Truth Commissions after economic meltdown: Learning or blame game?on 9 January 2018
By Iosif Kovras and Shaun McDaid
Anniversaries often help societies learn from the past, both the successes and failures of the bygone era. 2018 will mark the centenary of the end of the First World War, and will be the focus of much commemorative activity. However, it will also be the 10th anniversary of the beginning of the Global Recession. 2018 therefore provides a useful opportunity to look back and identify what lessons have been learned from these events, and how such learning occurred.
In the early days of the post-2008 recession, many European leaders framed the crisis as a “blessing in disguise”; an opportunity for effective reform and economic recovery. To this end, Truth Commissions were used in at least four countries suffering from recession (Iceland, Ireland, Greece and Cyprus), to discover what went wrong and who carried responsibility.
Against this backdrop, we sought to understand what specific mechanisms or policies political elites used to convert past policy failures into lessons for the future, arising from such Commissions. This was the focus of our recent article, published in Political Studies (no paywall), which examined three post-recession Truth Commissions in Europe.
The logic of the Truth Commissions
Economic Truth Commissions are investigative bodies tasked to document the causes of the crises, and identify those individuals or institutions responsible for them. These mechanisms can benefit countries emerging from economic crisis in two important ways.
First, the commission’s report can convert past policy failures into guidance for reforms to protect the country from future crises. The Pecora commission – named after its commissioner, Fernando Pecora – established to investigate the great depression in the US is a good example. Its report offered a number of novel institutional reforms, resulting in the Glass-Steagall Act. This legislation led to the separation of commercial and investment banking which ultimately protected markets from a financial crisis for several decades.
Second, contemporary financial crises are complex and technical, often occurring in distant or virtual locations, enabling only a minority of experts to understand their root causes. Truth Commissions have the capacity to ‘uncover’ complicated processes unseen by most citizens but affecting their daily lives. In such a way they can accommodate the popular demand for accountability and create a master narrative about the crisis.
Lessons from three European Truth Commissions
To assess the role of Truth Commissions in post-crisis politics, we focused on the comparative experience of three European countries, which had suffered severe economic shocks in the Great Recession: Iceland, Greece, and Ireland.
All three countries established these commissions to document the causes of the crises, and offer recommendations for future reforms. Our research showed puzzling variations regarding these commissions, both in the timing of their establishment and their overall success in delivering their objectives.
While the Icelandic commission was set up weeks after the crash, the Greek and Irish commissions were established several years later. Most notably, the outcomes from the commissions were also radically different. The recommendations of the final report of the Icelandic commission became the political compass that, initially at least, guided further reforms, supported by cross party consensus.
The Irish and the Greek commissions, however, quickly turned into politicized instruments for political elites to play blame game. But what accounts for these divergences?
Two Types of Learning
We found that there are two types of political learning – institutional and instrumental – related to the establishment of a Truth Commission. Institutional learning applies to countries where rebuilding trust after a major economic crisis is important for political elites: here, levels of public transparency and trust in institutions were already high in pre-crisis periods, and a Truth Commission appeared in the early stages of crisis.
The second, instrumental learning, applies to countries where newly elected governments had no direct involvement with either the immediate onset or initial (mis)management of the crisis. Here, Truth Commissions were only established when seen as expedient, usually before or after critical political events, such as elections or IMF bailout negotiations. In effect, they were useful devices to blame predecessors in an attempt to gain or consolidate electoral spoils. But these attempts often have unintended consequences, which can actually backfire on the governments that seek to profit from them.
This was certainly the case in Greece and Ireland, where attempts to smear political opponents ended up highlighting systemic weaknesses in the political cultures – which tended to absolve any one party from blame for the collapse. Perhaps the best evidence that such commissions, where used instrumentally, may be problematic is in their future place in party political discourse. Few, if any politicians, refer frequently to the Greek or Irish commissions in the discussion of economic policy in their respective states.
Are truth commissions useful? Lessons for the Future
The comparative analysis of the three countries reveals mixed findings. Their use is certainly not without risk. While in some countries they have been used as an instrument to score political points and play the blame game, in Iceland the Commission has been the catalyst for significant changes. Firstly, based on a thorough investigation it established an official narrative about the causes of the crisis that made it impossible for critics to dispute fundamental facts. Secondly, its findings were instrumental in the subsequent criminal investigations leading to the effective prosecution of dozens of bankers. Thirdly, and most importantly, the recommendations were endorsed by political elites to reform key institutions and the political culture that paved the way for the meltdown; currently the country is much better protected from the consequence of a future financial crisis.
Whilst the Greek and Irish cases serve as a cautionary tale, the Icelandic truth commission is a glowing example of how societies can learn from the past. Other countries facing similar challenges may have much to learn from Iceland’s experience.
Iosif Kovras is Senior Lecturer in Comparative Politics at City University, London. He tweets @IKovras. Shaun McDaid is Lecturer in Politics at the University of Huddersfield.He tweets @DrShaunMcDaid.
This article contains findings from a research project which was generously funded by the ESRC as part of the ‘Truth, Accountability or Impunity? Transitional Justice and the Economic Crisis’ project (grant reference: ES/M011321/1). For more information about the project please visit our website: https://accountabilityaftereconomiccrisis.com/
Image: Clement127 CC BY-NC-ND