Tuesday, February 3, 2015

FM Varoufakis to EU: "Help Us Reform Our Country!" And the EU's Response Should Be?

Finance Minister Yanis Varoufakis is quoted in the Ekathimerini as follows: "I’ll say, 'Help us to reform our country and give us some fiscal space to do this, otherwise we shall continue to suffocate and become a deformed rather than a reformed Greece'." The proper EU answer to this request should be as follows:

"In October 2011, the EU Task Force for Greece (TFGR) was formed with the mission statement that it is 'a resource at the disposal of the Greek authorities as they seek to build a modern and prosperous Greece: a Greece characterised by economic opportunity and social equity, and served by an efficient administration with a strong public service ethos'".

Put differently, the TFGR is like a platform which organizes the best resources of all EU countries to help Greece in supporting growth, employment and competitiveness, in enabling growth through reform of Greek public administration and in maintaining progress towards fiscal consolidation. Who has the best educational system? Finland? Ok, get them down here ASAP! Who has the best public service? France? Ok, get them down here ASAP! Who has the best social re-destribution system? Austria? Ok, get them down here ASAP!

For over 3 years now, I have been lamenting in this blog that Greece did not really take advantage of the TFGR. Here is one of my major appeals. Perhaps the new Greek government will wise up to the fact that they have a tremendous resource at their disposal. A resource where other developing economies might say "We should be so lucky as to have such a Task Force!"


  1. Ok, most probably you are right. We probably wasted another good tool. But I am supposed to be one of the more enlightened citizens of Greece. To be honest all I have heard is the Task Force says this and suggests that. The media who was suppose to be supporting something suggested by the eu, painted the TFGR, as permenant Troika in Greece. Not as group of people trying to reform help Greece.

    Just so I have an idea, I went onto there site for the first time and they themslves have nice mission statement but there is no practicality presented as to what they are doing and how they seek or plan to help the average person like myself or moreso the system.

    I have heard many times the German president of this organization make some nice constructive critism but i never heard of any direct projects to seek improvements in specific categories.

    As a business manager I find that the specific organization as such, does not present any project goals or project successes. Sometimes I see the problems of Greece on a personal mangerial level and I state as a politican I would tackle small problems first and work my way up to bigger problems. Where is the TFGR's organization of projects? What have they done? To my knowledge nothing. I am unaware of if they have helped change the few things I have seen changed in the public sector but they are not honored for their role. So how do I know as a greek citizen, if this is a useful tool or simply a local troika overseeing us, especially how the media presents them?

    Subject change:
    Mr. Kastner, as a foreign filo hellene, have you ever considered coming to provide your direct assistance locally aside from running this blog?


    1. The TFGR operated from the start under one great handicap: it could not come across as a foreign occupation force. A couple of years ago I had some contacts with the TFGR. In fact, the report which I linked I had written for the TFGR at Y/E 2012. I could clearly sense how frustrated they were. On one hand, they knew what needed to be done. On the other hand, the only way to get it done was when a Greek commissioned them to do it. BTW, I thought having a German head the TFGR was not one of the smartest ideas of the EU.

      The only way that the TFGR can operate successfully is if and when the Greeks make it "their" Task Force. It must be clear that it is Greece who calls the shots and the TFGR who helps when asked. And if the Greek side thinks they can get better and cheaper consultants elsewhere, they should do that.

  2. They do need the TFGR, and judging from the last days of action from Varoufakis he is a man who can walk on and say OK I did not win that one, but I will live to fight another battle. There will likely be some of the new ministers who are bright; some of them may be bright enough to know that they are inexperienced in their job and in how to deal with the civil servants of their ministry. If these civil servants look at the consistency of the government's behavior, some of them will be afraid, and angry.They will then do what they do best, nothing, and with great fuss. They are perfectly able to paralyze all activity. They know all the rules in the book, hell they wrote the rules. Yes, Minister????
    In comes the TFGR, they have been on the ground for a long time, they have implemented a lot of the new systems, they know the ropes, they may even know what civil servants they should be weary of. Can you get it any better?
    I still don't like the FinMin's arrogance and narcissism, but if that is the price for realistic, intelligent, constructive cooperation then, I could easily pay that price, let's hope the European politicians can as well.

  3. Klaus: this idea of "best practice" implicit in your comments is now totally discredited. It was common government propaganda about 15 years ago -- the idea that there is one really good way to educate, or manage the labour market, or improve economic progress...

    The fact is that there are identifiable bad practices.

    The fact is that there are many good practices.

    The fact is that every policy has a structural context. You cannot, therefore, simply import policies. The Finns have no idea of anything other than Finland.

    The solution is that you need world class experts to bring their expertise to any problematic case, and with local experts and politicians, discuss possible solutions. This does not happen in any EU country, but it sometimes happens in less developed countries.

    So, if the TFGR was composed of world class experts in major policy areas, who could work with the Greek state, then I would agree with you. I am quite sure it consists of bureaucrats and others who have made their careers by doing nothing, other than getting regular salary increases.

    On these grounds, I disagree 100%. And by the way, I am the author or co-author of several reports for the UN and EU that do just as I have described. But no EU government will ever accept external advice: the Germans in particular, but also the UK, France and Sweden, are very stubborn and refuse to listen to anyone or anything that doesn't fit their political dogma.

  4. Although I highly value the financial analyses of the author, regarding psychological aspects I have a more realistic attitude:

    The Greek population did never before see it that way, and will not change that attitude in foreseeable future.

    In Switzerland the same kind of deeply rooted behavior exists in the isolated regions in the alps, maybe the topography has influenced the genes ;)


  5. @Guest.
    If you find it a general principle that Finns can only know about Finland, then you should stop advising other countries and institutions.
    I do not know the qualifications of TFGR, I have read Horst Reichenbach's CV. Yes, he is a bureaucrat, that, is in fact a good chance to learn how to build institutions. I do not know if he is a good one, but he has access and funding to find the best. I personally would prefer to have my table made by a carpenter, not a rocket scientist.

    1. @Lennard. No, you failed to understand what I wrote. When I and others with some experience of research and policy advice work, we do not work as national experts when doing international comparative work. There is a scientific school of research for comparative policy and this has to be allied with expertise in specific areas and some specific countries.

      In such work, one brings in experts on specific countries and uses their expertise. But as I explained, every policy has a national context, and the Finn will not be able to understand much if anything about Greece.

      This is the mistake that the Troika and Germany make repeatedly: that they do no understand what is going on in other countries and interpret everything as a failed version of Germany.

      This arrogance of analysis was common in the development economics literature of the 1970s and has now been removed from the scientific methodology. Greece is not a less developed version of Germany: it is completely different.

      IN this light, and given that many international agencies tend not to make the same mistakes as the Troika (the IMF and World Bank excepted: their position on this is highly ambiguous, owing to a neoclassical economics obsession), I did not expect the Troika to produce the very worst recommendations for the improvement of the Greek economy.

      In fact, their policy prescriptions are for the most part ludicrous, and are clearly derived from simplistic imposition of neoclassical ideas on a complex country. Those impositions have had a disastrous impact on the Greek people, and resulted in even more distortions of certain sectors, which apparently the Troika consider to be progress.

      I am sorry to tell you that I consider what the Germans and Troika have imposed on Greece to be based on ignorance and arrogance.Greece does not need any more bureaucrats -- whatever their origin. It needs real skills, of all sorts, and a political will to use them.

  6. @ Guest
    You are quite right, I failed to understand much of what you wrote, and I still do. Why do you think TFGR can not supply "real skills of all sorts"?

    1. I may be wrong, but I have a deep-rooted suspicion about the capacity of any bureaucrat to innovate. The same for the majority of academics, too. Greece is historically something of a basket-case, and needs really creative solutions to idiosyncratic problems.

      Most of the EU, and Germany is possible the most culpable, is caught up in a rigid way of thinking, about "correct" policies, and the the "obvious" reasons that Greece has economic problems. This commonsense bureaucratic approach will not work, for the reasons I posted above. Greece needs innovation and access to capital for such innovation -- and that applies to the public sector as much as the private. Bureaucrats cannot guide innovation.