Reforming Greece II: Ideas for a Successful Bottom-Up Approach

by Daniela Schwarzer

If a bottom-up approach, which I suggested in my earlier blog, is a promising way to promote reforms in Greece, one should discuss criteria for a successful strategy. A first criterion is to have the strategy formulated within Greece, given the limited success of outside influence (the Troika). A second would be to focus on the capability and commitment of local political, business and corporate entities to innovate. These are the bodies regarded as acting with legitimacy by a population which is traditionally sceptic of the national political elites. Thirdly, progress should be regularly monitored and transparently rewarded. Failure to make progress meanwhile should have negative repercussions.

One approach that meets these criteria would be to set up ‘special modernisation zones’ in Greece. In these modernisation zones, administrative bodies would be re-structured, if needed with external support, to enable the collection of taxes, guaranteeing legal standards and minimising corruption. A reduction in the patronage resulting from the close intertwining of politics and administration would be part of this. Greece’s large political parties have given those belonging to the political camp in power preference with jobs at any one time. This has contributed to the excessive growth of the public sector. The quality of administrative bodies has suffered as a consequence.

Municipalities would apply for the status of such a zone. Applications would be handled by a project board. In the case of a successful application, the municipality would benefit from some temporary tax exemptions with the objective to encourage public investment. Within the framework of the modernisation project, assistance would also be granted in investment planning, in education and infrastructure development. Local authorities would also be given advice when calling upon structural funds and in applying for loans from development banks. Relevant experience in this type of approach exists from twinning and TAIEX programmes, which function in a demand-led manner. Local authorities would have to formulate concrete requirements for staff and expertise, whereupon the supporter network would be scanned for suitable support.

If elected decision-makers apply for the status of a special modernisation zone for their municipality, the problem of ownership, which is only too well-known in externally promoted top-down development processes, would be reduced. Local political leaders would be responsible for the implementation of their own project and required to collaborate constructively with external supporters. They would not be replaced by a technocratic board or made de facto impotent, as is now the case under the troika programme at national level. Furthermore, a ‘Business Angels for Greece Network’ could make entrepreneurial know-how available for start-up businesses and founders of businesses and initiate contacts with investors.

If tax revenue is generated in the special modernisation zones as a result of the measures taken, only a proportion would be paid into the national budget. The rest would be reinvested in the region in growth-promoting projects (infrastructure, education). The requirement to expand the project geographically could be tied to this. Neighbouring local authorities could be linked in with a form of twinning. For instance, communication and transport infrastructure could be expanded in the geographic vicinity. In addition, innovative approaches to financing, such as the construction of town development funds, are to be examined and developed further.

Although the basic principles of modernisation zones are decentralisation and individual initiative, some coordination is needed at the national level. A first step should be the setting up of a project board comprising Greek representatives from politics, business and civil society, as well as some representatives of the EU institutions and other member states. Their task would be to establish the overarching structures for this new policy approach with like-minded Greeks.

The board would moreover be responsible for awarding special zone status and would have to evaluate progress regularly. It would also establish the necessary supporter networks. There is some evidence that a number of Greek protagonists are already becoming more involved in the development of their own country. In the operative phase, a series of round table meetings could define joint standards and information flows. Furthermore, bilateral initiatives at political and non-state level (such as between business associations, town partnerships, in the civil society arena etc.) should be included. German political foundations, which have relaunched activities in Greece since 1 March 2012, could mobilise forces within civil society or support the founding of new organisations, which have committed to social and economic modernisation. Finally, all actors involved should continue to promote public discussion regarding the country’s prospects in the EU and the need for deep-rooted reform.

 Daniela Schwarzer is currently the Head of the Research Division European Integration at the German Institute for International and Security Affairs, Stiftung Wissenschaft und Politik (SWP) in Berlin. She joined the Institute in 2005.