21 October 2011

In Greece, 'corruption pervades every corner of life' - by Jon Henley

I repost the newblog post by the Guardian

Original article stable link: http://www.guardian.co.uk/world/blog/2011/oct/20/europe-breadline-corrution-pervades-corner


Jon Henley is travelling through Portugal, Spain, Italy and Greece to hear the human stories behind the European debt crisis. Here Leonidas Pitsoulis describes Greek corruption

Greece on the Breadline

Many Greeks have extremely low levels of personal debt – by western standards. Photograph: Angelos Tzortzinis/AFP/Getty Images

Leonidas Pitsoulis, 43, returned to Thessaloniki seven years ago after leaving at 18 to study and then teach in America and at the LSE in London. Coming back as an adult after leaving as a teenager was an eye-opener, he said.

"I really hadn't been aware of the scale of everyday corruption here," he said. "You just don't pick up on that, as a kid. But coming back, and when you're used to another way of doing things, it really, really strikes you."

Corruption pervades every corner of day to day life in Greece, Pitsoulis said. "From the doctor who takes his consultation fee without declaring it, to the bar-owner who buys his stock cash, no questions asked," he said. "It's just unthinking; the way it is."

Nobody gets a job because they're the candidate best qualified and suited for it, he said: "You get a job because you're the son or nephew or cousin or old schoolfriend of someone who knows someone who might want a little service.

"I saw it in my military service –there I was, coming back from the US with a PhD, you might think they'd try and make sensible use of me somehow. But I was sent to an island to kick my heels, while the 19-year-old sons of people who knew people got to do quite serious jobs in Athens.

"It's one of the reasons why the state administration is so ineffective – you have people handling big sums of money, public money, who have no specialist education or training for that kind of job. Amazing, really."

Like all his colleagues at Thessaloniki university, where he teaches maths, his salary has been cut almost in half – from around €40,000 to €24,000, he said – and he's been hit by an array of new and higher taxes.

A saving grace for many Greeks, he says, is the extremely low level of personal debt, by western standards, of most households. Most middle-class Greeks own their homes outright; there's a "cultural aversion" to debt that leaves many in a better position than, say, debt-laden Britons or Americans would be if their governments tried the same draconian austerity measures.

But what alarms him more is that he can't see a political way out of the current crisis.

"Economically, we have two choices: leave the euro and revert to the drachma," he said, "which is probably possible because I think now the EU banks will be protected if we default. But that would have a huge downside: all those wealthy Greeks who have euros stashed away abroad would become much, much wealthier in drachma. That doesn't bear thinking about.

"Or, and I think this is what the government is doing, we can devalue indirectly, by drastically lowering the standard of living. We can't devalue the currency, because it's the euro. But they can do it indirectly, by squeezing us till the pips squeak."

Understandably, this is not a popular strategy. "That's the issue," Pitsoulis says. Politically, I can't see the way out of this. In the past this kind of situation might have led to a coup d'état. Now, I don't know. Something needs to be done to change this system, and it won't be possible while it's still in place. It's like a machine with too many viruses; we need to reboot, wipe the hard disk, start again. But how?"

Greece's economy could be placed under some kind of international supervision, he suggested; although that would never be politically acceptable. He remains, though, cautiously optimistic: "There's a lot of talent here, a hell of a lot," he said. It's just stifled by the corruption, the inefficiencies, the system. We need to reset, start afresh. That's an enticing idea, at least."


NOTE by George Papaioannou:

I completely agree with most description offered by Leonidas Pitsoulis about the prevalent, every day phenomena of corruption within the Greek society.

However, i would point and primarily stress out my belief (which i think is shared by a well-respected layer of the society) that corruption has been derived and produced over these 40 something years of the Modern Greek (3rd) Democracy by the bi-polar political party system. I would openly promote the opinion that the root of the establishment of a society that acts corruptly is the type of self-interested, non-equal governance by Pasok and Nea Dimokratia (the two parties that have governed Greece after the reversal of the military regime in 1974).

The idea that priority is given to the political affiliations, beliefs and active party support of people-members-supporters against the fair judgment based on performance, skills and abilities for e.g the recruitment of public servants, or the distribution of means tested benefits to one region instead of the other was a key principle of governance by both parties that ruled over the decades.

Initially this was desirable by the most layers of the society that found the short-term effects reinvigorating for their pockets and the economy. Expansion of the public sector, regardless of who is employed and under what criteria lead to the introduction of new wealth to the market through the increase in average incomes since everyone employed is a key spender. Thus, the phenomenon was acceptable by the private sector too.

On top, the private sector's major heads would never oppose a system that would always seek to satisfy their needs by imposing pro-enterpeunerial measures or by selectively subsidising some key players in each industry with vaguely clear and transparent public competitions for public works, hospital supplies, e.t.c.  These capitalists who their interests were well protected and promoted by the two parties would never seek to condemn the acts of corrupt activity by the political status quo.

These who were trapped in the illusion of an expanding welfare and pseudo economic stability were the poorer layers of the society (the 'masses') those who in other words have the power to determine electoral outcomes as they constitute the majority of the population.

The phenomenon of party driven corruption gradually was incorporated into the everyday life. Public servants in key financial or political positions, such as the tax collectors and those responsible for issuing building permissions or make construction checks, got into the system of self-interested attitude by engaging actively with the private individuals seeking economic rents for their responsibilities or to offer beneficial or favourable treatments (e.g to neglect a fee due to an economic violation). Hence, the corrupt daily behaviour started spreading.

Citizens who were not involved in such corrupt mechanisms, perhaps realised (some) that when the fairness and justice of the system is lost (less qualified were recruited, selected for postgraduate courses, granted access to public resources, and receiving favourable treatment) then the problem started to overheat. A small coffee owner, a taxi driver, will have limited incentive to be financially lawful. The incentive in other words to pursue illegal or profit hiding and tax avoiding tactics rises vertically.

Through this method and I would believe, sequence, the corrupt norm spreads until it constitutes the number one problem of the Greek society nowadays. The anecdote that "I am stupid because I have decided to be lawful (towards the government)" is a commonly heard one and attempts to signify this sense of anger and frustration that a 'good' citizen who is correct against her responsibilities faces.

Gradually and as the economy started gradually to move away from its pseudo-prosperous era, with tighter fiscal policy to be applied, with taxes rising and benefits being massively cut, and primarily with the primary 'weapon' of the bi-polar alternation that of recruitment to the public sector being disallowed by the troika forces (IMF, ECB, EU) then the problem of corruption started appearing more and more to the daily agenda.

The reason for the promotion of corruption (which existed at the same magnitude, degree, and level before) to the headlines of the newspapers whereas before it was just the 'primary problem to be tackled' by each government until the day of the election, is that the issue of corruption and especially the tax avoidance has hit the government policy plans as a boomerang. Corruption used to be the means of exploiting the resources of the public budgets for party, political benefit for every incumbent. At the moment is the reverse. The pre-existing corruption augmented the public disagreement and opposition towards the status quo, leading to questions of legitimacy. Unfortunately, when questioning legitimacy due to politically driven corruption this can be the end for every government. Hence, a vicious cycle with a new form of corruption has initiated. This time is a purely political, qualitative corruption. I name it corruption of public disobedience. People, hide profits (if they are small business owners) or reduce their true salaries (if they can), refuse (or are truly unable) to pay taxes so as to politically show their disagreement towards the government's decisions. A non-new style of Citizen's Corruption with a clear message to the government has begun.

My resolution, thus, having understood the cause and the fundamental influence of the political status quo to the construction of the corrupt patterns and norms, will be a complete decapitation of the root of the problem. Since the root as i perceive it is the bi-polar system of governance and the two parties that have constituted it, i reach the conclusion that their reversal is of direct and immediate importance if we are truly willing to see the Greek society acting in a harmonic and civilised, transparent way again any time soon.

P.S: Apparently, my resolution does not induce any kind of political and economic supervision as perhaps the solution proposed by Leonidas Pitsoulis. I find that a foreign supervisory board or body will be completely non-tolerable by the Greek society and would lead to a massive civil unrest. However, i do agree 100% that if the capabilities of the people in Greece are used correctly and above all under fair criteria then an efficient governance can be a reality. If this is achieved and legitimacy of their government or political system returns to the minds of Greeks then the corruption phenomena will gradually decline in frequency. Also the trust will return to the social bonds across the layers of the society.