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August 25, 2015 Comments (0) Views: 1665 Homepage

Beware the technocratic governments

“If at first you do succeed, try again”. I suppose it could be written on the epitaph of Greece’s first Syriza government who, despite being granted permission from their electors to reject the tough terms of a new bail-out deal, subsequently accepted a deal with even tougher conditionality, on the surface at least. And then, within hours of their latest bail-out cash arriving (only for most of it to be sent straight off to the European Central Bank to pay other maturing loans), Prime Minister Alexis Tsipras put the whole thing to a vote again, only this time in the form of a snap General Election, scheduled for 20th September. As I’m writing this, former Syriza cabinet minister Panagiotis Lafanazis is trying to form an interim government in the three weeks or so between now and the election. I’m not sure he has so much chance of forming a government, though: his Popular Unity party is so young that I can’t even find an internet site for it yet.

If past performance is anything to go by, it won’t be long before someone or other suggests the formation of a government of technocrats or national unity to help Greece along, not just for the next three weeks, but into the next parliament as well. In some ways, at least, it’s an appealing thought. After all, technocrats would “know what needed to be done”, wouldn’t they? They wouldn’t be subject to the day-to-day whims of their electorates, would they? And those same voters would presumably understand that, even if the proposed medicine is painful, it is at least being done “for the best”, wouldn’t they?

Or would they? Actually, the more I remembered about the past instances of technocratic governments that I could recall, the less optimistic I became about the prospects for one in Greece.

The first government of Iraq in the aftermath of the 2003 War was a technocratic one, I suppose. Called the Coalition Provisional Authority of Iraq, and first led by Paul Bremer, it certainly wasn’t elected by the Iraq people. It didn’t face the easiest of environments, of course. Far from it, in fact. But many of its early decisions were later seen to have been either not followed up completely (e.g. having audited financial accounts), or ill-thought through (e.g. disbanding the army). In most quarters, it isn’t a government that’s particularly fondly remembered, nor held up as a model for what technocratic governments can achieve.

Then there was the Russian government of Sergei Kiriyenko of Russia in 1998. Things have changed in the subsequent fifteen years or so, but I do remember thinking at the time that he looked awfully young (he was 35) to be a Prime Minister. Poor Mr. Kiriyenko didn’t take over at the best of times, either. But he did manage agree a big loan deal with the IMF within three months of taking office – tough conditions attached, though – and he did even secure the first tranche of the money (you probably won’t be surprised give the recent events in Greece, but the money was desperately needed at the time to pay some of Russia’s other creditors). At the time, it was biggest loan in the IMF’s history relative to the GDP of the economy being supported (seventeen years later, Greece would break that record with plenty of room to spare!). But things quickly turned sour, the investors got antsy, and even higher interest rates didn’t dissuade them from heading towards the exits (far from it, in fact). By the middle of August 1998, the game was up: Russia devalued the rouble, and refused to pay its creditors either in roubles or in dollars. By the end of the month, Mr. Kiriyenko was out.

But what about Italy, and the technocratic governments of the mid-1990s of Lamberto Dini and Romano Prodi? Well, on the face of it, they did do enough to ensure Italy’s entry into the Euro in 1999. But should we really be quite so quick to label that a success? After all, fifteen years later, Italy’s unemployment rate is even higher than it was in 1999, while its inflation rate – at just 0.2% in the year to June – is arguably now too low. And believe it or not, but in the thirteen years since Euro notes and coins replaced the Lira, Italy’s real GDP has actually contracted. The common notes and coins may look nice, but the performance of the Italian economy since their introduction has been little short of disastrous.

With Greece’s next election just a few weeks away, and with Alexis Tsipras temporarily looking on from the sidelines, Greece is blessed with having 8 living former Prime Ministers. Or is that cursed? Actually, there are only two other big countries in the world with more living former Heads of government: Italy (with 10 former Prime Ministers) and Japan (with 12). But however blessed they are with living former Prime Ministers, none of the countries in question seems to be able to do much to cure either their growth deficits, their debt excesses, or even their inflation shortfalls. Of course, technocratic governments are rarely appointed when the economic going is good. Even adjusted for that, though, their past performance is hardly something to aspire to. It does make you wonder, though: is it really all the fault of the technocratic governments, or do their electorates deserve to share at least some of the blame?

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