I don’t see how this is going to go as planned:
More than 160 German financial services executives are willing to come to Greece in order to strengthen the Greek tax mechanism, according to a report to be published in the German magazine ‘Wirtschafts Woche’ … The magazine cites German deputy finance minister Hans Bernhard Beus, who explains that a key factor is the knowledge of a foreign language – some of them speak Greek – while the return to active duty of retired tax collectors should not be ruled out. Many come from the state of North Rhine-Westphalia, whose finance minister, Norbert Walter-Borjans, compares Greece with 90s East Germany, noting that even the East Germans at the time were suspecious towards the West.
Those of us who have worked in development finance at the bottom-most level, with local companies and officials, understand that no amount of technical assistance can work in the face of entrenched resistance in the location. (Here is my general discussion of microfinance from a decade ago; it still seems to me pretty much correct.) Less so still when the perception is that it is all pain and no gain. Tax collection, more than most activities of government, depends upon perceptions of legitimacy; the idea that a government can collect against serious popular will is far-fetched, and particularly so when it is perceived as being on behalf of foreign interests.
It is likewise hard to see the local Greek tax collectors as wanting to be in the service of foreign governments and banks it seems to me as likely that they will see it as their patriotic duty to help tax evasion as stop it. The reference to East Germany seems to me especially perplexing; whatever the East Germans’ suspicions of their rich West German cousins, it was reunification and they were all Germans. Surely no one actually thinks that the arrival of tax collectors masquerading as technical assistance will be seen on any side in this as European solidarity? Yes, one could say that the price of receiving more bailouts has to be, on any objective measure, reform of Greece’s public finances – and that this is objectively a form of European solidarity.
But I would have thought that the ability to deliver this kind of tough love requires that one have internalized – really have internalized – some sense of shared demos (as I discuss in this paper regarding global, rather than EU, governance). Not just separate societies happening to share a currency union. What German technical assistance proposes to do is properly understood as the consequence of a shared sense of citizenship that can accept joint sacrifice, not the act that produces it.
What I most don’t understand, however, is the strategy by Germany and other EZ states. They are not stupid, and all of these concerns have occurred to them, along with many more. It seems unlikely that they would proceed in the face of such obvious objections without some reasons to believe it could work. Or some form of Plan B. (At Opinio Juris blog a few days ago, I queried whether Plan B was merely to ring-fence Greece – giving up on it – and I further wondered whether this would lead to internal welfare migration as Greeks grew more desperate, particularly in regards to expensive medical care.) But mostly I do not see what Plan B might be. Suggestions welcomed in the comments.