The Technocrats Take Charge

Published in Investing on 15 November 2011

The eurozone tsunami sweeps more leaders from power.

You might remember 1989 -- a year of revolution and regime change, when the old Soviet Union collapsed and the Berlin Wall was brought down. Leader after leader fell like dominoes.

The end of an era?

Those were times never to be forgotten, and it is the closest comparison I can think of to today's events.

This year we have witnessed the heady days of the Arab Spring, when dictator after dictator was overthrown, as well as the eurozone debt crisis, which has burst like a tsunami across Europe, not only wreaking financial havoc... but also washing away some of the Continent's most famous leaders with it.

While we see the dawn of a new era in the Arab world, are we also seeing the end of an era in Europe?

During January 2011, in the aftermath of the Irish bailout, Taoiseach Brian Cowen was swept from power. And now, in November, events have carried away the heads of the Greek and Italian governments, too. Who knows who could be next?

We're all in this together

For me, George Papandreou always seemed a capable and decent leader. He took all manner of lectures and putdowns from his EU colleagues in the name of European unity, plus masses of flak and abuse from the Greek electorate, only to find himself forced out at the end.

His successor is Lucas Papademos, an economist who has worked at the Federal Reserve Bank of Boston and the Bank of Greece, where he was involved with Greece's transition from the drachma to the euro.

Many Greeks have welcomed the appointment of this brilliant 'technocrat' to the post of Prime Minister. And brilliant he must be, because he faces a baptism of fire.

First, he has to unite three political parties that have been at each other's throats in a coalition Greek government. Then he has to face-off demonstration after demonstration, as thousands of anti-austerity protestors take to the streets. And most difficult of all, he has to implement a fearsome programme of cost-cutting, privatisation and economic reforms.

Bye Bye Berlusconi

The situation in Italy, if not quite as dire as Greece, still looks grave.

A lot of commentators and politicians were, if we're quite honest, rather glad to see the back of Silvio Berlusconi. Italy's ex-prime minister seems to have been accused of everything, including mafia collusion, tax fraud, false accounting to bribery, during his terms in office. Oh, and that's not forgetting those bunga bunga parties!

But despite the cloud of bad publicity that has followed Berlusconi around, you can say in his favour that he has, until now, been the great survivor, serving longer than any other post-war Italian leader.

But what about his replacement, Mario Monti? Well, there is something very old school about Sig. Monti. But although he has a gentlemanly manner, he hides behind it a steel will.

After all, this is the man who dared to fine Microsoft (NASDAQ: MSFT.US) for abusing its dominant position at the height of the firm's supremacy, and who stood up to General Electric (NYSE: GE.US), blocking its merger with Honeywell (NYSE: HON.US).

Monti has strong intellectual credentials, having taught at Turin and Bocconi Universities and chaired a number of leading European think-tanks. And he has worked at the heart of Europe, serving as a European Commissioner.

Clearly he is the technocrat par excellence, but he also seems the ideal candidate to steer Italy through the current storm. And he has to hit the ground running, having to fix Italy's public finances and restart economic growth, while heading off the market's speculative attack on Italian government bonds.

Asked by reporters what Italians could expect, Monti gave a typically balanced reply: "Blood no, tears no, but maybe sacrifices."

If a great wave shall fall

What we are seeing here is the realisation that, in these troubled countries, the best leaders are not fist-waving populists but serious, intellectual technocrats. I broadly agree with this viewpoint. I believe these new appointees have the ability to see the big picture and make the intellectual leaps required that, perhaps, their predecessors lacked.

Does that mean they will succeed? Well, no one can predict that. But the challenges they face are immense, and not even a genius can hold back the tide.

More from Prabhat Sakya:

> Worried about the state of the eurozone right now? Then download The Motley Fool's latest free guide -- What To Do When The Market Crashes -- without delay!

Share & subscribe


The opinions expressed here are those of the individual writers and are not representative of The Motley Fool. If you spot any comments that are unsuitable hit the flag to alert our moderators.

BarrenFluffit 15 Nov 2011 , 4:08pm

The appointment of a technocrat is usually a temporary commitment to a specific set of goals. However the business of politics involves compromises and trade off's. Is a technocrat the best person to keep everyone on side?

ANuvver 16 Nov 2011 , 8:18pm

Italy has a history of temporary administrations anyway, and has actually made a technocracy work before. Lets hope for the best from i Professori for now.

Join the conversation

Please take note - some tags have changed.

Line breaks are converted automatically.

You may use the following tags in your post: [b]bolded text[/b], [i]italicised text[/i]. All other tags will be removed from your post.

If you want to add a link, please ensure you type it as as opposed to

Hello stranger

To add your own comment, please login.

Not yet registered? Register now.