Friday, 13 July 2012

Greece’s Law 4014/2011: Lessons for Students of Development Studies

By Diana Conyers

Law 4014 of 2011 is one of a number of recent laws introduced by the Greek Government in response to the country’s financial crisis. It is intended to raise money for the cash-strapped government while at the same time addressing a longstanding problem of violations in planning and building regulations. I argue here that this case study provides some useful lessons for students of governance and development.

Governance challenges in the Greek planning system


It is estimated that 25% of properties in Greece violate some aspect of the planning and building regulations. The violations range from minor infringements, such as the construction of extensions without planning permission, to the construction of entire developments without the necessary building permits.

These irregularities (or ‘informalities’, as they are sometimes euphemistically called) are attributed to inefficiencies in the regulation systems, including the lack of land use plans in many areas, the high cost of building permits, and the excessive amount of time and ‘bureaucracy’ involved in acquiring them. It is an example of a common Greek phenomenon: bureaucratic inefficiency exacerbates an already existing culture of disregard for the rule of law.

Law 4014/2011 attempts to address this problem by requiring property owners to obtain a ‘certificate of regularisation’ before selling or transferring their properties. To get this certificate, a registered professional (an architect or civil engineer) must inspect the property and, if any ‘irregularities’ are found, a fine is payable. Properties are ‘regularised’ for a 30-year period.

The Law was introduced in September 2011 with the requirement that properties must be regularised by 31 December 2011. However the implementation of the law has been fraught with problems. The process of regularisation is almost as bureaucratic as the system that caused the initial problems, and the costs to property owners are high. The deadline for submission of applications has had to be postponed three times already.

Meanwhile, the process has increased the burden on the Greek population, particularly small, relatively poor property owners, and exacerbated the existing problems of a collapsed property market and lack of investment. Moreover, the law is being challenged in the courts, so could have to be withdrawn. 

In other words, the law is doing very little to address either of the original problems (‘informal’ development and lack of government revenue) and its implementation is creating or exacerbating others. The only winners are the architects and civil engineers employed to implement the process, and I suspect that some of them are beginning to regret ever getting involved!

Implications for students of governance and development


 This example from Greece shows that one cannot draw clear distinctions between ‘north’ and ‘south’, or ‘developed’ and ‘less developed’ countries. Although Greece is part of the European Union in many respects (including the quality of its ‘governance’) it has more in common with ‘less developed’ nations of Africa, Asia and Latin America. In fact, this is one of the reasons for its current problems: it’s difficult for a country like Greece to compete in an economic and monetary union dominated by countries like Germany.

Another implication is that the ‘international community’ seems to have learned little from experience with structural adjustment programmes (SAPs) in sub-Saharan Africa and Latin America in the 1980s and early 1990s. This experience showed that economic reform cannot happen without political and institutional reform. And the latter is a long, slow process that entails changes in ‘political culture’ and has to be internally driven; external actors can facilitate but not impose such reforms. 

The same mistakes are being made now in Greece. The economic and financial policies being forced upon the Greek government are unlikely to achieve the intended objectives unless accompanied by political and institutional reforms. Law 4014/2011 illustrates this point well.


The primacy of politics


And that leads me to a third implication of Law 4014/2011: the ‘primacy of politics’. Greece’s current problems are in large part due to a complex combination of national and international political factors.

At the national level, governance is hampered not only by bureaucratic inefficiency but also by a deeply embedded system of patronage and rent-seeking. The recently elected coalition government has vowed to confront this problem, but it will not be easy, especially since the two main parties involved (New Democracy and PASOK) are those who have governed the country for many years.  The opposition Syriza Party claimed to offer a real alternative, but did not get enough support to be able to put this claim to the test.

However, like most ‘less developed’ countries, Greece’s political problems are not merely internal. Why are the lessons learned from the earlier SAPs being ignored in Greece today? The main reason is not lack of knowledge, either of the experience with SAPs or of Greece’s governance problems. The main reason is that it is not in the political interests of those making the decisions (particularly the IMF, the European Central Bank and the German government), to remember these lessons - any more than it was in the interests of the IMF and World Bank to change its policies regarding SAPs when the failures became evident. In this respect, the recent change of government in France and the similar problems in other south European countries offer a glimmer of hope, but at present it is only a glimmer.      
                                    
More information on Law 4014/2011
Information on Greece’s general governance problems

1 comment:

  1. Why is Greece supposed to compete?

    If they hadn't taken the loans, what is wrong with how their economy was?

    Maybe, apart from culturally predatory loans, an economy of agriculture and tourism and leisure and conversation and inability for most of the population to afford the highest-tech gadgets is okay.

    Maybe, like Christianity and Islam say, the problem is the culturally predatory loans, a.k.a. interest-compounding usury. Maybe the solution is Islamic banking profits sharing in place of usury ("al-Islam, hoa al-Halla").

    Maybe.

    This "reform" is going to cost people a lot of money and I don't see why it won't just push people into a "black-market" system of property ownership, possibly enabled by bribing officials at half of what the engineer inspector would have been paid.

    Otherwise, stagnation in property exchanges is what this is likely to cause. I'm all for that--let "marginally" (ha ha) more grandchildren inherit Greek property over the EU elite who want to enjoy the Greek rural landscape and climate.

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