Analysis: Greece's new technocrats must win legitimacy

LONDON Mon Nov 7, 2011 12:02pm EST

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LONDON (Reuters) - In Italy, Eastern Europe and elsewhere, technocratic governments like the one expected to take the reins in Greece have a relatively good record at pushing through reforms seen as tough but necessary.

But, experts say, former bureaucrats and policy specialists-turned-rulers have the greatest chance of success when there is national consensus, however reluctant, on what needs to be done. There is relatively little sign of this in Greece at present.

Greek politicians look set to choose former European Central Bank deputy head Lucan Papademos to replace Prime Minister George Papandreou at the head of a unity government.

He would inherit the thankless task of pushing through the harsh measures required as conditions of Greece's latest bailout, further cutting spending, privatizing and firing public sector workers.

Any new prime minister will still have to work within a deeply dysfunctional political system only months from elections, amid growing popular unrest and anger.

"This is only a short term fix for Greece," wrote Ian Bremmer, president of political risk consultancy Eurasia Group.

"The new unity government has a temporary mandate, with early elections coming in February or March. The longer-term capacity of an eventual coalition government to adhere to fiscal austerity mandated by the European institutions and core European states is low indeed.

"And, as always, the Greek notion of timeline remains very different from that of the core European states."

With Italian Prime Minister Silvio Berlusconi also on the ropes, some suspect Italy too might be heading for the kind of technocratic rule it saw in the 1990s and early 2000s under Lamberto Dini, Massimo D' Alemo and others.

Those governments are remembered as among Italy's more effective, able to push through reforms. In central and eastern Europe, technocratic governments often run by former bureaucrats have helped countries recover after periods of crisis.

POPULAR MANDATE

Perhaps unexpectedly, some of these administrations have won much public support than more populist, electorally-focused governments reluctant to take tough steps. The technocratic unity government that ran the Czech Republic from 2009-10 was one of the most popular in its brief history, analysts say.

Papademos' challenge will be to turn the Greek political mood to view further austerity as necessary rather than unfair whilst keeping the two major parties -- each of which will provide a deputy prime minister -- from indulging in damaging short-term political games.

The new leadership will be taking power added ever worsening street unrest and growing anger at the demands of the "Troika" of the International Monetary Fund, EU and ECB.

"In the case of Greece -- also in Italy, but perhaps less so -- there is and will be a real problem of legitimacy," said Pepe Egger, head of the western Europe desk for political risk consultancy Exclusive Analysis.

"The 'technocrats' will be seen to have even less of a popular mandate, and they will be branded by a large part of the people as 'mere executors' of the Troika dictate."

Some may hope that by uniting to push through austerity, Papandreou's PASOK and the opposition New Democracy party will both dip their hands in the blood and share the blame.

But analysts say they expect continual one-upmanship from both players, and that when elections do eventually come there may be a significant rise in support for fringe parties.

EYES ON ELECTION

"All eyes will be on the snap election and the outcome ... and I'm wondering whether the Greek public will see any measures passed (before) then as legitimate," said IHS Global Insight Europe analyst Blanka Kolenikova.

"Both PASOK and ND are currently highly unpopular and three or so months is a very short time to change this. The election is unlikely to provide an outright winner, so Greece will be bracing for even more uncertainty and local instability."

There was a risk, she said, that this could drive some to extremist groups such as the anarchists, already blamed not just for violent demonstrations but also several parcel bombings.

That contrasts with the situation in Central and Eastern Europe after the collapse of communism or the financial turmoil that swept across the region following the 2008 crash.

Several governments fell but there was broad agreement that those in charge should do whatever necessary to secure IMF support and remain in the EU.

There was surprisingly little civil unrest, and financial and political stability returned relatively quickly.

Greece and Italy, some analysts say, are in contrast among the most extreme examples of a larger trend in Western Europe and elsewhere -- popular rejection of the solutions of political and business elites.

The horrified reaction of policymakers and markets to Papandreou's suggestion of a referendum to allow the Greek electorate the final decision on the bailout and austerity showed how wide that gulf had become. Bridging it will be one of the first tasks for any new government, technocratic or not.

"The reaction to the suggested Greek referendum was quite telling," said Jonathan Wood, global issues analyst at Control Risks.

"There are many contradictions going on here. At one level, there is a desire for leadership and at the same time you also have calls for more inclusive decision-making. The risk, of course, is that you simply get paralysis."

(Editing by Andrew Roche)

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Comments (1)
Lambick wrote:
If the Greeks want to stay within the Euro, and polls show that a clear majority wants to, then a technocrat government should be deemed to have sufficient legitimacy to fulfill the conditions for this. Some harsh measures are necessary and it’s going to hurt, so some Greek complaining is understandable. But the last thing to bother us with is the strictest interpretation of democracy: Greece has to fight off a messy default or spend decades in penury, stagnation, isolation, massive unemployment, mass emigration and social unrest.

Nov 07, 2011 5:14pm EST  --  Report as abuse
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