REformability of POlitical Systems in times of crisis (REPOS)

Summary

In times of crisis, reforms constitute strategies of survival and adaptation of political and administrative systems, under extreme circumstances of financial pressure and intense social challenges. Such reforms try to balance two different concerns:

On the one hand, to accomplish a rapid adaptation into new circumstances and ameliorate the efficiency of the political and administrative system, and on the other hand, to revitalize democratic legitimacy and social acceptance. Local Government, a vital institution of the political and administrative system that is very important for democratic legitimacy and the provision of services to citizens, has been proven to be quite vulnerable to financial crisis. This can be confirmed by the fact that financial problems similar to the ones of Greek municipalities emerged also in Germany, a country of much more favourable economic conditions. In the present project proposal, the comparison between Greece and Germany is approached under the framework of the “most different cases design”. The distinct differences will be useful for the development of alternative reform strategies and the management of problems from different starting points. Both countries have developed initiatives combining legal, financial and political measures for the financial consolidation of over-debt municipalities. The project will detect and analyse those factors and conditions that contribute to the success / failure of local financial consolidation. This will be achieved through the systematic analysis and comparison of 10 selected case studies in the two countries. The project will utilize document analysis techniques for the differentiated meanings (comprehension, evaluation and communication) of financial consolidation, along with an interdisciplinary approach, which will take advantage of most of the methods used in financial, legal, political and administrative sciences. The main goal is the elaboration and dissemination of specific strategies and operational policy measures for sustainable reforms of financial consolidation and beyond.

REPOS project has three main research questions:

  • 1. How institutional settings and national specificities between the two countries influence the different approaches and processes of municipal fiscal consolidation?
  • 2. How actor related factors and case-specific variables influence different approaches and processes of municipal consolidation under the similar institutional structures, within the same country?
  • 3. How different problem perceptions of the actors in each locality are reflected in the local discourse on fiscal problems and how the specificity of each locality can be interpreted?

The project focuses on specific problem resolution capacities and approaches in Greece compared to Germany and vice versa. Institutional structures and actors in both countries are examined comparatively, in order to elaborate patterns of action that either promote or obstruct reform abilities. The main goal is the elaboration and dissemination of specific strategies and operational policy measures for sustainable reforms of financial consolidation and beyond.

The analysis of different institutional and socio-economic contexts, as well as actor-centred aspects was made with different methods of qualitative research. As the main objective was to reach a high degree of triangulation of data and methods, REPOS teams combined guided interviews and document analyses.

We examined all documents and transcribed interviews with the software MAXQDA which ensured that all researchers use common concepts in their daily empirical work. In both countries we interviewed the same actor groups but due to different institutional settings the concrete selection of actors differs. Nevertheless, the objective was to ensure that we interview actors with various perspectives and expertise on the fiscal challenges. Thus, we interviewed executives and elected representatives from local levels with formal decision-making power and executive actors from upper level governments. Moreover, we decided to interview actors from interest groups, consultancies and journalists who were relevant for the debate and the interpretations of the fiscal crisis in each city.

Greece
The selection of the Greek cases was based on the official categorization of all Greek municipalities by the Ministry of Interior during the preparation of the Kallikrates plan. The main indicator was municipal debt as percentage of debt to annual revenues in 2010 – the so called ‘municipal over-debt’ or ‘Kallikrates criterion 2’. The Kallikrates plan set for first time hard budget constraints for local government budgets. According to criterion 2 local debt should not exceed the 60% of total revenue. According to this indicator the Ministry of Interior categorized all municipalities in local governments with very high ‘over-debt’ (more than 150 percent), high ‘over-debt’ (100 till 150 percent) and municipalities with moderate ‘over-debt’ (50 till 100 percent). We chose at least one case of each category and decided to consider especially cities which successfully reduced local government debt since 2010. Moreover, we excluded smaller municipalities in rural areas and on islands to ensure the comparability to the German cases. However, in contrast to the German cases the population of selected cities varies stronger but this is unavoidable as the number of bigger municipalities (more than 100,000 inhabitants) is very limited in Greece compared to Germany (see Table 5). We also considered if a critical mass of publicity of fiscal challenges could be observed which was necessary for our qualitative approach. Furthermore, given the fact that more than one third of all municipalities of all categories are located in the greater Attica region, we finally came to the selection of four municipalities in this region (Maroussi, Rentis/Nikaia, Athens, Piraeus) and two medium size cities in the periphery (Patras and Volos).
Germany
For the selection of the German cases, we needed a different selection strategy as current comparative data was not available due to the introduction of different book keeping systems at the local level and long reporting periods. In the beginning of our research the newest comparative budget data were from 2011. Therefore, it was impossible to use a similar selection indicator like the ‘municipal over-debt’ for Greece. Moreover, the urban system of Germany is very different from the Greek one. While the Greek urban system is mono-centric (centred on the capital of Athens and a moderate number of relevant peripheral centres), the poly-centric German urban system includes a large number of important cities with different defined functional roles within their region or at national level. Therefore we decided in a first step to choose cities that participate in the consolidation programs of the federal states of North Rhine-Westphalia, Rhineland-Palatinate, Hesse and Saxony-Anhalt which belong to the ‘crisis states’ of local government debt or at least have higher fiscal challenges than similar ‘Länder’ (Saxony-Anhalt). Within these federal states we concentrated in a second step on independent cities with a population between 100,000 and 500,000 inhabitants. Hence, despite different levels of decentralization between the ‘Länder’ all selected German cities have a similar amount of local government tasks. Moreover, all these possible cases belong to the category of cities (independent cities with a population for 100,000 to 500,000) with the biggest fiscal challenges in Germany with respect to short-term debt and budget deficits and have a similar size like the Greek cases. In a third step we compared the preliminary outcomes of fiscal policies of remaining possible cases within the four ‘Länder’ (six in North Rhine Westphalia, four in Rhineland-Palatinate, three in Hesse, two in Saxony-Anhalt) and selected Wuppertal, Mainz, Kassel and Magdeburg. As none of these German cities could possess such an extensive decrease of debt in the short-run like some of the Greek municipalities we looked out for ‘softer’ evidence for successful consolidation like reduced annual deficits, first balanced budgets or the formally successful implementation a consolidation program. We considered also that the selected cities should have different actor constellations. Moreover, similar to the selection of Greek cases we took care that we found a vivid debate on fiscal policies in the cities to facilitate our qualitative approach.

Partners and Funding

Outcomes