Ringfencing Greece

Tragedy is a Greek word — and so is catharsis. And yet, the odds are good that only the former will come to characterize what will happen in Greece from this point on. Before long, the February 2012 bailout agreement negotiated by the eurozone’s finance ministers will come to be seen as the high water mark of trying to impose reason and rationality onto what ultimately is a hopeless situation.

Turning things around would take a miracle, but not because Greece’s debt levels, even after a significant restructuring, remain staggeringly high. The real challenge lies in the country’s political and administrative culture. The country suffers from decades of (bipartisan) mismanagement, corruption, fraud, profound ineffectiveness, collusion, ineptitude and mere wishful thinking.

Hard though it may be to imagine, in some respects the Greeks are worse off than the East Europeans were in 1990 when they finally shed the Communist yoke. The citizens of those countries, however, undertook two constructive measures: First, they removed the top layers of the Communist Party apparatchiks and found some upstanding citizens who, for the most part, had not been involved in politics and called on them to govern their countries for a brighter future.

And second, they did not have to rebuild their administrative structures from scratch. Politically rewired and recharged, minus the Communist mindset, they were able to revitalize their bureaucracies in order to provide their countries with competent administrations. Eastern Europe, in other words, had its cathartic moment.

There is very little hope that the same will happen in the case of Greece. For all the understandable frustration, there is little evidence of a “throw the bums out” spirit. In addition, the bureaucracy is so thoroughly infected with inefficiency and, yes, corruption that there is little chance for it to be a reliable factor in the much-needed turnaround.

It also doesn’t help that some Greek politicians, above all the country’s finance minister, Evangelos Venizelos, have a habit of trying to turn on their “boy, do I have a deal for you” charm with their foreign interlocutors. Venizelos, in particular, does not seem to be aware that he is viewed internationally as having all the charm of a snake-oil salesman.

All the current talk about Greece either leaving the euro and going back to the drachma or staying in the euro at any price overlooks the pivotal fact that, in either case, the country has to reinvent itself from top to bottom. All of the cozy deals which certain professions have won at the expense of the public need to be ended. And effective income tax collection, particularly at the upper end of the scale, needs to begin.

And yet, it is here where the Greek “reforms” have run into the deepest of troubles. Privileged lobbies, such as pharmacies, notaries, cab drivers and others, continue to play their political games, hoping yet again that the world will lose focus and forget about all of Greece’s special deals at home.

The EU has prescribed some 150 corrective measures that Greece needs to enact to have a shot at a prosperous future, but it is clear the powers that be in Greece lack the sincerity of purpose to tackle them. They behave with the same willfulness of a Vladimir Putin, without realizing that, unlike Russia, they don’t have the oil receipts to grease the wheels of a dysfunctional, if not illegitimate, state.

All of that is a great tragedy. As many young Greeks have argued, this is the crisis they have been waiting for. This is their one chance to rectify the many problems handed down from past times and to find a pathway to a better future. And yet its resolution is hampered by all those who are politically and administratively connected and act like leeches hell-bent on sucking the rest of the Greek public edifice dry for their own benefit.

A Greek commentator has argued that the Greek government may be incompetent, but it is not suicidal. One would certainly hope so. But most of Europe has now made the opposite bet. The reason why “progress” on “resolving” the Greek debt crisis has been so excruciatingly slow is that the real issue for most Europeans is not Greece itself, but making sure Greece doesn’t bring down the rest of Europe.

And in that endeavor, despite all the criticism that the “continentals” made the resolution of the debt crisis more costly, they may well be succeeding. Countries like Italy, Spain and Portugal are taking many of the steps they need to in order to lay down a credible case that they are actually intent on saving themselves. They seem to realize what the first order of business is — domestic reforms to generate growth and employment.

That is where the gulf that separates Greece from the rest of Europe lies. The Greek establishment is not keen on saving Greece, but only itself. Since the end of the Second World War, they have felt fully confident in their ability to play everybody else for fools. And just who do they see as fools? The Greek people at large, as well as much of the rest of the world.

That kind of hubris (another Greek word) is very deeply rooted in Greece’s political “elites.” What Europe has done over the past two years is its level best to “ringfence” Greece, to prevent it from contaminating other countries. That process isn’t finished quite yet. But unlike Greece’s pseudo-progress, it is a process in earnest forward motion.

Editor’s note: This article is based on comments the author made during an interview on the Diane Rehm Show on February 21, 2012. The audio and a transcript of that interview can be found on the show’s website.