Thursday, 13 June 2013


This is of course old news to Greek readers and most foreign ones too - the Greek Government has shut down ERT, the public broadcaster, in what they claim was a drive to eliminate waste. In the last week of its life, Greek public TV got about 13% of total viewership, broken up between three stations. None managed more than 7%.

As officials openly admit, the decision was motivated not simply by cost-cutting concerns but also (primarily, I would add) by the Government's inability to get an early-retirement and voluntary redundancy deal out of the ERT unions. Essentially the Government decided that it was easier to reboot the organisation and pay everyone's compensation than try to clear the obstacles to restructuring - which was in any case true, but a poor basis on which to act.

Perhaps Samaras sees this as some kind of Thatcher moment, a Mother of All Battles against entrenched interests. Whatever the financial or ideological case for binning the public broadcaster (and I am entirely sympathetic to getting rid of compulsory funding for ERT and freeing it from political interference, indeed even shutting it down for good), he is wrong on this matter. This is not his Thatcher moment. It is his one more stepping stone to the loss of all legitimacy as Prime Minister.

The decision was, by all accounts, taken with significant disregard for checks and balances, although, as it turns out, within the letter of the law. The Greek Government failed to consult Parliament prior to acting (not a legal obligation but surely an indication of good governance, as you'll see below), and has yet to appoint a professional administrator. The major coalition party, New Democracy, apparently even made a point of sneaking it in behind the backs of its junior coalition partners, who are now playing the only card they have by threatening to withdraw their support from the coalition, triggering a new election that all three coalition partners have sought to avoid. I doubt they will follow up on their threats.

NOTE: I have amended the following section significantly on 15/6/13 thanks to a very helpful note by a commentator. See below, and his blog, for details.

The decision to shut ERT down was enacted through a Joint Ministerial Decision (full text in Greek here) on 11 June, a treatment that was made possible back in 2011, when the 2005 law on the management of public enterprises was amended to allow for the closure of loss-making public enterprises. The Joint Ministerial Decision, however, was preceded through a novel legislative instrument (a Legislative Act) established a single day before the ERT intervention (full text in Greek here, although only temporarily), which grants the Government the power to effectively act as the administrator of the failed body through provisions in the original JMD shutting it down. This amendment is meant to ensure that public sector bodies can be 'rebooted', spending a little time in administrative purgatory in the care of government, as opposed to a professional administrator.

The use of a Legislative Act has caused a great deal of controversy: such instruments are explicitly reserved by our Constitution for use in "extraordinary cases of urgent and unforeseen need" because, while they still require approval from Parliament within 40 days, they do provide the Government with a licence to act on them in the meantime. Hence their use in compliance with medium term plans is a contradiction in terms, unless perhaps one argues that it is the unions' unwillingness to compromise that is so 'extraordinary and unforeseen' as to justify such measures. Even this bit of mental gymnastics is hard to defend (who could fail to foresee turkeys voting down Christmas?) and will probably not be upheld by the Council of State in the inevitable referral to come.

18/06/13 UPDATE: As expected, the Council of State ruled against the Government and struck down the 11/6 Legislative Act, although it did uphold the JMD mandating the closure of ERT.

In any case, I am told that such instruments have been used 19 times in the current crisis. Others (here) claim that the figure is much lower, i.e. 4 in the last eighteen months. Some, such as the act establishing our original bailout agreement, could justifiably be said to address unforeseen and urgent circumstances. But such proliferation (even if the latter figure is correct) is unjustified.

To clarify, the Legislative Act (as my reader correctly points out) does not authorise the closure of ERT. It does something else entirely.

You see, the Government has indicated (both in the original JMD and via a self-leaked non-paper) that it will re-establish the national broadcaster under a new identity and on a more rational basis as soon as possible. This is essentially the purpose of the Legislative Act - it allows the government to oversee the process of administration though a Joint Ministerial decision. In this case the JMD went out of its way to ensure that, while all other obligations of the now-defunct public sector body are taken on by the State, the employment contracts of all of its staff (including those seconded to other bodies) are automatically ended, and it will have to cease broadcasting.

As I mentioned earlier, the Legislative Act regulating administration could be overturned by Parliament. If this happens, the Greek Government's decision to close ERT will not be overturned. What will happen, is that the legal framework for its administration, the employment status of ERT's laid-off staff and its right to broadcast will come into question, in a pretty costly and time-consuming way. It's also to some extent a political ploy or poison pill on behalf of the Government, as those protesting the closure of ERT will now stand accused of interfering in the establishment of the new ERT, and the handover of the defunct ERT's assets.

What motivated this fairly authoritarian treatment? Well the obvious driver is the fact that Government and the unions were unlikely to ever reach an agreement, and public consultation would have prompted a new wave of protests in early summer (a volatile time) that would pile pressure on the governing coalition. However, people are also suggesting that this is a matter of:
  1. bolstering the Government's reformist credentials in the aftermath of the failed sale of DEPA, our state natural gas company (said sale having failed after the Russians were unable to extract a guarantee that we would suspend European Competition rules to ensure rent-seeking potential should their bid succeed 
  2. ceding valuable intellectual property (such as, I would expect, the ERT video archive) to favoured private interests in a non-transparent manner, or
  3. dumping the disaffected old Party Faithful who make up some of ERT's current staff and replacing them with grateful new captive voters.
I really can't comment much on these scenarios, except to say that 1) is out of the question - even the dystopian inbreds running ND must realise that this move would create tons of bad publicity, not to mention saving much less money than the DEPA sale was intended to bring in. 2) is testable - a lot hinges on how soon an administrator will be appointed and who this will be; note that the JMD gives the administrator the right to establish contracts on behalf of the State - I'm not sure why; 3) is less testable in practice but the way in which new ERT jobs are advertised in future could give us some hints.

Would ND be willing to risk an election? Recent polls suggest that a barrage of slightly fishy-sounding good news coming out of Greece had given New Democracy some breathing room in early June, making it possible to risk a new round of elections, but I doubt any of the three coalition partners would consciously take such a risk - losing the elections would, after all, spell the end of the political careers of an entire generation of politicians, while winning would only buy them more time to (possibly) capitalise on an extremely weak recovery.

Update: A good and balanced roundup by Nick Malkoutsis of the reactions to the ERT closure can be found here. I am not too concerned with the ensuing protests because they have flattened a complex issue into a very simple one; they would be useless as a guide to future policy, as indeed most protests tend to be.


ERT (key financial figures here) was Greece's public broadcaster, and first went live in February 1966, barely a year before the junta took over, entrenching within ERT a dirigiste legacy for years to come. State broadcasters generally tend to thrive in wartime or martial-law environments. Similarly, Greek public radio was actually first set up in 1938, under the fascist regime of I. Metaxas (more history here). For a brief overview of the broadcaster's checkered record up to the 90s, see this paper. A killer fact is that in the 80s the average tenure of an ERT director was 8 months (source).

Arguably the first breath of fresh air came in 1998 when the company's first-ever medium term strategy was set in motion and its first early-retirement plan was put into place, freeing up resources for (gasp!) programming. The culprit behind this evil neoliberal scheme to make ERT into a serious broadcaster were none other than one of Satan's Big Four imps, KPMG (see here for a detailed history of their involvement). For once, their consulting really seemed to pay off - unless perhaps ERT's emancipation was a fruit ripe for the picking.

One clue as to why the state's stranglehold on ERT was loosened in this way had to do with its falling share of the voters' attention. More importantly, in the parties' minds, private television was now a much better medium for political promotion, judging from the huge leap in political advertising spend between 1990 and 1993.

The parties' reliance on TV for influence was to prove their undoing - as documented here, the change of channels resulted in a loss of grassroots rapport, creating a vicious circle where the population was becoming increasingly alienated and parties  in turn had to rely more on television to reach them. Meanwhile, trust in politicians, TV and the press went into synchronised diving mode, as the Eurobarometer figures below demonstrate (note the lines indicate % of Greeks mistrusting):

This shift probably contributed, along with shifting public spending priorities, to the change in Greek voters' attitudes towards the political process in general, as documented here. In fact, the frustrated longing for an unmediated engagement with political parties could be fuelling part of the mafia-style growth of parties such as Golden Dawn, as well as the personality cult silliness of the Independent Greeks.

Despite what ERT's early history might suggest, ERT advocates argue that a state broadcaster is necessary if the people are to have access to objective information - the kind that is crucial to informed political decisions and action. Clearly, and, assuming de facto independence is possible for a state broadcaster, their argument has some merit in Greece, if not elsewhere. I have briefly examined that claim here, and found it to be missing the point slights (it's independence, not state subsidy, that makes public broadcasters good for democracy).

That aside, it's fair to say Greek private television is for the most part not in the business of producing television programming. Rather the stations (which are unreasonably numerous, and even the largest of which are unlicenced and unprofitable) are fronts for a much less wholesome machine of political influence and are cross-subsidised from rents extracted from the State through other arms of their owners' business empires. Such rent-seeking is in turn made possible through the influence of the media on voters' perceptions, hence ensuring that the TV stations do, in fact, earn their keep.

This is partly the outcome of a botched liberalisation of TV stations back in the 80s and 90s, of which a good summary is available here and here (pg. 252 onwards). Note that I am always in favour of liberalising broadcasting, indeed all services, and even today's ERT advocates would have struggled to argue against it in principle. But in the absence of reliable institutions, liberalisation doesn't always deliver what one might have hoped for, and it is hard to distinguish a bona fide liberalisation initiative from a plan for tailored de-regulation that enshrines rent-seeking opportunities. This is, in fact, Greece's problem in a nutshell: reforms are needed to drive growth now, but are predicated on institution-building that could take a generation; and a bad reform is occasionally worse than no reform.

To summarise, my take on the ERT affair is this: Samaras has taken a huge gamble, risking self-immolation via the ballot box in order (I guess) to rebuild some of ND's lost clientelist network. Motivations aside, his crime lies not in wanting to do away with ERT, or even in using an unorthodox means for doing so (the reboot method), but in his cavalier attitude towards the Constitution and for Parliament, which feeds into a disturbing pre-existing pattern. Regardless of how cost-effective ERT's successor turns out to be, this precedent is shameful and risks discrediting any decisive future reform as an institutional coup.


  1. The world is awash with information via the net, so the Greek govt as to get rid of its state funded TV broadcaster, so what, big deal. Lots of over staffed TV journo's in Greece I imagine, how about doing the same to the BBC?

    1. @Anon, as you see I am open to this eventuality. But even this has to be done by the book. We don't even know what the book is by the looks of it.

  2. Dear Manos, I respect your analysis but I have to dissagree.
    Pls indicate just one case, when the Greek state managed to reform successfully (to private sector standards) one organisation or one statute (to common logic) in the last 40 years.
    Panos VK

    1. @Anon. I am not sure how to answer this question. Reform is not something any government does well and private sector standards vary enormously. In fact, private and public sector standards tend to differ much less from each other within a single country than either differ across countries.

      Greece has a rubbish record of reform and there's not much to be done about it in the next two months or so. That said, the implication of your objection is that no reform is possible anywhere in Greece. I don't see how that can be the case. Moreover, justifying a disregard for due process because 'we wouldn't get it right anywhere' is a very dangerous type of reasoning. Taken to its logical conclusion, this leaves us only with totalitarianism - not even the standard displayed in the case of ERT.

  3. Μανο, you got it wrong. ERT was done away with by a joint ministerial decision, not the legislative act. Take a look here:


    1. @A.A: I'm happy to review my phrasing, which I'm sure steamrolls over the legal reality of this situation. My reading is that:

      1. Article 14B, added to the original 2005 law in 2011, made it possible to disband a public sector body such as ERT.

      2. The legislative act of June further amends the (now amended) 2005 law to allow the Joint Ministerial decision to effectively decree the process of administration - which ensures that Government can disband a public sector body without calling in a professional administrator.

      3. The Join Ministerial Decision of June pulls the trigger specifically on ERT.

      This is my understanding. If I got it right this time round, the purpose of the 11 June legislative act was simply to ensure a professional administrator wouldn't go anywhere near ERT.

    2. @A.A. Actually, I take part of that back. My reading of the JMD is that it still allows (but doesn't require) the State to appoint a professional administrator.


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