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Assessing the Intentions of the Government(s) Since the Ratification of the Maastricht Treaty

  • Theodore Pelagidis
  • Michael Mitsopoulos
Chapter

Abstract

The documented intentions of, as implied from the policy statements in the Parliament and other public occasions, and the policy initiatives taken by the Greek government that ratified the Maastricht Treaty demonstrate, in a nutshell, the following:
  • The dangers to the Greek society in general, and in particular to the prospect of joining the EMU as an able and equal member, that stemmed from the extreme imbalances and inefficiencies introduced during the ’80s, were accurately assessed and a plan to address them was devised and quite consistently executed.

  • This program aimed at addressing the problems at hand in the following ways: (a) with some tax increases in order to stabilize the public finances, that were on an clearly unsustainable path, (b) by placing the main burden on the fiscal adjustment process on cutting expenditure and stabilizing the costs of the social security system, with a reduction in the public sector wage bill and a reform of the social security system, (c) with a wide-ranging privatization program that included selling off of state owned enterprises, handing over the construction and operation of major infrastructure projects to the private sector, handing the management of utilities over to the private sector, cutting collectives off of state patronage, and eliminating unneeded public service entities and privatizing others.

  • The latter part of the consolidation program was an integral part of a broader and conscious effort to unlock the growth potential of the country by reducing the stifling control of the state on innovative and growth-enhancing activities. Deregulation of markets, reduction of red tape and regulations that indirectly reduced market entry; the creation of new markets; and the facilitation of the activities of the productive sector, were to complement the growth-enhancing strategic retreat of the state from the economy, beside the above-mentioned flagship privatization strategies.

  • Equally integral in the plan, both as far as the initial design was concerned, as derived by public policy statements, and as far as the execution was concerned, was an effort to strengthen the institutional capacity of budgetary control and enhance the efficiency of the public administration. Besides specific provisions, for example to require an assessment of the budgetary impact of any act, beyond laws, and to outlaw the printing of money to cover budget deficits, the main thrust of the effort was placed in an improvement of the human resource management in the public sector. Critical aspects of the latter were the re-introduction of managerial positions with clearly delineated responsibilities, accountability, job performance evaluation, linking promotion and pay with performance in the public sector, abolishing perks and benefits that were excessive, abolishing the ability to shirk and abuse office flagrantly, and limiting the ability of striking unions to completely ignore laws when implementing their initiatives.

  • The design of the policies, and their implementation, were aiming to be within the spirit of what are now Articles 120 and 121 of the Treaty for the Functioning of the European Union (TFEU), while driven by awareness that Europe had its own problems and that ultimately the Greek government had to address the problems of Greece.

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Copyright information

© The Author(s) 2017

Authors and Affiliations

  • Theodore Pelagidis
    • 1
  • Michael Mitsopoulos
    • 2
  1. 1.NR Senior FellowBrookings InstitutionWashington, DCUSA
  2. 2.Hellenic Federation of EnterprisesAthensGreece

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