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Saturday, December 1, 2018

A Manifesto For A New Greek Political Governance

A guest commentary by Konstantinos (Dean) Plassaras.

As a Greek American who followed closely the painful re-arrangements of Greek life post 2008 and had to endure unusual humiliations in the process stemming from revelations about the mismanagement of the country of his birth and the behavioral patterns of its people, I wish to offer a plan of political action for the upcoming 2019 Greek Parliamentary election which is expected sometime during the fall of 2019.

It is often repeated in the Greek public dialogue that the best political outcome would be a government of national unity in order to implement a series of painful compromises and reforms promised to the European Union, an institution which also faces its own turmoil and existential issues of considerable depth. In other words, whether one looks at Greece from an internal/domestic point of view or external/international prism, there are some rough seas ahead and certain practical decisions/actions need to be undertaken in completing safely a challenging voyage.

As every mariner will tell you, when he/she sees the storm clouds gathering, the first reaction is neither to change the sea captain of the vessel nor to wish having a different type vessel to survive the upcoming waves. Rather one readies the ship as best as possible, fortifies crew unity and focuses on the task at hand. It is the sense of impending danger that galvanizes everyone on board into a cohesive response on the basis of the same shared fate.

Unfortunately, modern Greeks in the face of danger and/or  external challenges tend to divide rather than unite. To further exasperate this enduring Greek political trait, the existing Greek political class tends to be of rather low quality compared to US or core European standards which leads to the usual accusation that Greek politicians are not so much concerned about improving the life of their fellow citizens but rather more concerned to secure a position of privilege at public expense. In addition to the flaws inherent to all political parties everywhere around the world, Greek politicians tend to be arrogant, opinionated and rather unfocused to the hard task of good governance.

There is an old saying that if someone gives you lemons, you make lemonade. So given the shortcomings and inherent flaws of the Greek political class what is one to do? Do the best with the material you have, might be a good answer rather than constantly trying to reinvent the wheel.

In early 2015, the Greek voters elected a new party, not so much by choice but rather due to lack of credible alternatives. The two traditional systemic parties had experienced a spectacular failure and having tried to achieve European approval in co-governance came up short in the process. A new political coalition was created, sort of a fusion between traditional Left (Syriza) and traditional Right (ANEL, aka Anexartitoi Ellines, translated in English to Independent Greeks). This new government was not an optimal choice on the grounds of professional skill in governance or experience yet it tried its best and scored a few points. This governing coalition, which its opponents refer to in a pejorative way as SyrizAnel (a Greek adaptation of the Merkozy phenomenon of European indecision and incompetence) is, however, heavily tilted towards Syriza (90% Syriza, 10% ANEL). So, even though it achieved something unheard of in modern Greek politics (a unity government of both the Left and the Right), it is seriously lopsided towards the Left and as such not truly a representative party of all Greeks.

Before I deliver my observation, which by now some of you suspect what it might be, let me reveal my personal bias which is that I am tone deaf towards ideology of any kind and I am rather a seeker/admirer of talent in others. I do not wish to engage in a discussion of whether the Right or Left promotes the correct approach because to be quite frank, I have heard the arguments of both sides and they are both lacking. Therefore, I am more interested in picking talent from both sides and allowing them the space to work together with an extreme tolerance towards their ideological differences which I find worthless. The idea here is to pick the right team for Greece and not a political dogma to live by.

Hence, my proposal to the Greeks: keep what you got but take a page out of the book of the ancients and perfect it. To do so, the conservative representation in the future coalition government needs to increase, let’s say to a 50/50 ratio. In order to achieve such a ratio, conservative Greeks who are considering voting for the failed New Democracy party need to instead direct their vote towards increasing the ANEL representation for the following reasons:

* The two governing parties, despite profound ideological differences, know by now how to work together which is good as a foundation towards national unity.
* Tsipras has earned some European appreciation and his governance (so to speak) is a known commodity by now in European circles. Europe can work with someone they know and indeed are working with the Tsipras government on a variety of fronts.
* There are certain ministers who have been exceptional in discharging their duties: (a) Euclid Tsakalotos, a product of Oxford who truly speaks the European language and relates flawlessly to his counterparts outside Greece; (b) Elena Kountoura, the Tourism minister who has experienced successive years of breaking records in both the number of tourists and state revenues. Because success begets success, I would like these two ministers to stay because they have a lot more to offer and by now they are fluent in the performance of their duties.
* Kammenos, the head of ANEL, even though a controversial figure and a dedicated eurosceptic, nonetheless he manages the highly sensitive defense department which is a different world of its own; an amalgam of egos, excessive national pride and lofty expectations. It takes a certain person (even some false bravado) to do this job well and Syriza, which is a dedicated anti-militarism party, could not perform this function very well; the risk here being a serious division or schism on a national basis compounded by ever-present religious matters.
* The existing coalition has gained experience in governance and it would be best to build on such experience for optimal outcomes.

What of the New Democracy and Pasok political parties, you might ask? Pasok was clearly annihilated and what survives today is its more radical part reconstituted under Syriza. The mainstream ex-Pasok centrists remaining faithful today are not convincing at all. Mitsotakis is a talented guy and a future leader of Greece but he needs to spend another four years in the benches getting rid of New Democracy’s old wood which is considerable, indeed. He is a reformer but his party is the most sclerotic anti-reformist party one could possibly imagine. So, New Democracy needs to reconstitute itself in more credible ways which currently are lacking. What is also lacking in any attempt to re-introduce this old party so soon back to power is the proverbial reasoning that "trying the same old thing expecting a new outcome is a form of madness”. To see a party of failure so soon back from exile would be a clear sign that nothing has changed in Greece or ever will change. A cynical outcome indeed. I also fear the hatred and division sown by ND and Syriza which might plunge Greece into a protracted period of political stagnation. So the idea here is to let the conservative representation grow without the agency of the usual ND broker.

Having said all this, I am fully aware that the Greeks will not follow my proposal. The existing voting habits would seriously prevent such. Therefore, why am I giving this advice which has such low likelihood of acceptance? Well, I was born a Greek and the burden of care for my own would only leave me with my last breath. I also wish future generations that might read these ideas to know that there were alternatives proposed towards a better national equilibrium.

Finally I wish to thank all who participate in this blog for the rigorous debate platform provided. Even though at times I pretended to be indifferent to the ideas presented here, the truth is that what was said followed me for a long time and urged me to think and reformulate my approach. Is free thinking better than following the safety of the majority? I guess this is something we will all find out or maybe future historians will eventually tell us if it had a good ending.

Dean Plassaras is a Greek-American living in the Western United States.

14 comments:

  1. I am a bit hesitant concerning what on first sight looks like a "Third Way" option. But I understand from a national perspective it may make sense. Europe no doubt complicates matters.

    You gotta wipe away my "genetic" suspicion that unity may be mostly desired if real or assumed/created enemies are out there. Wrong?

    Are they economic enemies only?

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  2. Excellent! Words that in my view could apply to many other countries.

    JdR, Canada

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  3. Let's see how Donald Trump will manage to balance the Jerusalem and Riyadh forces as ME's bastions against Iran. Where should Canada side?

    Considering the gathering storm? Yes, but I doubt it will be a cakewalk, not easy to turn back the clock on neoliberal politics post 1989/91. A brave new world of national interests only once again preparing for the gathering storm along the latest axis of evil? Iran (the world's top sponsor of terrorism?), Syria, Russia and China? Starting with dropping all white lies about the "liberal world order"? But yes, no doubt the earlier left's globalization politics critique have made it fiercefully to the right by now.

    But what do I know about politics. Other then being probably misguided by our own interior political struggle. In Kosovo this news item tells us two candidates struggle for the superior US attention:
    http://www.balkaninsight.com/en/article/kosovo-s-rival-leaders-compete-for-us-support-12-03-2018

    Meaning? I am hesitant about populists. But yes, the "old parties" are under serious stress in "old Europe" too.

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  4. Klaus, a look at Trump's economic program, quite interesting reference to GM in our larger context.

    https://turcopolier.typepad.com/sic_semper_tyrannis
    /2018/12/-there-are-three-kinds-of-lies-lies-damned-lies-and-statistics-by-.html

    The reason their sales dramatically fell because GM was approving anybody who could breath for credit during the years of 2012 - 2017 at their in house finance unit. Guess what? A lot of those buyers have defaulted on their auto loan. The average FICO score was around 530 if that tells you anything. People with poor credit talk and if you wanted a car you went to GM and bought a sedan from 2012 - 2017. Once the subprime auto loan default rate shot up inevitably the loans dried up. In 2014 GM sold 273,000 Chevrolet Cruze and this year they will be lucky to sell 125,000. Wallstreet performance at its best.

    I would appreciate your expertise on credit more generally, or the use of credit cards in the US vs Europe. We do have personal bankruptcy of course over here more recently vs let's say business bankruptcy. I found that a "legal liberal success" at the time. ... Although, maybe I shouldn't have, considering I never took a credit or over-used my credit card beyond my means.

    Thus: If I may go back to Yanis' argument, indirectly. Or my limited grasp of it, maybe? Is there any solid evidence that German banks compared to others in "old Europe", lend too much to, "the South" or the periphery? Greece, Ireland, Italy, Spain? ?Iceland? Fully understanding the risk? And are there private vs state debts numbers in Greece over the decades? Ok. I understand. Maybe? What tricks does my country use?* Any idea? ... But statistics on private debts? I ask, since apparently members of old Europe were allowed partly on Yanis blog then. Benelux perspective.

    * Ok, if I may: A question I asked myself at the time from within my close to basic knowledge of finances or economics and/or national economics. Could Germany have handled or as "leader" have handled a Greek bankruptcy within the then existing framework? But couldn't. Since it would have been unable to handle both its own inner problems as a result of 2008 and the Greek debts held by German banks significant predatory behavior? I ask, since a German prof in one of the many talking circles I watched a Greek state bankruptcy within the existing framework, I seem to remember, was suggested an easy solution to matters. By a prof, I am sure not on economics or national economics though. Political science, maybe?

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  5. Klaus, a sunshine story off the agenda, if I may?

    I assume you have followed Sunlight Systems after their May 2018 fire. If you have not you will be pleased to know that they handled it in an exemplary way. They were out with a press release the day after the fire, they have continuously kept customers, shareholders, employees and regulatory authorities informed. They had been prudent and taken out not only material damage cover, but also loss of earnings.
    They are now up and running with even larger capacity, they have recently crowned the success with an EIB loan of EUR 12.5 million for R&D and further automation of the production. It is a case of professional handling of a crises (or preventing it).

    Lennard.

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  6. https://www.bankofgreece.gr/Pages/en/Bank/News/PressReleases/DispItem.aspx?Item_ID=6279&List_ID=1af869f3-57fb-4de6-b9ae-bdfd83c66c95&Filter_by=DT

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    1. The best proof that the structure of the Greek economy hasn't changed all that much despite all the 'reforms' is the direct correlation between increased purchasing power and increased imports. End result: current account deficit. Same of story.

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    2. I think the increased Greek exports are primarily attributed to the increased price of oil and gas imports. Greece is more than 50% dependent on oil imports for electricity generation whereas the EU average is closer to 30%. Greece eventually will shrink such oil imports but it can't happen tomorrow; it will take some time. It's happening though.
      Dean

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    3. The following export product groups represent the highest dollar value in Greek global shipments during 2017. Also shown is the percentage share each export category represents in terms of overall exports from Greece.
      Mineral fuels including oil: US$10.1 billion (31% of total exports)
      Aluminum: $1.8 billion (5.6%)
      Machinery including computers: $1.5 billion (4.6%)
      Pharmaceuticals: $1.3 billion (4.1%)
      Plastics, plastic articles: $1.3 billion (3.9%)
      Electrical machinery, equipment: $1.2 billion (3.6%)
      Vegetable/fruit/nut preparations: $1.1 billion (3.4%)
      Fruits, nuts: $987.4 million (3%)
      Fish: $753.4 million (2.3%)
      Dairy, eggs, honey: $703.7 million (2.2%)
      Greece’s top 10 exports accounted for 63.8% of the overall value of its global shipments.

      And by far the biggest import category are fuels, which explains the increase in imports as primarily fuel based: http://www.worldsrichestcountries.com/top_greece_imports.html

      Dean

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    4. I am inserting the link for the source of your information because that website really presents some interesting information:

      http://www.worldstopexports.com/greeces-top-10-exports/

      Of particular relevance is the tab "opportunities" because it shows those product categories where Greece has substantial deficits, i. e. where Greece imports more than it exports.

      I can understand that Greece would have a huge deficit in the category of fuels. I have a bit of trouble understanding why Greece would have such a huge deficit with ships and boats.

      But it's the categories of machinery, pharmaceuticals, etc. where Greece should have opportunities.

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    5. Agreed. Of course these are 2017 numbers and in 2018 we have both higher import and export numbers.

      As far as ships are concerned, I remember in early 2017 that there have been deliveries of ships built in Korea as one off. The trade with Korea in 2018 looks entirely different. The part I am not clear about is this: when a foreign built ship gets delivered, Greece is charged a trade deficit but then the ship owner changes the flag and is now let's say a Liberian ship. So, I am not sure how Greece recoups the deficit created by such an import since the ship during its useful life operates under a non-Greek flag.


      Yesterday, we had a delivery for the first time of Texas LNG (out of Corpus Christi) to Revithousa (a small islet off the coast of Athens) w/ a storage capacity of natural gas for the Greek distribution network. So, the ship which delivered it is a new one under the ownership of Tsakos (a Greek shipowner). So we may have another case of an expensive (specialized) new ship charged against the Greek trade account but operating under a Liberian flag (which happens to be the case).


      Greece has two peculiarities in its trade deficit. One, we just spoke about has to do with the infrequent delivery of foreign built ships. The other is the petroleum products category which happens to be the largest export category for Greece. To be able to export petroleum products of higher value, you need to import crude petroleum first. And this is where Greece gets hit with a double whammy. Not only it has to buy at generally fluctuating high prices petroleum imports for its own energy needs but also let's say a double amount for its export business. And sometimes you have to buy the raw petroleum product in one year and sell the refined petroleum products the next year to book a profit. In other words, we have a distortion here which is very particular to Greece and other countries which have to import fuel and then re-export it in different forms. And there is also a seasonal factor. The fuels that Greece re-exports are in higher demand during the tourist season.


      Bottom line: When looking at Greek trade statistics it's not easy to know at first glance whether trade deficits are due to bad Greek spending habits(over consumption) or distortions of arbitrage used by very few Greek companies with a vey large footprint in the Greek economy due to the nature of their particular businesses which are energy-hungry and price sensitive.

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    6. There is a reason why the Bank of Greece always uses the sub-category "exports/imports or trade balance 'excluding oil and shipping'". Obviously, oil and shipping distort the picture.

      For the period Jan-Oct, the trade deficit "excluding oil and shipping" was 13,4 BEUR in 2017 and increased to 14,5 BEUR in 2018, a 9% increase which is quite a bit. Imports actually increased by 10% but exports increased by even 12% (albeit on a much smaller base).

      Regarding the accounting for the ships. If a ship is purchased by a Greek resident (private or corporate) and paid for out of Greece, it is an import in the Balance of Payments. If it is purchased and paid for by, say, the UK subsidiary of a Greek company and then sent to Greece for use there, it is either a foreign investment or a loan in kind, not an import.

      If the imported ship remains owned by a Greek resident, only with a Panamanian flag, there is no re-export. If a Panamanian flag means that ownership of the ship is transferred to Panama, then it is an export. I don't know why someone would first import a ship to Greece only to export it again to Panama. My guess is that the ships which are truly imported to Greece stay in Greece for use there.

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  7. Merry Christmas, Klaus, to you, your family, friends and guests here.

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    1. Thank you and the same to you (and all the guests here)!

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