The Limits of External Empowerment: EMU, Technocracy and Reform of the Greek Pension System

Abstract

This paper seeks to explain an aborted attempt at reform of the Greek pension system, following a series of previous failures. It applies the framework of rational choice institutionalism in order to examine the strategy and setting of the relevant actors. The pension system had become a huge fiscal burden on the state, threatening Greece's position in the European Union. Moreover, its gross inequalities of provision and bureaucratic inefficiency were symptoms of the embedded clientelism and ‘disjointed corporatism’ that stood in the way of the government's self-proclaimed ‘modernization’ programme. In the event, though EMU entry requirements empowered the reform momentum, a combination of the strategic weakness of key actors and the entrenched opposition of sectoral interests dissipated the initiative. The failure suggests the relevance of the wider social setting to reform: in particular, the weakness of the technocratic community and the relative absence of a supportive ‘advocacy coalition’, beyond the dominance of the ‘party state’. Faced with criticism, the political leadership sought to protect their electoral position and postponed pressing decisions. The case study raises important questions about the scope for such reform in Greece and the future stability of the ‘Euro-zone’.