Is SYRIZA just another Greek party that does not know what to do?

Kyriakos Moumoutzis |

Less than a week after SYRIZA’s (Coalition of the Radical Left) electoral victory, uncertainty regarding the newly formed Greek government’s economic policy has increased. In a statement emailed to Bloomberg News, Greek Prime Minister Alexis Tsipras said: ‘we need time to breathe and create our own medium-term recovery programme’. Mr. Tsipras’ statement followed his Finance Minister Yanis Varoufakis’ interview with BBC’s Newsnight, during which he criticised the two Economic Adjustment Programmes (the so-called ‘bailout programmes’) that Greece had previously negotiated with its creditors. He referred to them as ‘unenforceable’ programmes, which for five years have been ‘steadfastly refusing to produce any tangible benefits’.


Mr. Varoufakis, however, also conceded that ‘time limitations’ are ‘severe’. Indeed, the Parliamentary Budget Office’s latest quarterly report emphasised that ‘the new government’s decisions must be made with the utmost speed’, so as to stem the costs that the Greek economy has already incurred as a result of the uncertainty associated with the elections. Given that they seem to be aware of the economic costs of prolonged uncertainty, it remains unclear why SYRIZA has been so unprepared as to require ‘breathing time’ to formulate its economic policy.


This lack of preparation is not specific to SYRIZA. The last time that a newly elected Greek government was required to formulate its economic policy without having to meet the conditions attached to financial assistance, it was equally unprepared. It was in January 2010, a few months before the first bailout programme was agreed, when Finance Minister Giorgos Papakonstantinou of PASOK’s (Pan-Hellenic Socialist Movement) newly formed government submitted an update of Greece’s Stability Programme (these are the programmes, which all European Union member states submit to the European Commission for assessment and in which they report on their fiscal policies).


As the government had already revised upwards its estimate of the budget deficit for 2009, the update described a policy of fiscal adjustment, which included measures on both the revenue and the expenditure side of the budget. The Greek government was assuring the European Commission that measures on the expenditure side included ‘the sustained effort to identify areas of wasteful expenditure for further expenditure cuts’ (emphasis added). At first glance, this might appear reasonable. Upon closer inspection, it is shocking. The Greek Finance Minister drafted a budget and  the Greek Parliament voted it into law in late November 2009. A few weeks later, the same Finance minister was telling the European Commission that, while he did not quite know where exactly in the budget that he had drafted the ‘wasteful expenditure’ lay, he was determined to find it!


During the period of time between Mr. Papakonstantinou’s quest to find ‘wasteful expenditure’ in his own budget and Mr. Tsipras’ request for ‘breathing time’ to create his own recovery programme, the bailout programmes for Greece presented problems in terms of both economic effectiveness and social justice. Nevertheless, they also resolved an important problem of capacity. They provided Greek governments with fairly specific policy ideas, which Greek governments do not appear capable of generating themselves.


Leading experts in Greek politics have often emphasised Greece’s problems of ‘reform capacity’, which have prevented successive Greek governments from pursuing policy change and successfully addressing the country’s economic problems. These analyses, however, tend to focus on the administrative capacity to implement policy change. The examples of Mr. Papakonstantinou and Mr. Tsipras demonstrate a limited capacity to formulate rather than implement new policies. Greek governments do not appear capable of generating the necessary policy ideas that would allow them to determine what expenditure they should cut and how exactly to achieve ‘primary balanced budgets’, a goal which according to Mr. Tsipras his government’s recovery programme will try to achieve.


Now that the Greek government has rejected that bailout programmes that its predecessors had negotiated with Greece’s creditors, this is the challenge that it must meet: to generate alternative policy ideas that will allow it to achieve its goals. One would have hoped that they would have made more progress by now. At any rate, as Eurogroup President Jeroen Dijsselbloem put it, ‘it is now up to the Greek government to determine its position on how to move forward’.


Kyriakos Moumoutzis is a Lecturer in European and International Politics at King’s College London.