IMPORTANT CRITERIA FOR ENGAGING REFORM PROGRAMMES AT EU AND MEMBER STATE LEVEL

The criteria here below are taken from an excellent article titled ‘How to tame a budget crisis’ by Göran Persson. Mr. Persson was Finance Minister of Sweden from 1994 to 1996 and Prime Minister from 1996 to 2006. Politicians at the EU and national level would be well advised to consider these criteria as they embark on profound reform programmes.

To design and implement reforms politicians at both the EU and national level must  have three personal and non-negotiable commitments.

Five cornerstones of reform

There has to be a rigorously structured plan

1. Get a reality check. Naturally, the first phase of every large reform has to be a thorough analysis. What is the situation we’re trying to address? What problems do we have to solve? What do we know, what do we believe, and what additional knowledge can we find? The problem with this process of analysis is that almost everyone, including the experts have a vested interest- based on ideology, personal implications, or pecuniary reasons. At this stage policy makers need to question every conclusion, even those that originate with their own agencies in order to develop a conviction that will withstand the tough scrutiny of everyone from professors to blue-collar workers. The more transparent the formation of this analysis, the better. A public discussion will both make conflicting interests examine other arguments and make citizens more aware of the problems and thus more open to reform. Maybe the most important thing to understand is that you won’t have perfect understanding. Many politicians become paralyzed by the search for the perfect solution. And while they analyze, the problem grows and eventually someone else- the opposition, interest groups, the market will take the initiative. Then it is virtually impossible to drive reform.

2. Construct a reform program: To push through a genuinely unpopular reform, the reform must do two things: offer a solution to the crisis and include safeguards to make sure the crisis does not recur. A successful reform programme must also address the domestic cultural and political logic.

3. Get the mandate. Every politician has his or her power as a mandate, ultimately from the voters. It is formed around power centers, such as trade unions or employers’ federations, media, and specific individuals or companies. These centers must be understood, faced, and involved. It is an illusion to believe they will all agree to each unpopular decision, but it is essential to understand the consequences and have an idea of how to counteract or influence any major challenges they can create. Creating a common definition of the crisis and its components as well as including critical power centers, makes it harder for such groups to launch full-scale confrontations. The most important mandate, however, is in parliament. It is important for the government to have solid support for the measures it takes and to ensure that the mandate lasts over a long period. To muddle through with one compromise at a time will quickly erode any momentum the reform might have had. If the government doesn’t have the support it can rely on, it will be constantly searching for new partners, which takes time. Even worse, with every change of partner, the measures that are enacted will deviate further and further from the original plan. A solid majority must be based on a common understanding: Yes, it will be difficult and popular support will diminish, but in the long term, the electorate will reward those who do the right things for the country and deliver. And in order to deliver, we have to stick together- no matter what happens.

4. Execute. Execution is, in essence, a matter of good management. It is impossible to control all parts of the implementation and there is rarely time to construct detailed instructions for every part of the administration in the state, regions, and municipalities. Further, many of the agencies and authorities run highly professional and complex operations. Making centralized decisions on exactly how to meet new budget requirements is discouraging and will ultimately lead to many poor decisions. Instead, it is important to ensure that the administration is motivated and has clear targets. All those who are responsible must have the freedom to execute but at the same time be accountable for the results of their actions. The entire administration must understand the reasons for the reforms, the targets and the importance of everyone contributing. As a leader you have to stand up, be clear and open, meet the inevitable criticism, take action when managers do not deliver, and explain why, perhaps many times. You have to be compassionate with the people affected but firm in standing up for the measures taken and the path chosen. That is why communication is so important. This is not a one-night show. Most large reform programmes last for many years and consist of thousands of decisions and bills to parliament. There will be many critical articles in the media and many disappointed people that you have to face during execution. It takes endurance. It takes a strong central team. It takes delegation.

No silver bullets

Many failed reforms can be explained by the lack of one or more of these cornerstones. Many politicians have known very well what to do but failed in execution. Many have had the mandate from the people but missed the majority in the parliament- failed to motivate the administration. And many have failed to fully achieve their goals because they lost their political mission while pushing through unpopular decisions and either lost the momentum or lost an election. If politicians fail to deliver on the difficult issues- not only sovereign-debt reduction but also innovation and growth, competitiveness, unemployment, ecological sustainability, global trade, and decent distribution of wealth and income, the political power will deteriorate. Ultimately, democracy will become shallow and vulnerable.

• 5. Shift to a new agenda. Almost all politicians in democracies have entered into politics for a single reason. They want to do good. They have different views of what good is, but that is their motivation- improve the world, their countries, and the people they serve. In  a company, you can motivate staff with bonuses or other material incentives. That is impossible in politics. To endure a lengthy, unpopular reform programme, it is almost a prerequisite to combine execution with planning ahead for more positive reforms once the austerity measures have done their work. When the largest hurdles are passed and the momentum is still strong, it is time to communicate new ambitions