Greece Needs a Government Finance Truth and Reconciliation Commission

April 12, 2010 11:00 AM

What does a newly elected leader do in a time of crisis when calling for a "new era" of reform?

The first thing is to demarcate the historic scale of the problem and underline how hard the struggle ahead will be. True to script, Greek Prime Minister George Papandreou declared that "the basic problem in Greece, unluckily, is that we have systemic corruption, from the top to the bottom. We have a very clientelist manner in dealing with how we allot our money, which means political favors rather than putting the money into important areas of growth or education or social needs."

Second, a leader bent on change should denounce the previous government as mostly responsible for driving the country to the wall. Again, Prime Minister Papandreou in Greece wasted little time in declaring how the "the previous Greek government was reckless, a conservative government with a lack of transparency, corruption, cronyism, extreme social inequalities, a lack of cohesion, the poor getting poorer, the rich richer." And that its actions led to "not only a fiscal deficit, but I would call it a credibility deficit. As a matter of fact, I call that the biggest deficit we had, as a result of the fabricated budget figures our predecessors had published."

Third, in the age of the Internet, a call for increased transparency and responsive and open government (à la the Obama administration's Open Government initiative) must be issued, accompanied by some immediate steps to convince the public that the government's proposals are serious and equitable.

Unsurprisingly, when Prime Minister Papandreou was in Washington on March 8, he declared that "to usher in a new norm of transparency, we are televising our cabinet meetings; we have launched an open, online application process for public-sector jobs, even at the highest of levels, and passed a law so that every government expense will be published online—a first in Europe. Every signature, from mine to the civil servants' in local government, will be online. We post all our proposals on the web to allow for deliberation and participation—in a Web 2.0 application—which empowers our citizens, puts a check on lawmakers, and strengthens the quality of our policies. These are among the changes my government has made and will pursue in response to this crisis. So I am confident that Greece will very soon be a paradigm of open government." And if people don't believe that, there is always the mandatory "open government website" now in Greece, too, at www.opengov.gr.

But after all these actions, how else must a leader move "change" forward?

Recent history has shown that something more must be done to establish authoritatively what went wrong and who was responsible. In a historical "Rankian" sense that people must come to empirically agree on wie es eigentlich gewesen ist (how it actually happened), before they can change it.

As powerfully pioneered in South Africa after the apartheid era, clarity about past mistakes can be accomplished by an independent body similar to the South African Truth and Reconciliation Commission. Closer to home, the US Congress last year established a Financial Crisis Inquiry Commission, which has begun to hold hearings and investigate the actions by banks, regulators and other players who shared in the misjudgments that produced the worst economic downturn in 75 years. A similar report to investigate and analyze the processes leading to the collapse of the Icelandic economy in 2008–09 has similarly just been published by the independent "Special Investigation Commission" established by the Icelandic parliament.

If Greece wants to move beyond its history of fiscal fraud and systemic corruption, it could set up its own commission and give it a mandate to uncover how and by whom Greece's books were cooked.

Few people could have more credibility in calling for such an investigation than Papandreou. Not only would the work of a Greek commission concentrate on the activities of the previous conservative Greek government, it could not avoid probing the activities of earlier Greek governments headed by Prime Minister Papandreou's own father, Andreas, who was prime minister of Greece twice from 1981–89 and 1993–96. Few could therefore charge George Papandreou with any political bias in establishing a Greek Government Finance Truth and Reconciliation Commission.

Moreover, with the imminent retirement of Greek European Central Bank Vice President Lucas Papademos in May 2010, Prime Minister Papandreou would have the perfect man with impeccable international credentials and intimate knowledge of Greek finances over the period (he was governor of the Bank of Greece from 1994–2002) to lead a Greek commission.

If Prime Minister Papandreou is therefore really intent on ushering in a new era of accountability for Greece, as well as regaining some market credibility, he should establish such a commission without delay. Knowing precisely what went wrong will truly help Greece usher in a new era for its political as well as its economic system.