Greece Reaps the Fruits of Corruption

Greece's financial and fiscal problems are front page news over my breakfast table daily here in London.

The EU will probably bail out Greece, however reluctantly, without her resorting to the International Monetary Fund, or through massive Chinese bond purchases. Brussels will do this out of EU solidarity and the need to protect the Euro and even bigger member nations (Spain, Italy) from contagion, but Europe's patience is coming to an end, and the anger with Greece's systemic corruption is palpable.

According to Transparency International, a Berlin-based think tank monitoring global corruption, of the 27 countries in the EU, Greece is tied with its Balkan neighbours Bulgaria and Romania for the lowest place.

Think about what this means. That Greece, in the European Union for nearly 30 years, is on a par with two countries which joined in 2007, both of which suffered a very harsh communist legacy. The figures prove that Greece and its fellow Balkan neighbors have not really emerged from being Ottoman pashaliks; Ottoman norms of corruption are as strong as ever.
Greece resembles other peripheral Euro economies, which overleveraged themselves using credit ratings that reflected the Eurozone as a whole, rather than the country in question.

This is not Greece's--or Spain's fault—it is rather the fault of the Eurozone policy makers who have created a currency union without the fiscal union required to make it work. This is the one "moral" argument in Greece's favour, but her credibility is shattered by the state of corruption in Greece.

Greece, like Spain or Portugal, can be forgiven for profligacy, but not for a level of corruption endemic in Greece.
Most of us who have lived in Greece have our own stories of corruption, these are a few of mine.

In the process of repatriation as a Greek-American, I witnessed the pettiness, inefficiency, arrogance, and extortionist tendencies of the Greek "civil" servant.

This was corruption writ small. As a banker in Greece, I also witnessed the version writ large with corporate and shipping clients. A shipping company finance director told me that, when he sought his company's tax refund, a tax inspector told him it would "cost" about 10 percent to assure that the refund materialised.

It is estimated that the average Greek family pays over EUR 1500 per year in bribes; when one considers that EUR 1000 per month is decent take home pay, and even if you factor in a "black economy" input, that represents one month's salary.
Finally, the Greek government's "cooking" statistics needs no further comment.

This condition has sapped the EU's tolerance to the breaking point, and has destroyed Greece's credibility, perhaps irrevocably. No nation can afford to have Greece's credibility deficit. As usual, it is the poor who suffer the most.

As a Greek citizen, I applaud Prime Minister Papandreou's attempts to bring transparency to Greek politics, but he has well over five centuries of a corruption culture to tackle.

The Ottoman Turks ruled with a combination of extortion and laxity; pay the right person, and you were left alone. The concept of the state as a provider of infrastructure and a legal system were alien.

The Greek, and Bulgarian, Serbian, Romanian and other states which threw out Turkish rule did not throw out Turkish norms. These remained, solid as ever.