Now comes the hard part for Greece, like a Phoenix rising from the ashes of burned off debt and Eurozone exile, it must learn to “fly right” with the brotherly help of the EU. The next 5 steps in the re-birth saga will take many years and tears to complete and that can be frightening. In tight situations like this, it always is helpful to look for successful examples of re-incarnation. Surprisingly for some people, there are several that can foster encouragement and tips on how to get off the ground and gain cruising altitude. As a quirk of faith, Spiegel online published today a tailored made article of an example to end the Greek tragedy. This year, 2011, marks the ten year anniversary of Argentina’s start down the runway of its Phoenix experience. The neighboring graph illustrates the Argentine debt burden development over time, the haircut effect, subsequent stabilization of yearly credit increases and alludes to the pain endured by the citizens of the troubled nation. Greece could parallel that development if the right measures are taken. Everyone also knows that not everything turned out perfect in Argentina and the future still must be managed but the situation is greatly improved since 2001. By learning from what worked there and also didn’t, the Greek Odyssey could turn out to be more successful in perhaps a shorter time. The link to the Spiegel online article is:Taking a quick hop from South America to Europe we return to laying out the last 5 steps of Operation Phoenix and they are:
6. Develop an Investment Plan to attract foreign capital
7. Develop a plan to promote economically relevant innovation
8. Mobilize a change in the Greek people’s political culture
9. Force change in the Greek Body Politic
10. Attack corruption vigorously
Do these 5 measures sound naïve, too much to ask or a call to let’s forget Operation Phoenix. Well they may be a tough set of goals but I like the challenge and its realistic chance of success. As Edward Albee said, “You’ve got to be ready to fail interestingly to have a chance at succeeding interestingly.” Besides, even if the EZ and Greece were going to continue down the road they’ve been traveling and failing on for two years, they’d have to confront the problems the “High Five” listed above intend to address. In fact the High Five identify the root cause of Greece’s and other Debt ridden countries malaise.
Develop an Investment Plan
“Immature poets imitate, great poets steal.” – T.S. Eliot
So many countries like Ireland and the Czech Republic have made and executed successful Investment plans. Tailoring one to Greece should be a matter of cut and paste accompanied by EU monitoring.
The problem to combat here is the unattractiveness of Greece as an investment opportunity. Statistics at www.indexmundi.com, show the country ranking at 56th worldwide in respect to foreign investment, that in 2009 amounted to $48 billion. The three countries ranked immediately above Greece are Bulgaria, Slovakia and the Ukraine. Not exactly countries in the fast lane. The elements of the problem are four: an unfriendly investment culture, mediocre talent pool, questionable infrastructure and too much corruption. These four horsemen of the apocalypse have to be confronted head on if growth spurred on by foreign investment is to be made possible. The EU and the Netherlands as a mentor must take a lead role here, hand in hand with a specially set up Greek commission on foreign investment. This new troika must:
a) Define and administer tax benefits for foreign investments just as Ireland successfully did years ago.
b) Channel funds into a selected set of Universities and high schools as an initial catalyst to foster higher quality educational results throughout the country. An international exchange program mainly targeting a flow of highly qualified teachers and professors into Greece’s educational institutions should be quickly organized in ways similar to what Germany did after its re-unification. National tests seeking to find talented young students in the 7th and 8th grades of primary school should be defined and carried out. The selected students would be given special educational support. Israel is an excellent example of how such a program can find and nurture talent to the benefit of the whole economy. It is also what the USA did after the shock of Sputnik in the 1950’s with great success. This special education track would not be done at the disadvantage to any other students.
c) As industrial parks and new Educational facilities are being planned, their connections to transportation hubs, one another and other key elements of the economy have to be laid out together. This will insure the efficient use of assets and interaction.
d) The battle against corruption has its own section.
Develop an Innovation Plan
“Build a better mousetrap and the world will beat a path to your door.” Ralph Waldo Emerson “And the rats will avoid your house.” Me.
Greece sits at the 90th position and has the lowest ranking of EU countries in the international Economic Freedom and Global Competitiveness Index. Many knowledgeable people believe there are three main items that govern competiveness: cost, quality and innovation. Being outside the Euro will help moderate costs in Greece. Quality is a factor that can be learned and depends on corporate culture. Innovation is the game changer. It can propel a country’s economy, if it is done with a focus and a vengeance. Israel, a small country not far away from Greece has become a power in Hi-Tech innovation. It has more tech companies listed on the Nasdaq (the primary USA technology stock exchange) than all of Europe. It did it with a plan that included the special education of selected students as already mentioned and a government program administered and funded by an agency titled the Office of the Chief Scientist (OCS). This program has been immensely successful. Greece should form an alliance with Israel to not only learn from its experience, but to create a joint venture somewhere in the country, near to the best Technical Universities. The goal would be the establishment of a start-up mecca as an incubator for innovative product development. Israel could inject some of its best veteran entrepreneurs as seed talent to get the ball rolling. The EU and Greek institutions would set up a fund equivalent to that of the OCS. Taxation on successful innovative products that are export home runs, would be given a tax benefits for a specific interval of time. In a later stage, after the innovation program has achieved critical mass, other neighboring countries like Turkey could be invited to participate. This program could become a crucible for “Innovation-Med (iMed)”.
Mobilize a Change in Greek Political Culture
“Every nation has the government it deserves.” – Joseph de Maistre
And that means If the Greek people do nothing, they deserve their fate.
This is a hard and critical part of the High Five. If this gets done right, the next two steps become easier and faster to master. The Greek people must raise the bar when they go to vote. It’s time to stop voting for either a member of the Papandreou or Karamanlis clan and their handymen. In the 37 years since the end of the military dictatorship of the country, members of these families have run the country for 23 of those years: Papandreous-12, Karamanalis-11. Maybe some Greeks voted for these clans out of conviction and some out of personal advantage. Whatever it was, the majority of their votes weren’t for Greece or their children’s future. The politics of the clans dug the hole Greece is now stuck in. What is needed is a 180 degree turn away from the past towards younger more future orientated political views. The young voters of the country must go to the polls and vote for new personalities and the older voters must also go but not vote for patronage.
Force a change in Politics
“Throw the Bums Out” – Many persons
The powerful are reluctant to relinquish power voluntarily. Let’s take it from them. Here is how or at least the makings of a good start.
a) A term limit of 8 years should be imposed on membership in the Greek Parliament.
b) Remove the immunity of parliamentarians or reduce drastically its coverage.
c) An additional house should be established in the Greek legislative structure. The second house should be constructed similarly to the “Upper House in Germany” or the US Senate. This would promote more debate and transparency on critical legislation.
d) Tie the salaries of Members of Parliament to achieving the financial goals of Greece as is practiced in Industry.
Behind these suggestions are the notions of limited durations holding power and accountability.
Attack Corruption vigorously
“Trust is good, Control is better.” – Vladimir Lenin and “Birds of a feather flock together.” – Plato
These proverbs will be useful especially when realizing that Greece ranks lowest of all EU countries, at position 78 internationally, on Transparency International’s Corruption Perceptions Index. It is the caboose on the EU train.
Taking Lenin’s advice seriously, the EU should:
a) Require that all members of parliament make their Income tax returns public.
b) Require that all business affiliations of members of parliament be made public.
c) Set up an EU wide anti-corruption policing unit. There are a few countries besides Greece that need some transparency and investigations as well, such as Italy at position 67 on the list, Portugal at position 32 and Spain at position 30.
d) Besides financials goals make Greece’s return to the Euro dependent on its achieving a rank of 25 or better on the corruption index.
e) Taking Plato’s observation seriously, require that all members of Parliament remain free of conflicts of interest while they serve in office and for 5 subsequent years after leaving office
All the anti-corruption rules mentioned here should find their way into an EU wide codex.
Argentina still has serious trouble with corruption and political incest. Its success under these circumstances, however, indicates how far Greece can fly if it tackles the underworld of politics as well as the financial darkness of debt. It should not be forgotten that Argentina didn’t have the EU to assist it out of its misery.
I hope Greece will have the opportunity to take the hard road forward and become a Phoenix.
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