The neoliberal experiment of the “Memoranda”: Greek exceptionalism or
the mirror of Europe’s future?
George Katrougalos, Professor of Public Law, Democritus University
The “European patient”: A short genealogy of the Greek political system ...... 2
A-1 A glimpse on history ................................................................................................. 2
A-2 Greek state and society ............................................................................................. 8
BMemoranda: A neoliberal remedy, more lethal than the disease .................... 11
B-1 An ideologically biased appraisal…… ................................................................... 11
A-2 … leading to the implementation of unconstitutional, socially unfair and
economically inefficient measures.................................................................................. 18
A-
The article challenges the foundations of the methodological axis of the book
at both levels: First it argues that the dualism between “underdogs” and
“modernizers” does not reflect accurately the basic dichotomies of Greek society, and
therefore fails to explain the symptoms of the “Greek exceptionalism”. It is rather a
version of the Orientalism/Occidentalism narration, which, as all exclusively cultural
explanations of social phenomena, is ultimately oversimplistic and misleading.
The first part explores the relationship between the Greek state and society,
explaining the basic causes of institutional dysfunctions and the weak legitimacy of
public power. The economy was from the beginning state-driven because of the
abysmal weakness of its productive basis and the eclipse of a strong national
bourgeois class. It was not the expansion of the state that suffocated the economy but
quite the inverse: the public power has just filled the vacuum of the absence of any
substantial capitalist productive forces. However, it has never acquired the character
of a Weberian, neutral administration, as it was from the beginning based on the
satisfaction of clientelistic interests.
The second part analyzes the policies of “Memoranda”. It defines them as a
mere repetition of the neo-liberal strategy of Washington Consensus, having little, if
any, understanding of the real problems of the Greek economy. For this reason, the
remedy has been more lethal than the disease. The Greek society has become a kind
of “lab rat”, in the framework of a social experiment trying to explore the limits of
societal resistance to “shock and awe” policies dismantling the social state. Therefore,
the two camps of the raging battle are not actually modernizers and traditionalists, but
rather proponents of neo-liberalism and defenders of the European social state.
2
A- The “European patient”: A short
genealogy of the Greek political system
A-1 A glimpse on history
Flawed legislation, inadaptable to our morals
and our interests and its ruinous application by
partisan state organs: these are the reasons for our
lack of respect and contempt for our laws.
A. Antoniadis, The Municipalities (Τα Δημοτικά)
1866, p. 13.
Already in the 19th Century, Greek publicists, such as the aforementioned
Antoniadis, and foreign visitors1 were describing the same grim situation: public
administration was omnipresent and simultaneously distrusted by the majority of the
population2. In the same line, in one of the most influential reports on the Greek
administrative reform, commissioned by the government, Prof. Georges Langrod stated
the obvious, writing that "the vicissitudes of the h\istory of Greece (...) are the source of
the discrepancies between the institutional framework and the reality and the persistence
of popular mistrust and hostility towards the public power "3 .
Which are these “vicissitudes”? And how can one explain the paradox: the
administration to be universally disdained, but seemingly all adult citizens to want to
become civil servants4? (Towards the end of 19th century the number of public servants
per 10,000 population has been seven times greater than in the UK.5).
1
See, for instance, E. About, La Crèce Contemporaine, Librairie Hachette et Cie, Paris,
1872, F. Thiersch, De l'état actuel de la Grèce, Leipzig 1833.
2
With regard to social relations in Greece in 19th century see N. Svoronos, Esquisse de l'
évolution sociale et politique en Grèce, Les Temps Modernes, no 276 bis, 1972, p. 27-28, K.
Tsoukalas, Social Development and State in Greece, The structuring of public space, Athens,
Ed. Themelio, 1986, V. Filias, Power and Society, Ed.Gutenberg, Athens 1981 (both in
Greek).
3
G. Langrod, L'administration publique en Grèce et sa réforme, La revue administrative 103
Janvier-Fevrier 1965, p. 71.
4
Cf. E. About (op.cit., p.190): " dans un Etat où tous les hommes, sans exception, aspirent
aux emplois publics, on tient les sénateurs par leurs clients et par leurs familles".
5
See G. Dertilis, Social Change and Military Intervention in politics, Greece 1887-1928,
Shefield 1976, Table XIII. However, in later years the number of civil servants decreases:
they represented 4.8% of total workforce in 1904, 3,3% in 1920 and only 1.84% in 1928. Cf.
also E. Makris, The active population of Greece 1821-1971, Statistical studies 1821-1971,
EKKE, Athens, 1972, (in Greek), p. 207 and S. Grigoriadis, Economic history ¬ of Modern
Greece's economic, Athens 1975, (in Greek), p.24.
3
First of all, one should take into account that the Greek state has been founded
after a devastating, although victorious, revolutionary war against Turkey, on the ruins
of a very poor, pre-capitalist society. It has thus become, by necessity, “the functional
axis of economy”6 and an employer of first and last resort. As Comte de Gobineau was
writing some decades later, "the entire population was thinking that if the state was the
only one who had money, one should try to take advantage and work as a public
servant."
During all 19th century this functional necessity for constant state intervention to
the economy remained unchangeable. The very weak Greek bourgeois class was from
the beginning obliged to ally itself with the traditional pre-capitalist strata, big
landowners, local notables and Phanariotes7. These early proto-capitalist elements,
mostly merchants and ship owners, instead of cumulating capital through industrial
endeavors were struggling for access to the state dividends. Their economic activities
were not oriented to manufacturing but to banking and commerce, driving wealth by
special relationship with the political apparatus.
This ‘comprador’ character of Greek bourgeoisie8, its parasitic relationship with
the state and its dependence on foreign capitals are salient features of the Greek ruling
class. The state did not suffocate the private initiative; it has just filled the vacuum left
by the inability of the former to function as an autonomous, independent economic
actor. In this framework, the separation of society and state didn’t take place in the same
manner as in the other European states. The fusion of political and economic power
remained a constant of the system till our days, despite periods of fast economic growth
that contributed to approach Greece to the European average9, due to the ‘rent-seeking’
behaviour of the elites.10.
6
K. Vergopoulos, State and political economy in the 19th century, Exantas, Athens 1978, p.
309, K. Moskof, The birth of national consciousness and the Greek Society, Ed. Synkhroni
Epokhi, Athens 1978 (both in Greek).
7
Greeks residing in Phaner, the main Greek quarter of Constantinople, who have acquired
great wealth and influence during the 17th century and occupied since then high political and
administrative posts in the Ottoman Empire. Many of them have participated in the Greek
revolution and played a key role after the liberation, due to their diplomatic and political
skills. During the revolution they have clashed with its plebeian elements, mostly the military
leaders (kapetanioi),
8
Cf. N. Mouzelis,. Modern Greek Society: Facets of Underdevelopment, Exantas, Athens,
1978, p. 20 – 1 (in Greek)
9
The annual growth rate of GDP in Greece during the periods 1932-1938 and 1962-1973 was
among the highest in (current) OECD countries. See on that G. Mhlios, A. Ioakimoglou, The
internationalization of Greek capitalism and balance of payments, Exantas, Athens 1990, p.
4
More importantly, the bourgeois modernizers of the Greek state, such as
Trikoupis and Venizelos, did not break with this tradition. Instead, they have forged
personal political alliances with magnates of their own making or choice (e.g. Trikoupis
was a closed friend of banker Syngros, one of the main perpetrators of the state
bankruptcy of 1893, industrialist Bodosakis had close ties both with Venizelos and
Karamanlis11).
In consequence, the division between privileged social strata having special
access to state resources and the rest of the society is one of the constant institutional
traits of the Greek Polity. This merge of public and private economic power through
horizontal networks, leads to a very fragile legitimacy, for a simple reason: the
relationships of power are not being legitimized by the seemingly impersonal forces of
the market, but by direct political intervention.
In this ambiance both a protestant ethic of capitalist development and a rational,
Weberian administration are impossible12. Moreover, the “uncivicness” of political life
has as natural consequence a permanent lack of confidence in the state as a neutral,
impartial mechanism, at the service of general interest and a resulting generalized crisis
of trust and legitimacy. Therefore, the question of hegemony cannot be resolved outside
the sphere of the state with non political means13.
The dominant classes have tried to substitute organic, institutional legitimacy
either by constructing nationalistic mirages (such as the “Great Idea”, i.e. the political
goal of annexing all territories with historic Greek populations to the fatherland) or by
seeking cultural14, economic or even direct political and military support to “protector”
foreign countries. This tradition of reliance to “protectors” goes back to the Revolution,
when the direct military intervention of the fleets of England, Russia and France in
Navarino battle was pivotal for the independence of the Greek state. The British -and
95, M.Petmezidou-Tsoulouvi, Social classes et social reproduction, Exantas, Athens 1987, p.
162 (both in Greek).
10
See K. Featherstone ‘Varieties of Capitalism’ and the Greek case: explaining the constraints
on domestic reform? GreeSE Hellenic Observatory Papers on Greece and Southeast Europe,
Paper No 11 2008, The State in Late Development, Greek Political Science Review, 1993,
1:53-89.
11
See G. Katrougalos, “European ‘Social States’ and the USA: An Ocean Apart?” European
Constitutional Law Review, 2008, 4, p. 225–250.
12
See G. Katrougalos, La crise de légitimité de l’administration. Le cas de Grèce, Bs
Sakkoulas Publishers, Athens, 1993, especially the first two chapters of second part.
13
M.Petmezidou-Tsoulouvi, Social Classes and mechanisms of social reproduction, op. cit.,
p. 189.
14
Cf. N. Demertzis, The Greek Political Culture Today, Odysseas, Athens 1994 (in Greek).
5
after the Second World War the Americans- have exerted since then a direct steering on
the political and social life, which in some periods limited the political independence of
the Greek state at protectorate levels.
One of the major poets of 19th century, A. Kalvos, describes vividly in his
“Wishes” the popular resentment towards this kind of political tutelage:
“It is better, better,
The Greeks dispersed in the four corners of the world
To beg for bread with the hand extended
Than to have protectors.”
It is a common, but fallacious misunderstanding that this reaction hides a
division between “modernizers”, proponents of the westernization of Greece, and
“traditionalists”, defending the Balkan status quo15. On the contrary, the reaction to the
“protectors” was never limited to traditionalists but it has been widely shared by various
political and social actors, primordially by the progressive and radical forces having as
parallel goal the political independence and the socialist transformation of the country.
In a situation like this, the only way of popular legitimization of public power is
the development of horizontal clientelistic networks, through non-programmatic,
patronage oriented political parties. The generalization of the suffrage right to the male
population, which took place already in the 1830’s (for the municipal elections16), has
given political clout to these parties, which functioned on the sole basis of control of the
staffing and functioning of public administration (‘spoils system’17).
This explains another paradox: why the undeveloped political system in Greece
has expanded the electoral right18 much earlier than core European states19? In the latter,
the emergence of the mass parties is concomitant with the institutional response to the
15
For a representative example of this school of thought see Th. Veremis, J. Koli0poulos,
Greece, the modern continuity, Kastaniotis, Athens, 2006 (in Greek), for a critical appraisal
cf. George Katrougalos, Modern historiography with sound nationalistic beliefs, Avghi, 8-32009 (in Greek).
16
See G. Katrougalos, Local administration and society in post-revolutionary Greece, 18331862, Review of Public and Administrative Law 4/1991 (in Greek).
17
See L. Maisel and J. Cooper (eds.), Political Parties: Development and Decay (Beverly
Hills, CA, Sage Publications 1978.
18
The electoral law of 24/4/1833 recognized a general electoral right to the municipal
elections to all male adults over 25, with the exception of domestic servants. After the
Constitution of 1864, the electoral law of 1877 recognized the right to vote to all adult male
population, with the same exception.
19
In UK, the most democratically developed country of this century, only 1.8% of the population had
electoral rights before the Reform Act of 1832 and just 2.7% after it. In 1867 and 1884 the respective
6
“social question” of 19th century: how could the market be made compatible with the
extension of political and social rights, without a socialist revolution?20 Hence, the
expansion of electoral rights was not possible as far as the working class remained a
revolutionary “classe dangereuse”. On the contrary, such danger for the political system
did not exist in Greece. Quite the opposite, the patronage-oriented politics, reinforced
by the generalization of suffrage, were the basic pillars of political stability.
The schism between privileged strata, with access to state resources, and
deprived ones has deepened in the period after the civil war (1946-1949, opposing proWestern and communists), when the political prosecutions against the side of the losers
resulted to a profoundly divided society.
An extended chase of sorceress through a
wide specter of authoritarian measures has forged a partisan, police state21. “Certificates
of sound social beliefs" were necessary for any interaction with the public services,
even for the issuance of a driver's license and a passport or for participation at the
university exams. The prosecutions, the deportations and the executions culminated
many years after the end of civil war, as they were part of a systematic effort of
restructuring of the political system. For instance, in 1957 -eight years after the end of
the Civil War- 5521 citizens have been deprived of their Greek citizenship, compared to
only 52 in 195122.
The purges in the public sector were widespread and systematic. During this
period almost one third of public servants have been liquidated on reasons of political
disloyalty23. In order to cover the vacant posts but also to create new bonds of loyalty
of wider masses to the state, recruitment in public service has ballooned. According to
some estimates the percentage of employees and workers to the wider public sector
reached at this time almost 50% of the working force24.
figures have been 6.4 and 12.1% See F. Zakaria, The future of freedom (New York-London, Norton &
Co 2003), p. 80.
20
See U. Preuss, The concept of rights in the Welfare State, in G. Teubner (ed.), Dilemmas of law in the
Welfare State, Berlin, W. de Gruyter, N. York, 1986, p.151 at p.152.
21
According to K. Tsoukalas (State, Society, Employment in Greece, Themelio, 1987, in
Greek, p. 32) in 1962 60,000 people worked for the secret services of the police and army,
almost 1% of the entire adult population!
22
See E.G.Nikolopoulos, Les notions de légitimité et de légalité en Grèce, 1967-1970, Thèse,
Paris II, 1980, p. 149-150, cf. N.Alivizatos, Les institutions politiques de la Grèce à travers
les crises, Thèse de doctorat d'Etat, LGDJ 1979, p. 371.
23
N.Alivizatos, Les institutions politiques de la Grèce à travers les crises, ibidem.
24
K. Tsoukalas, Thoughts on the role of public employment in Greece, in The State in
Peripheral Capitalism, Exantas, Athens, 1985 (in Greek), p.112.
7
This impressive extension of state apparatus did not coincide with the
foundation of welfare state structures25. The public sector has been reorganized
according to a different sociopolitical goal: to build a social alliance between the ruling
class and the new middle social strata of loyal public servants26. The lack of a fully
developed welfare state, together with the prevailing authoritarian and paternalistic
policies, have shaped the symbolical collective image of the administration not to that
of a benevolent father, as in the main European welfare states, but to one of a brutal
gendarme27.
The public deficit in the field of social protection coincides with a strong
intrusion of the state in most sectors of social life. This prima facie paradox is the direct
corollary of the predominance of patronage policies, which compel the state to intervene
ad hoc and without any predefined strategy to every side of the socio-economic life, not
in order to rationally regulate it, but for satisfying ephemeral clienteles. This leads to a
highly fragmented income maintenance system, displaying an internal polarisation:
peaks of generosity (especially regarding pensions) for privileged strata of the
population, coexisting with huge gaps of protection. An important fraction of the
population remained without effective social coverage, especially the ex-employed and
unemployed, those in flexible forms of employment (temporary, part-time) and those
working in the informal sector or having irregular jobs.
After the fall of dictatorship of colonels (1967-1974) 28 traditional clientelism,
which was centered around local notables and MPs, has changed to a more
bureaucratic, party-directed patronage, as the main political parties, the Socialist Party
(PASOK) and the conservative party (New Democracy) have been gradually
transformed to mass parties29. With the ascension of PASOK to power in the 1980s
the social expenditures have increased, at levels comparable –but still a bit lower- to
these of the EU. However, the expansion of the welfare structures occurred in a period
25
Cf. K.Tsoukalas, State, Society, Employment in Greece, op.cit., p. 89.
Tsoukalas, op. cit., passim.
27
Cf. P. Legendre, Histoire de l'Administration, de 1750 à nos jours, Presses Universitaires de
France, 1974, Paris, p. 204.
28
See. K. Mavrias, Transition démocratique et changement constitutionnel en Europe du Sud.
Espagne-Grèce-Portugal, Ant. Sakkoulas, Athènes-Komotini 1997, p. 49.
29
The Socialist Party had 27,000 members in 1977 and 100,000 in 1981, New Democracy
20,000 members in April 1976 but over 100,000 in 1985. See D. Charalambous, The
dictatorship as a result of contradictions in the structure of the post civil war political system
and its negative effects in G. Athanasatou, Al. Rigos, S. Seferiadis (eds.), The 1967-1974
26
8
of general economic recession, contrary to the other European welfare states, which
have flourished in the economic prosperity of the post-war “trente glorieuses”. By
necessity, its funding has increased the public debt.
Moreover, the expansion of a highly fragmented pension system has once
more been used for distributing differentiated entitlements to selected party clienteles,
creating a highly collusive mix between public and non public actors and
institutions30. Public institutions continued to display a low degree of state power
proper, as they are still highly vulnerable to partisan pressures and political
manipulations.
A-2 Greek state and society
The majority of scholars see in the aforementioned institutional set-up a bipolar
antithesis between a strong and “gigantic” state and a weak, "atrophied",
"membranous" and "underdeveloped " society31.
This paradigm is currently under
reconsideration, as oversimplistic and in many ways inaccurate32. First of all, with
regard to ideological hegemony, the Greek state is much weaker than the European
average, because of its fragile, non organic legitimacy and the generalized lack of
“trust”33 towards public and societal institutions34.
dictatorship, Political practices and ideological resistance, Greek Society of Political
Science, Kastaniotis, Athens 1999, p. 83 (in Greek).
30
See, among others, G. Katrougalos, G. Lazaridis, Southern European Welfare States, Ed.
Palgrave Macmillan, London, 2003, M. Ferrera, The reform of social state in Southern
Europe, in N. Matsaganis (Ed.) Perspectives of the social state in Southern Europe, Ellinika
Grammata, Athens, 1999, pp. 33-65 (in Greek). R. Gunther, P. N. Diamandouros D.
Sotiropoulos, (Eds), Democracy and the State in the New Southern Europe Oxford, Oxford
University Press, 2006.
31
See, among others, K. Vergopoulos, The State in Peripheral Capitalism, Ed. Exantas,
Athens, 1985, p. 30 (in Greek), N. Mouzelis, Class and clientelistic politics: the case of
Greece, The Sociological Review, 1978, 26, p. 471–497, the same, Modern Greek Society:
Facets of underdevelopment, op. cit., p. 29, V. Filias, The problem of organization of political
parties in Greece, in The Political Forces in Greece, Exantas, Athens, 1977 (in Greek) p. 249.
32
See J. Voulgaris, State and civil society in Greece: A relationship to revise? Greek Review
of Political Science, 28, 2006, 5-33, N. Mouzelis, State and civil society in Greece: From the
old to new paradigm? Greek Review of Political Science, 30, 2007, 107-114 (both in Greek).
33
In the sense of Putnam. See R. D, Putnam (Ed.) Democracies in Flux: The Evolution of
Social Capital in Contemporary Society, Oxford University Press, Oxford, 2002, the same,
Making Democracy Work. Civic Traditions in Modern Italy. Princeton University Press,
Princeton, 1993, cf. A. Lyberaki and Ch.Paraskevopoulos Social Capital Measurement in
Greece, Paper for the International Conference of the Organisation for Economic Cooperation and Development (OECD), London, 25-27 September 2002.
9
Moreover, it is not “gigantic”, but irrationally organized, hydrocephalous in
some areas and underdeveloped in others, especially in the welfare sector. As we are
going to see in the next paragraph, both regarding the number of public servants and the
total public expenditure, the Greek administration is, actually, below the European
average. The distribution, however, of human and economic resources within it is
highly problematic, due to the prevailing clientelistic policies, with basic predicament
the underdevelopment of welfare structures besides the pensions and the health system.
More importantly, this theorization ignores the symbiotic character of political
and economic elites. The image of a “dirigiste”, overwhelming “soviet” state, which
suffocates a defenseless, weak but healthy entrepreneurial class, is completely
ideological and misleading. As already exposed, historically the state has just filled up
the vacuum left by the inability of the Greek bourgeois class to act as an autonomous
economic agent and not as a parasite to the public purse. Even today, business collusion
and dependence on the public budget define the rules of the economic game. The
majority of Greek capitalists maintain privileged relationships with the power, regularly
exchanging political influence with public money (e.g. mass media magnates who use
their newspapers or television channels as leverage for gaining public contracts).
For the same reasons, the Greek society was never state-corporatist35, at least not
in the sense of the authoritarian state-corporatism of neo-fascist Spain or Portugal,
where trade unions and other private associations have been organically integrated
inside the State36. The assimilation of the individual or societal institutions into an
organic entity with the public power has remained alien to the dominant ideology,
despite some efforts towards this direction by the short-lived dictatorship of Metaxas
(1936-1940). It is an acute political incrementalism and not a hierarchical “organic”
unity of private and public instances that prevails throughout the Greek history.
34
Cf. L. Tsoukalis, Beyond the Greek Paradox, in G. T. Allison and K. Nicolaidis (Eds), The
Greek Paradox: Promise vs. Performance, The MIT Press, Cambridge, Massachusetts and
London, 1997.
35
As suggests, for instance, G. Mavrogordatos, Between Pitiokamptis and Procroustis:
Professional Associations in Today’s Greece, Odysseas, Athens, 1988.
36
The Portuguese Constitution of 1933 and the Spanish “Fuero de los Espanoles” of 1945
attributed large competence of public law to the syndicates and associations and established a
corporate assembly.
10
Needless to say, this fragmented and rent-seeking character of interest mediation is also
far away of the typical European social neo-corporatist pattern37.
Last, but not least: the civil society has never been tamed in its totality and
unconditionally surrendered to the bondages of patronage. There is a long history of
social resistance and civil disobedience in Greece, politically expressed by a strong Left,
with traditional links to wider social strata. At least once in the Greek history, during the
resistance against the German occupation (1941-1944), this part of the society has
become majoritarian. The National Liberation Movement (EAM) has developed in the
liberated areas of the country genuine institutions of public representation and direct
democracy. This historical project has been abruptly terminated by the subsequent civil
war.
Even on the aftermath of this war, the effort of the state to manipulate the
organizations of the working class, by dismantling leftist trade-unions and establishing
state-funded ones, did not result to a full scale state syndicalism, but in a dual situation,
marked by the parallel existence and competition of official, state-controlled and
“dissident” militant trade unions38. This tradition explains why the radical response to
the recent crisis was not easily controlled or smothered, as it happened in other
European countries.
Summarizing: the dominant contradiction of the Greek political system has
never been one between modernizers and traditionalists. If there is a permanent,
dividing line, it is one which separates social strata having a symbiotic relationship with
the public power and those deprived of any kind of special access to it.
37
I am trying to show why the Greek social system is not corpatistic in G. Katrougalos, The
spectre of the Greek Corporatism: collective negotiations in the public sector, Revue of
Labour Relations 2005 (in Greek). Cf. G. Pagoulatos, who identifies the system as a unique
‘parentela pluralism’ (G. Pagoulatos, Greece’s New Political Economy: State, Finance and
Growth from Post-war to EMU, Palgrave Macmillan, London and New York, 2003, p. 162)
and K. Lavdas who is writing of a ‘disjointed corporatism’. (K. Lavdas, The Europeanisation
of Greece: Interest Politics and the Crises of Integration, Macmillan, London, p. 17).
38
See A. Avgoustids, The Greek trade union movement in the 1940s, Kastaniotis, Athens,
1999, p. 304, 308, K. Seferis, the Greek trade union movement, Ed. Neo Syndikalistiko
Kinima, Athens 1976 (both in Greek).
11
B- Memoranda: A neoliberal remedy, more lethal than the
disease
B-1 An ideologically biased appraisal……
"We have not made any kind of preparatory
work. Just at the last minute we have copied and pasted
isolated segments from earlier Letters of Intent to the
IMF by Turkey, Mexico or Hungary and hastily
adapted them to synthesize the Greek Memorandum.”
(…) "It's a bad compilation, a Frankenstein
Memorandum"
Anonymous interviews of PASOK’s ministers,
reported by Paul Papadopoulos, The dramatic
background of two years of the Memorandum, To Vima
16/10/201139
The previous analysis showed that the Greek political system is suffering from
an unbalanced, irrationally built, badly coordinated public administration and a
distorted relationship between the political and economic power. Moreover –but this
escapes the confines of this article- the productive basis of Greek economy has been
seriously eroded during the last three decades, above all in primary and secondary
sectors,. The huge deficits created by this situation have been temporarily
camouflaged due to the easy lending that the country enjoyed after joining the
Eurozone. A consumerism boosted through easy bank loans and a “credit card” frenzy
has contributed to a false image of prosperity and profligacy, especially for the new
middle classes.
This false prosperity could not any more be funded, when the global financial
crisis has morphed into an international debt crisis. Instead of specific, elaborated
reforms that should aim to remedy these fundamental structural deficiencies, the
recipe of the Memoranda has just repeated the same general dictates of the neoliberal
orthodoxy, the notorious Washington consensus: Horizontal reduction of all public
expenses –primarily of the social ones-, a plan for massive transfer of wealth from the
public to private sector through privatizations of public enterprises, regardless of their
39
Vima is one of newspapers that defend vehemently the memoranda. Its director has served
as porte-parole of Papadimos Governement, the coalition that has been formed in order to
implement the second bail-out (PSI) and the related austerity measures. Therefore the
credibility of these references, although anonymous, is not contested.
12
strategic nature or their financial utility for the budget and a thorough deregulation of
labour law legislation40.
The purported big size of public sector has been officially presented as the
basic cause of the crisis. Moreover, the European media (and in unofficial or semiofficial statements even IMF or EU representatives41) presented the licentiousness and
profligacy of Greek people as the real root of the problem. Both these narratives are
ideological and misleading.
As shown in Graphs 1-3, total public spending in Greece (as a percentage of
GDP) has been constantly lower than the EU average and remained so, both in the
1990’ and in the 2000s. Moreover, public employment as a percentage of labour force
is lower not only than the EU average but of the OECD average, as well. Hence the
purported “gigantism” of the Greek State is not supported by any empirical evidence
and is clearly a by-product of the neoliberal anti-state fundamentalism.
Graph 1: Source/Graph: OECD, Government at a glance, 2011,
http://www.oecd.org/dataoecd/60/3/48214177.pdf
40
See on that G. Katrougalos, The end of labour law? The counter reform of Memorandum II,
Labour Law Review, 9/2012, p. 637-646. (in Greek).
41
Cf., for instance, a statement of 25-5-2012 by the International Monetary Fund Director
Christine Lagarde, saying that she has more sympathy for poor African children than the
Greek tax-evading people.
13
Graph 2: Source/Graph: OECD, Government at a glance, 2009.
Graph 3: Source/Graph: OECD, Economic Outlook Database, Greece, Economic
Survey, 2009.
14
Graph 4: Source/Graph: OECD Economic Outlook database, OECD, Greece,
Economic Survey, 2009.
Graph 5: Personnel of public sector, 2006-2011
Line above: Total working force in public sector/ Second line: Temporary personnel
Third line: Civil servants (permanent personnel with tenure)/Last line: Non permanent personnel of local
authorities
Source-Graph: Report of ICAP and Hay Group to the Ministry of Internal Affairs and
Finance, February 2011, p. 181
As already argued, the basic problem of the Greek public sector is its limited
effectiveness, due to its skewed organisation and the irrational and uncoordinated
development of its resources. Indicatively, only 11% of the public sector’s personnel
are employed in welfare services, compared with the EU average of 15%42. Instead of
introducing measures that would redeploy personnel from overpopulated branches of
government to the much needy social services, the memoranda have imposed
42
See M. Petmezidou, . Southern Europe, in B. Greve (Ed.) International handbook of the
welfare state, Routledge, London, 2012, the same, Crisis, Social State and solidarity,
15
completely arbitrary, horizontal reductions, which have created even more acute
problems to the every-day function of public services and undermined the capability
to deliver public goods (see Graph 5).
Besides, despite the fact that due to these restrictions many public services are
functioning with skeleton crews, especially in socially sensitive sectors, such as
schools and hospitals, the Memoranda call for a further personnel reduction of over
150.000 staff in the general government till 2015. If this reduction, equal to 22
percent of the already mitigated public employment, takes place, the total public wage
will fall to about 9 percent of GDP, even less than the lowest spending OECD
countries (see Graph 6).
Graph 6 Source/Graph: IMF: Fifth Review Under the Stand-By
Arrangement with Greece, IMF Country Report No. 11/351, December 2011, p. 16
With regard to the cutbacks of welfare services, the Memoranda are not just
repeating the usual neoliberal mantra, but they are overtly manipulating data, to the
extend of a blatant fraud: They claim, for instance, that “Greece’s level of social
spending (as a share of GDP) remains well above the euro area average”43, calling
thus for further reductions of the order of 1½ percent of GDP to be taken over 2013–
14. This is a colossal inaccuracy, to use a euphemism. In 2008 Greek social
Newsletter
of
Hellenic
Social
Policy
Association,
2011,
http://www.eekp.gr/media/files/en_deltio/newsletter_10-11.pdf.
43
Letter of Intent, Memorandum of Economic and Financial Policies and Technical
Memorandum of Understanding, March 9, 2012, p. 8
16
expenditure was only 81% of the EU-15 average and since then, due to the crisis and
the austerity measures, has plummeted44.
Equally ideological and untrue are the claims that Greek citizens have a moral
share of responsibility for the crisis, due to their profligacy and licentiousness: the
frivolous grasshoppers of the South wanting to live at the expense of the Northern,
protestant ants. Not only is the private debt of the Greek households considerably
smaller than the European average45, but, as shown in Graph 7, the average working
hours are higher in Greece than in any other European country.
More importantly, the social salary (social transfers minus the corresponding
paid taxes) that the Greek working class has received, in the period 1995-200946, is
constantly negative. Tax income represents in Greece only 21,2% of GDP, compared
to 27,2% of the European average47 and, due to huge tax evasion of wealthier strata,
its bulk is paid by the salaried and pensioners. That means, simply, that the working
class is subventionning the state, not the opposite way around.
44
According to ESSPROS system of social protection statistics, cf. M. Petmesidou, .
Southern Europe, ibidem. For 2009 the respective figures have been as follows: EU-27
average 28,4%, EU-15 29,1%, Greece 27,3% (Social Protection Benefits as percentage of
GDP).
45
The private debt of Greece is estimated at about 123,1% of GDP, compared to 208,3% of
Germany, 198,3% of Italy, 240,5% of France, 238,4% of Portugal and 386,0% of UK. Data
based on a study of McKinsey Global Institute, presented in V. Viliardos, Development or
Bankruptcy, December 2010,
www.sofokleous10.gr/portal2/toprotothema/toprotothema/2010-12-27-23-13-432010122731890.
46
Th. Maniatis and H. Gousiou, Social expenditure, salaried tax and fiscal crisis in Southern
Europe, in Bank of Greece, Social policy and social cohesion in Greece, Athens, 2012, p. 149.
47
Ibidem. Cf. Ch. Papatheodorou, S. Sakellaropoulos and P. Yeros, Greece at a Crossroads:
Crisis and Radicalization in the Southern European Semi-periphery
http://mrzine.monthlyreview.org/2012/psy300512.html.
17
Graph 7 Average weekly hours of work in main job
Source-Graphe: Cartography: Eurostat — GISCO, Euro Geographics Association,
06/2009. Darker colour means more working hours.
18
A-2 … leading to the implementation of unconstitutional,
socially unfair and economically inefficient measures
(…A)lmost none of the money is going to the
Greek government to pay for vital public services.
Instead, it is flowing directly back into the troika’s
pockets. (…) On its face, the situation seems absurd.
The European authorities are effectively lending
Greece money so Greece can repay the money it
borrowed from them.
L. Alderman, J. Ewing, Most Aid to Athens
Circles Back to Europe, New York Times, May 30,
2012
The Greek crisis is part of a wider crisis of the European capitalism, which has
been demonstrated under different facets in various countries, reflecting specific
national structural weaknesses: as banking overexposure in Ireland, as real-estate
bubble in Spain, as excessive public debt in Greece. This crisis reflects the gradual
abandonment of the European social model by the European Union and the transition
towards a neoliberal system of social regulation.
The “European social state”48 was the institutional result of the historical
compromise of the gold post-War decades: it guaranteed the capitalist economic
relations but used also, in addition, ‘political power to supersede, supplement or
modify operations of the economic system in order to achieve results, which the
economic system would not achieve on its own (…) guided by other values than those
determined by open market forces’.49 This ‘market-correcting’ function50 impregnated
the legal culture, in the sense that, in the words of R. Aron, ‘the concept of State and
law is not any more merely negative, but also positive, so that the law is considered
See G. Katrougalos, “European ‘Social States’ and the USA: An Ocean Apart?” European
Constitutional Law Review, 2008, 4: 225–250.
49
T.H. Marshall, Social Policy, Routledge, London, 1975, p. 15. Marshall was referring there to social
policy in general, but his description defines very precisely also the basic functions of the social state
principle.
50
Cf. S. Deakin and J. Browne in T. Hervey and J. Kenner, Economic and Social Rights under the EU
Charter of Fundamental Rights-A legal perspective, Hart Publishing, Oxford-Portland Oregon, 2003, p.
27 at p. 28.
48
19
to be not only the juridical foundation but also the source of the material conditions
for its fulfilment.
51
This specific Polity, very different than the Anglo Saxon liberal state, has been
undermined by the process of European Unification even before the recent crisis52.
This is due to the constitutional asymmetry between the national “Social States” and
the dominant-in the EU ‘mercantile citizenship’53, still defined not by a link to a
demos but to the market.54 Despite the inclusion of social rights in the Charter of
Fundamental Rights, the European Court failed to introduce a new scale of social
values into Community law, demonstrating a pure neoliberal ‘market mentality’55.
The crisis has exacerbated these already present trends. Following Germany's
national strategy of the Agenda 2010 to cut domestic wages in order to increase
competitiveness - a policy of "beggar thyself and thy neighbour"56- the EU insisted on
austerity policies aiming to reduce deficits, regardless of the social cost. These
austerity policies contrast sharply with the more expansionists, neo-Keynesian ones
followed by the Fed and the USA.
In this framework, the Memoranda could be seen as just one more episode of
the prevailing “Sado-Monetarism”57 of the EU economic orthodoxy, or as a part of the
more general neoliberal Washington Consensus, imposed by the IMF to various
countries of the Third World. However, never before in the First World a country has
been called to adjust and converge so abruptly downward to "competitive levels,"
closer to Asian or Latin American wage standards.
51
R. Aron, Etudes Politiques, Gallimard, Paris, 1972, p. 242. Cf. George Katrougalos, The European
Social Model on Normative Terms: Problems of Identity and Perspectives, European Review of Public
Law 2005, Vol.17-No 3.
52
See G. Katrougalos, The dim perspectives of the European social citizenship, NYU Jean
Monnet Paper 7 2007.
53
F. Scharpf, ‘The European Social Model: Coping with the Challenges of Diversity’, vol.40, n°4
Journal of Common Market Studies, 2002, p. 645.
54
M.P. Maduro, ‘Europe’s Social Self: ‘The sickness unto death’’ in J. Shaw (ed.), Social Law and
Policy in an Evolving European Union, Hart Publishing, Oxford, Portland, 2000, p. 325.
55
M. Aziz, The impact of European Rights on national legal cultures, Hart Publishing, Oxford 2004, cf.
G. Katrougalos, The European Court of Justice and the EU’s economic constitution, in Charistirion to
L. Theoharopoulos and D. Kontogiorga-Theoharopoulos, 2010, p. 343-376, N. Aliprantis, G.
Katrougalos, The Laval and Viking Cases, Bulletin of Comparative Labrour Relations 69, 2009, p.7382.
56
C. Lapavitsas et al.,
Eurozone Crisis: Beggar Thyself and Thy Neighbour, RMF
Occasional Report, 2010, www.researchonmoneyandfinance.org.
57
M. Perelman, Sado-Monetarism The Role of the Federal Reserve System in Keeping
Wages Low, Monthly Review Volume 63, Issue 11 2012.
20
This shift cannot be legally effected within the existing constitutional
boundaries. The Memoranda imply an assignment to the “troika” of the responsibility
for defining and implementing economic, financial and social policies contrary to the
fundamental principle of Social State. This de facto transfer of the economic
sovereignty does not mean only that the Greek government and parliament are under a
direct political control of their debtors, but violates gravely the constitutional order58.
Αs described in a Joint Statement of five Professors of Constitutional Law (of
which I am one of the signatories59), the memoranda, their executive legislation and
the loan treaties constitute a deviation from constitutional, European and international
legality both at procedural and substantive grounds: Neither of the two loan treaties
has been ratified by the parliament, contrary to article 36 para 2 of the Constitution.
Moreover, the guarantees of respect and protection of national sovereignty within
constitutional and international law have also been violated, by the inclusion in these
treaties of a waiver of immunity on reasons of national sovereignty60.
Finally –and more importantly- the austerity measures violate a number of
structural constitutional principles (such as the principles of equality of public burden
and of social state of law -article 4 para 5 and article 25 para. 1 of Greek Constitution)
and fundamental social rights (articles 22 and 23 of the Constitution). They also
violate fundamental guarantees of the EU Charter of fundamental rights and
International Labour Law.
Although the legal dimension is important, it should not hide the political
essence of the Memoranda, which is to serve a double objective: The first is the one
overtly admitted, to help the debtors take back their money. The second is to
58
Cf. G. Katrougalos, G. Pavlidis, La Constitution nationale et les défenses juridiques du pays
surendetté face à une situation de détresse financière : leçons tirées de la crise grecque,
European Review of Public Law, under publication, G. Katrougalos, The economic
Constitution and the para-constitution of the Memoranda, European Polity (Ευρωπαίων
Πολιτεία), 2/2010, 295-316 (in Greek), K. C. Chryssogonos, G. D. Pavlidis, “The Greek
Debt Crisis: Legal Aspects of the Support Mechanism for the Greek Economy by Eurozone
Member States and the International Monetary Fund” 2010.
59
Joint Statement by George Kasimatis, Emeritus Professor at the University of Athens
Andreas Dimitropoylos, Professor at the University of Athens, George Katrougalos, Professor
at the University of Thrace, Ilia Nikolopoulos, Professor at Panteion University, Costas
Chryssogonos, Professor at the University of Thessaloniki, Athens, February 12, 2012.
60
It is generally accepted that the state-borrower may waive its immunity from execution with
an express act (see, for instance, A. Reinisch, European Court Practice Concerning State
Immunity from Enforcement Measures, European Journal of International Law, vol.17, 2006
p. 816 ff.). However, the explicit abandonment of national sovereignty by an official
statement is unprecedented.
21
implement a vast programme of social engineering with two prongs: a) to shrink and
remodel the state according to neo-liberal postulates and b) to reconstruct the Greek
society by deregulation of the labour and other protective legislation.
The project has been partially successful at both accounts, but in the interest of
the debtors, not of Greece:
the first bailout of 130 billion Euros (May 2010) helped
the private lenders (mostly German and French Banks) to get rid of the Greek bonds
at their disposal. So, it constituted a huge transfer of money from the public and
official sector (European States, IMF and ECB) to private that saved the foreign
banks, but not the Greek economy: one year after, the debt has ballooned from 120%
to 160% of GDP61! This was due to the shrinking of the economy, as a direct result of
austerity measures, and to the fact that the interest of the 2010 loan was much higher
than the previous loans repaid by it. The second bailout of 2012 concerned mainly the
bonds kept by Greek insurance funds and Greek banks (which, however, have been
given back most of their money through a generous recapitalization, without
nationalization.)
Still, not only the remaining of the debt is today much higher than at the
beginning of the programme but also, even if everything goes according to the IMF
projections (which, of course, till now have been proven constantly and repetitiously
abysmally wrong) in 2015 will be at 117% of GDP, slightly less than the 120% of
2010. It is absolutely impossible to pay back a debt of this magnitude.
The impact of the measures at the society was equally disruptive. Greece is
still a country of self-employed (35% of the active population, compared to 11% of
European average) and small enterprises (they control 55% of the retail commerce,
whereas in Europe the big bulk of it is ensured by supermarkets and big retailers).
These are especially hit by the shrinking of the economy and the deregulation
measures.
However, the most destructive impact of Memoranda was at the level of
labour law. After all, the deregulation of the latter is one of the structural reforms that
IMF intends to impose to all countries it “helps”. The reform (a genuine institutional
counter-revolution) comprised, among others, the unilateral, by statute, annulation or
premature termination of all collective agreements. Even the national collective
agreement has been unilaterally modified, so as to reduce the minimum legal salary.
61
See IMF: Fourth Review Under the Stand-By Arrangement with Greece, 2011.
22
Obviously, as Amartya Sen recently remarked, “such indiscriminate cutting slashes
(constitute) a counterproductive strategy, given huge unemployment and idle
productive enterprises that have been decimated by the lack of market demand”62.
Moreover, the abrogation of the clause permitting to trade unions to ask for an
arbitration award, if the employers were refusing to negotiate wages, means
practically the end of all collective agreements in the immediate future.
Even with regard to the reform of public sector the Memoranda failed to be
the “handmaiden of change”, as hoped by its proponents63. Besides the horizontal
reduction of personnel, which, as we have seen, deteriorated the structural problems
of Greek administration accentuating the gaps of its skewed organization, the only
public agencies that have been terminated by the new legislation were the mostly
needed: For instance, the Organization of Social Housing and the Public Institute of
Geology and Mineral Exploration (IGME), vital for future investments and the
exploitation of physical resources.
The advocates of the Memoranda are presenting them as the remedy to the
institutional vicissitudes of the country. Truth is that none of these has been touched
by the (counter)reform. The gaps in the welfare protection remain, the Greek
administration is always irrationally organized and badly coordinated. The basic
failure of these policies, however, lays to their rejection by the vast majority of the
people, as shown by the elections and the huge demonstrations of the last two years.
The Greek guinea pig has escaped and that means that the social experiment of shock
and awe has failed. The representatives of the IMF have understood that and they
have slightly modified their attitude towards the country64.
However, this is a battle still raging. Its outcome will define not only the
institutional outlook of Greece in the years to come, but the European integration
itself. Greece has become the mirror of the future of Europe.
62
By Amartya Sen, The Crisis of European Democracy, NY Times, May 22, 2012.
A. Lyberaki and P. Tinios, The Crisis as Handmaiden of Social Change: settling old scores
or adjusting to the 21st century?, SEESOX Conference, St. Anthony’s College, Oxford, 2011.
64
See, for instance, the remarks of IMF’s Deputy Managing Director Nemat Shafik,
Monetary Fund Reviving Growth in Europe Brussels Economic Forum Brussels, May 31,
2012, http://www.imf.org/external/np/speeches/2012/053112.htm: “Overall, fiscal adjustment
plans for this year are broadly appropriate in Europe. In a few euro area countries, however,
the nominal fiscal targets for 2013 agreed before the current slowdown in growth may prove
too pro-cyclical and may need to be adjusted or at least expressed in structural terms.”
63