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The Story of Regulatory Reform in Greece

Written by Efi Stefopoulou on .

SnailΤhe greek regulatory policy is a long lasting reform that has just last scored a goal: A law has just been enacted setting the better regulation principles and prescribing the procedures to be followed for a better regulatory environment. The story of that reform may at the end look to be on the right track, but it took so long to happen that lets a bitter taste. Regulatory policy may be defined broadly as an explicit, dynamic, and consistent “whole of government” policy to pursue high quality regulation.

Regulatory reform emerged in Greece mainly in response to external pressures. In particular, it was a result of European Union membership. In 2001, the Organization for Economic Cooperation and Development conducted an in-depth review of Regulatory Reform in Greece, and made some policy recommendations. This report has been instrumental in raising awareness, and furthermore, has served as a reference to the Universities and the National School of Public Administration, which is the main pool of executives for the state bureaucracy.

The catch is obvious: We are talking about a reform – regulatory reform – which is unanimously considered to be a necessity, and we only refer to it in terms of some sort of external pressure and support, let it be the Organization for Economic Development or the European Union. Lack of ownership of the reform is apparent and apart from a handful of reformers that strongly believed in it, there has been no obvious driver of the reform.

A regulatory reform law that was drafted in 2003 never made its way to the parliament. It was finally issued as a Prime Minister’s circular taking the form of some "soft" regulation and to that point lets underline that circulars in the greek legal context is nothing but advices – nothing to do with the binding nature of the US presidential circulars for instance.

The question is who was objecting regulatory reform so fiercly? 67% of regulations in Greece are Ministerial Decisions. That means that ministers, elected representatives of their party, see in regulation a very powerful tool which they can use to satisfy clientelisitc need of their electorate. To that end, the embedded culture of patronage between the political and the other social systems acts as a deterrent to reform attempts and the complexity of the clientelistic networks annihilates the dynamic that the reforms may develop.

It is worth noticing how much more powerful proved the political figures to be over institutions, let alone the rest of the stakeholders (market and civil society). So, one may wonder: Wasn’t there a demand from the market and entrepreneurs for better regulation? What does civil society say on the need for better regulation?

Because of the fragmented and corporatistic structure of the Greek society, social institutions and audit mechanisms are weak. In a small country like Greece, competition is limited and moreover, many of the businesses thriving in Greece are doing so because their main client is the state. A combination of vested interests and a sense that everything is ok turned what could have been a positive civic engagement into clientelism.

But that was the case until the crisis outburst. The state could no more be the cornerstone of development. En plus, there was the Memorandum of Understanding with our lenders (i.e the European Commission, the European central Bank and the IMF) that had a provision for a regulatory reform law.

The economic dimension of regulations, assessing costs and benefits was now an issue of great importance. An interesting thing is that the parliamentarians, helped a lot in introducing regulatory reform, because they no more followed blind-eyed their party line: they wanted to assess the costs and benefits of the proposed regulations and that’s why they parliamentary code of procedure changed making it obligatory for every bill submitted for discussion in the parliament to be accompanied by an impact assessment.

The fact is that the knowledge and expertise on regulatory reform existed within the civil service. Well trained professionals mastered the better regulation toolkit, and this knowledge laid the foundations for the better regulation law that was finally discussed in the parliament and become a Greek law just a couple of weeks ago. By now an impact assessment is drafted for all major regulations. Not all them are of good quality:

  • Just 33% of them have some quantitative data supporting their argument.
  • 29% of them have a thorough proposal for a paperwork reduction measure.
  • All of them have been subject to public consultation. There are also some cases where 25% of the consultation comments were incorporated to the final draft – mainly to technical and very specific regulations were the responders were people with deep knowledge of the field.

The lesson from the Greek regulatory reform story – a story of delay - is that such innovative policies as the BR cannot be established at one stroke. Their incremental development causes tremors and imbalances in the existing administrative and political games. Policies with such a strong institutional dimension cannot thrive in countries where the institutions are not emancipated and the role of the persons is often more important. In Greece there are passionate and well trained professionals; reformers eager to establish a sustainable agenda for a state of the art public administration. What we should keep in mind is the diversification needed, in order to meet the emergent attributes of the Greek social reality. At the same time, we should not lose our orientation in alignment with the art and science of public administration forehead. The crisis is our opportunity, and we can't afford let it be wasted.

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