Is Greece Too Corrupt to Be Bailed Out?
by Rick Ackerman
from Rick’s Picks, originally posted December 22, 2009
From a civilizational pinnacle, modern Greece has fallen into a cesspool of public corruption
THE RECENT COLLAPSE OF BOND MARKETS in Greece threatens the very stability of the European Union. Although there is talk of a bailout, the country may be too corrupt for a rescue attempt to do much good. How bad is it? The answer to that question is startling, as the following report makes clear. It is from a Rick’s Picks subscriber who lives in Greece and believes the country’s economic potential is being squandered by a political spoils system that deeply permeates the business culture at all levels. He writes as follows:
“Greece is a beautiful, mountainous country with diverse natural scenery. Geographically, it occupies the majority area of the ancient Hellenic world at the southern part of the Balkan peninsula and the eastern part of the European community. It has a land area of 130,800 square kilometers. Its coastline extends for 13,676 kilometers, with 227 inhabited islands that rest on a sea of amazing clarity. Historical monuments abound, making the land a virtual museum and attracting millions of tourists every year. It has a population, according to the 2001 census, of 10,964,020, and a per capita GDP of $30,681. It boasts the largest ownership of shipping tonnage (tanker and cargo) in the world, with a total dwt of 141,931 thousand. It owns some of the largest natural resources in specific minerals in the EU, such as bauxite, magnetite, nickel, and perlite. There are also has anhydrite, gypsum., bentonite, gold. cement, magnesium compounds, pumice, and of course marble. In addition it has large flocks of livestock and fish stock. The abundant sun shine and the winds make it potentially self sufficient in clean energy.
“For all of its natural blessings, Greece is not producing sufficient wealth to repay its obligations. Foreign debt is estimated at € 200 billion. The sudden revelation that the real public deficit has reached 12% of GDP against the previous figure of 6% which was released just three months ago shocked the world markets. Repeated downgrades of its economy followed the news. Obviously, the economy is sick. Finding the correct therapy for a patient requires identifying the disease. In this case, someone may blame it on the world crisis. But frankly, it is not so. The world recession merely exposed and brought to the forefront the real weakness underlying the façade of prosperity.
“At the heart of Greece’s problems stands decades of mismanagement and malinvestment of borrowed funds, including economic assistance from the EU. Responsibility lies with a highly corrupt, unjust and inefficient government sector. This is a well publicized fact buttressed by several relevant statistics. The state operates in a structure much like feudalism. Smaller lordships with special interests operate within a greater feudal kingdom comprising the political parties, with laws and measures made in their favour. This works, naturally, at the expense of the overall society, and therefore the economy.
Layers of Control
“On top are the big political parties which oversee a large government sector that encompasses services, industries and the issuance of special licenses to private interests. Feudal lords and the syndicates who actually control them support the government in exchange for special benefits. Within these fiefdoms there are others, and so on, down to the lowest possible level where local governmental authority exists. Nepotism and political favoritism reign supreme.
“If their prerogatives are threatened in any way, the feudal lords curtail services, bringing the economy to a standstill. Any administrator like the newly elected prime minister will be isolated within his own party and boycotted if any serious effort is instigated to check the power of the feudal lords.
“Although the laws in Greece are Draconian for the private person, ministers, members of parliament and public employees are almost never sanctioned. Not one politician or tax officer has been punished for any wrongdoing in 20 or so years. Note that this is happening in the most corrupt nation in Europe, where numerous large scandals occur almost every year.
“Meanwhile, hundreds of civilians are being thrown in jail and their properties confiscated by the state because of relatively minor offenses. Government versus citizen power is extremely unbalanced as far as comparative rights and penalties. Greeks are a talented and ingenious people. Their creativity, however, is dampened by an all-powerful, mortally sick public sector. Mirroring their government’s attitude, citizens find ways to circumvent paying taxes. The public sector’s corruption expands like a cancer, spreading injustice; it contaminates all the healthy cells, perpetuating amorality. Stealing becomes justified as a path to success.
“For Greece to get back on its feet and harness its dynamic potential, this whole mentality must change. Injustices and distortions must be addressed immediately to promote the growth of a healthy economy. One solution would be to establish special investigators and prosecutors to root out public corruption, with amnesty for whistle-blowers.”