporations and agricultural interests as well as religious organisations who do not pay anywhere close to their due share of the tax burden but who do put serious money into the main political parties and individual politicians in order to protect their profits (since the money spent on politics is infinitesimal when compared to the valuated tax assessment of their worth). In order to conceal the results of this long-standing practice, successive governments, be they centre-right or centre-left, cook the Treasury books and leave it for their successors to sort out, in what has become an elaborate wink and nod shell game played between themselves and their foreign creditors.

Greeks are by and large a nation of small property owners. Owning a home is, like in NZ, their core objective. The private sector is dominated by small and micro-enterprises run by owner-operators (often familial in nature) who eek out small margins catering to immediate needs (think dairies, dry cleaners. locksmiths and the like). The state does not direct investment capital towards these people, not does it particularly focus investment in large corporations either. What large-scale investment exists comes from foreign-connected sectors such as shipping, and much of the profit generated by the handful of such firms goes off-shore.

To this can be added a large black market fueled by unchecked migration across Greece’s incredibly porous borders. One in ten inhabitants in Greece are foreign born and the majority are undocumented.  This cash economy circulates outside the confines of the state (remember my anecdote about the gypsy street fair in the last post), yet is vital to filling the demand for basic necessities as well as for labour in the agricultural and service (including tourism) industries. Relatively little of the economic activity generated by these non-citizens provides revenue for the state, and with little immigration enforcement available (and largely impossible to regularise in the near term), that situation will only get worse as the official economy shrinks under the austerity regime now being imposed.

Thus the historical source of income stability (at least since the end of the colonel’s dictatorship in 1973) are public service jobs. But without an efficient tax system owing to the political cronyism of the major economic players, public budgets require external financing, which has led to more than two decades of deficit spending happily financed by foreign financial speculators trading in risk derivatives. The idea behind this play, which I accept, is that while firms may go bankrupt nations do not. Compounded interest ensures the investor’s profitability even if the principle is lost in a default (as Argentina showed in 2001-02). So the bottom line is that the system now under siege worked for everyone–the Greek elite enjoyed its privileges, the Greek population remained relatively content and peaceful even if economically underdeveloped by modernisation theory standards, and foreign financiers made money off Greek debt.

The trouble is that with the creation of the Eurozone currency system controlled by one central bank, countries such as Greece were placed in a financial straitjacket that eliminated the autonomy and cushion provided by independent national currencies.  It cannot devalue or overvalue its currency based on market conditions (as for example, Singapore does regularly), and thus is locked into a monetary (supply and demand) framework over which it has not control. Hence, should it default on its debt to its European backers, one major option would be to defect from the Eurozone and re-establish its national currency. There will be pain involved but it would allow Greece to reorganise its finances in more independent, if austere terms. It has enough investment to ensure that even with defection it will not sink (consider that tourism constitutes 20 percent of the Greek economy and its limited niche export markets could actually be favoured by such a move). That in turn might encourage others, particularly the other members of the so-called “Club Med,” to follow suit, which could well spell the end of the Eurozone (especially when considering that a Tory victory in the UK will mean an end  of talk of its ever joining and that Turkish incorporation into the EU could set the stage for an even bigger Greek-type scenario). Thus the Greek bail-out is not so much about Greece as it is about protecting the Eurozone as a currency market.

Which means that the strikes are going to continue, at an increased pace and on a potentially broader scale. In the face of elite indifference to their plight, it is the only means of defense for most Greeks. They have just been told that the public sector will take a 25 percent wage cut on top of a ten percent cut six months ago, then have wages frozen for three years. Imagine if that happened in NZ. Do you think that even the placid Kiwi public worker would take that lying down when s/he had no part in the deficit debacle? The retirement age will also rise while pension benefits will be cut. Although most people appear to accept the former, the latter is a major source of aggravation because as I mentioned before, there is little to no private sector pension plans. Prices of public utilities are set to rise and there is talk of privatising the bulk of the health system (which already is a two-tier system in which private health providers are used by the wealthy). All of which is to say that the burden of sacrifice will be shouldered by those who had nothing to do with creating the crisis in the first place. In fact, although improvements in tax enforcement are mentioned, that remains to be seen, and nowhere has it been mentioned that politicians will take a wage cut or corporations will be required to offer non-wage employment benefits in order to off-set cutbacks in public benefit programs while encouraging labour migration to the private sector. 

Which makes me think that the recently announced IMF/ECB Greek rescue package is more cosmetic than substantive and could well provoke a public backlash that could provoke renewed military interest in internal security. That, indeed, would be a disaster.

Note: As always, my observations on Greece are indebted to the insight of my partner as much as my own. I will take blame for any errors.

PS: I have been thinking of writing a post about our brushes with petty crime and come curious Greek mores, but do not want to turn this into a travelogue.  I shall try to integrate any such thoughts into a larger discussion of more serious subjects.

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They have to want it as much as you do.*

I spoke with an old Pentagon friend today (a person with whom I shared strategic planning duties in a specific area of concern, and who went on to far greater things than me), relating to him my early observations about Greece in crisis. I mentioned that the Greeks, who have a public sector that dwarfs the private sector, in which the public sector average wage is far above that of the private sector, have a huge sense of collective entitlement and natural rights. For example, university students (as public entitles) are currently demonstrating daily against proposed cuts in their free lunch and bus pass benefits, but not at the university. Instead, they disrupt downtown traffic. Tomorrow the seafarers, bus drivers and railway workers go on a 12 hour strike to protest wage freezes or labour market infringement  (the train and bus workers are public servants facing wage freezes and the seafarers are striking to protest non-EU ships being allowed berthing rights in Greek ports. Their combined walkout will paralyze the transportation network for 8 hours ). 

But media coverage of the issues is somewhat odd. Rather than look inward, the popular press is full of anti-German rants because the Germans will determine the conditions of the Greek debt bailout (which only delays the inevitable default), and the conditions imposed by the Germans (as majority holders of Greek debt) are considered to be the reasons why Greek workers will not get their entitled, perfunctory raises.  All the while  life goes on–the cafes and supermarkets are full, people crowd the trains, there are few demonstrations outside downtown. People do not appear to connect the impending default to their lifestyle.

Usually wages are tied to productivity, which means that if the public service is well paid it is also efficient (such as in Singapore). But in Greece it is not. From what I have observed and what my Greek interlocutors have told me, nothing gets done or it is waste of time to demand action. For example, on Saturday an illegal gypsy market spung up on the street outside our apartment building. It closed the street to vehicular traffic and vendors camped out on the apartment footsteps. The neighbours shut the front entrance doorway, which is usually propped open, out of fear of robbery. I asked my landlord if that was commonplace and she said that yes, although illegal the gyspy market had run for years because neighbours had zero success in complaining and bribes may have been paid for the authorities to look the other way (which indeed they did–I saw not a single cop during the entire afternoon the market was running).  In other words, Greek public service is as much a hindrance as a help to civil society, hence the proliferation of grey and black market activity. The curious thing is that this situation is tolerated by both of the dominant Greek parties, respectively left and right centre as they may be, because public sector employment and benefits is a common source of patronage and clientilism. Neither one wants to upset that apple cart (even if the latter is foreign debt-bought and effectively owned). 

Mind you, not that all Greek public services stink. When compared to the Auckland raillway system, for example, the Athenian Metro is stellar. There are few delays on the six inter city lines, complete integration with buses and suburban rail lines, and close integration with ferry and airport schedules. The only visible problem, from my non-expert viewpoint, is that there appears to be way too many people (or too little, depending on the station) doing nothing in pursuit of this goal. Then again, I tried the Henderson-Auckland (before and after Britomart) route for years, before and after it was privatised,  and the public-controlled Athens Metro system has it beat by a country mile.

Not that the Greek private sector is a beacon of innovation and entrepeneurship. To the contrary, it is mostly low skilled small holdings with no growth or technological ambition (think butchers, cosmetic vendors and locksmiths), and the political-economic elite (they are the same, crossing familial ties in many instances) in this rigid two party system have no interest in promoting the sort of capitalist ambition that would erode their joint lock on power. Cuba is similar in this regard, because in both cases oligarchic control supplants popular innovation as the motor of progress and majority consent is bought with public sector employment (not that I am drawing a direct line between the two regimes as a whole).

Which is to say, Greek economic backwardness is cultural, contrived and perpetuated by the Greek status quo. The elite see no need to change because deficit spending is a double edged sword, as many US banks found out to their dismay. Deficit-laden countries intimately locked into the European financial system such as Greece will not be allowed to collapse  becuase if they do the financial run is on given that Spain, Portugal and Ireland are all in the same predicament–too much debt, too little ability to pay within IMF/ECB guidlelines.  Hence, Greece may default, but it will not be allowed to financially collapse if for no other reasons than that the repercussions would be catastrophic on the European banking system itself.

Which is where my fomer Pentagon friend comes in. I noted to him that the problem with EU expansion is that the leading EU economies, France and Germany, viewed EU monetary expansion into Southern and Eastern Europe as a development project in which the lagging peripheral economies would be modernised by virtue of their connection with the European core (first via labour-intensive investment, then by value added industrial growth). The Euro giants emulated the US when it engaged Latin America in the 1960s and 1970s under the rubric of modernisation theory: just expose the backward masses to a little capitalist entrepenurialism and all will eventually be right.

Err…wrong.  As my friend noted, the locals have to want the change as much as we/you (external agents) do. And that is a cultural issue more than anything else. 

Developmentalist views such as that of the EU and US ignore the cultural component of investment climates. National preferences are different, cultural mores vary, and collective notions of rights and entitlements are not transferable across borders. The Germans and French may have thought that lending money to Greece to fund the Olympics would promote its modernisation, but like the Yanks in Latin America, they failed to understand that Greek culture–what it means to be Greek–supercedes any IMF/European Central Bank prescriptions. Hosting the Olympics was temporary; to be Greek is forever, and that is not reducible to a current deficit repayment schedule. To the contrary. It is reducible to notions of rights and entitlements crafted over milleniua and mytholoigised as such. That bottom line is not within an IMF  or European Central Bank purview.

Which is why my friend Ray’s point is well taken: an external actor can only help as much as the locals want to help themselves. There is no point in offering assistance and prescriptions if the locals do not see the need to change. Absent a local consensus on the need for change (which can be influenced by externally driven media manipulation but which ultimately has to resonate in the hearts  of the citiznery) better then  for external actors to cut bait than to engage in futile hope that the local conditions will change.

In fact, the opposite may be true: the less a country is propped up by external actors and the more it is forced to look inside itself for solutions, then the more it may eventually address the root causes of its backwardness, decline or stagnation (New Zealand could well be a case in point). In any event, only after internal failure is acknowledged that external assistance will make a difference in Greece or elsewhere, and that difference is not material but attitudinal.

 According to my buddy, that fact is as true for Greece as it is for Somalia, Irag and Afghanistan, and in the latter instances, the stakes are arguably much greater. I disagree with his summary assessment as it applies to Afghanistan (as I believe that there is more at stake than local self-realisation), but cannot help but recognise the truth in his words. At the end of the day in this age, no matter the degree of previous exploitation and subserviance, the root problem of backwardness lies within. Or to put it in my friend’s terms, “if the locals do not want to do it, it aint gonna happen.”

There is truth in that view and no amount of good intentioned external help will resolve the fundamental issue.

*Update: For a jaded by humorous view of Greek politics check this out.

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Field studying democratic crisis.

I am off to Greece this evening for a one month research and pleasure trip. My partner is working on book that compares family, immigration and higher education policy in three peripheral European democracies, and Greece is one of her case studies. I am tagging along because of our shared interest in studying democracies in crisis. People have asked why we would travel and live in Greece at a time of financial meltdowns, government paralysis, riots and strikes. Our answer is because that is precisely the case. Let me explain.

Most Western political science focuses on stable polities. Scholars prefer stability because, among other things, it provides more complete data sets and long-term institutional analysis.  After all, it is easier to study what is than what is not, and to theorise about what is certain rather than what is uncertain. The study of politics in NZ is one case in point–most of the research conducted in NZ politics departments focuses on voting behavior, party and coalition politics, the structure of parliament, policy formation, leadership issues, public management and other topics amenable to both qualitative and quantitative dissection (I am referring here to NZ domestic politics and not to foreign policy and international relations, which tend to be more fluid by nature).

In the last 30 years a sub-field of “transitology” has developed that studies political societies in transition. The sub-field was pioneered by Latin American and Iberian scholars studying the collapse of democracy and rise of authoritarianism, which was followed in the 1980s by path-breaking works on the collapse of authoritarian regimes and the transition to democracy during the so-called “Third Wave” of democratisation that swept the globe in the decade ending in 1995. I was a student of these pioneers, as was my partner (one generation removed). In my case the interest was also personal, as my upbringing in Latin America in the 1960s and 1970s occurred during a period of rampant political turmoil, including coups, attempted revolutions and virtual civil war in a host of countries.

For people like us the interest is in the politics of change. This involves the fluid dynamics of crisis, which often is chaotic and un-institutionalised, always uncertain, hard to chronicle and which can lead to what is known by neo-Gramscians as the “organic” crisis of the state. Periods of stability, in which politics is regimented, diachronic and orchestrated, tells relatively little about the real fabric or fiber of society. But a society under stress, in which that fabric is loaded by economic, social and political crises, is an excellent candidate for study of what ultimately holds a societal order together. It could be institutions, it could be culture, it could be religion, it could be nationalism, it could be football or some combination thereof, but it is during times of crisis that the fibric stitching of a society is most evident (said plainly: its basic ethno-cultural composition and socio-economic and political organisation). In some societies the crisis leads to regime collapse, in others to government collapse (which is not the same as a regime collapse), and in some cases it leads to regime reform or reconstitution. In many cases, a change of government does not suffice to overcome the crisis (this is less true for mature democracies as it is for new ones, but the crisis of mature democracy is absolutely manifest in places such as Greece).

Like people themselves, how a society responds to crisis is the true measure of its character. Whatever the outcome, all the fissures and seams of the political order are exposed during the moment of crisis. No quantitative data set can fully capture that picture (and in crisis ridden countries data sets are incomplete or unavailable), which is why qualitative field research at the moment of crisis is necessary. The latter is not a matter of sitting in an office on a university-to-university exchange courtesy of a government scholarship, and/or talking to other academics and “important” commentators, but instead involves hitting the streets to get a feel for the public mood, reading, listening to and watching the daily news, then digging through ministerial and interest group archives, interviewing policy makers, sectorial leaders, other interested parties and even casual conversations with taxi drivers, waiters and landlords to get both a structured and unstructured “feel” for how the crisis was caused, is managed, and how it will be resolved (all of which involve linguistic and cultural skills not generally taught in NZ universities).  Although much of what is recorded cannot be used in a book, it gives the observer a better appreciation of contextual depth when addressing the transitional subject.

Which brings us back to Greece. Greece has what could be described as a vigorous civil society burdened by a clientalistic, corporatist and nepotistic political system. Greeks are quick to defend their perceived rights, often by violent means. This approach is not confined to the political fringe but to middle class groups, students, farmers, shopkeepers, unionists and party activists. For example, a few months back university students took their Rector (akin to a Vice Chancellor) hostage, beat him and forced his resignation because of an increase in student fees. Housewives and shopkeepers have joined in violent protest against rising commodity prices than involved molotov versus tear gas clashes with the police. The use of trash can bombs is a common occurence (especially outside of banks), and the occasional political murder has been known to happen.

In the case of demonstrations in Athens, protestors make an obligatory stop at the US embassy to throw rocks, paint and the occasional firebomb just to make the point that the Yanks suck (much the way the Auckland and Wellington rent-a-mobs target the US consulate and embassy during protests against Israel, globalisation, imperialism, climate change, indigenous exploitation and a host of other real and imagined sins that they hold the US responsible for). The point is that Greeks are extremely politically conscious and very staunch when it comes to defending their self-proclaimed rights (the contrast with NZ society could not be starker, because when it comes to politics–and the 100 person rent-a-mobs nothwithstanding–most Kiwis could not be bothered to get off the couch).

Which is why this is the perfect time to go. Greek society is reeling under the weight of a looming credit default that the EU is still attempting to prevent via a financial rescue package crafted by Germany. Government paralysis is such that it can just stand by and hope for the rescue. Greeks are hitting the streets protesting over any number of greviances, one of which is that they are not in control of their collective destiny. Yet, life goes on.

Besides being a traveling companion to my partner, I shall be making my first observations about how the security forces respond to the crisis. I am particularly interested in how the Greek military reacts to the chaos in civil society, and whether it will take a role in internal security after years of working hard to separate internal from external security functions. Given the ever present animosity towards Turkey, issues of foreign-derived terrorism and demographic change tied to EU expansion, it will be interesting to see how the Greek strategic perspective is configured in light of  the internal and external context of crisis in which it is situated.

I shall attempt to write posts once we are settled. In the meantime Lew will hold down the fort until such a time as I get back on line or Anita returns from her hiatus.

PS–the pleasure part involves some weekend island-hopping. Santorini and Samos are on the itinerary.