Greek Tragedy: Where Did It All Go Wrong for the Cradle of Democracy?

The ills plaguing Greek society include government paralysis, monopolies, rampant corruption and tax evasion.

ATHENS − My first visit as a journalist to Athens was in March 2010, a few days after the Greek government bonds began to collapse on the international financial markets. The nation’s financial straits, structural ills and bond market all delivered a clear message: Greece was about to collapse and that would send the European capital markets into a maelstrom.

But at The Herald Tribune’s “Greece Investment Forum: Moving Forward,” held a month earlier in this city, the mood was quite ebullient, miles away from crisis. The Greek finance minister announced that his country wouldn’t need aid and that it was in the process of profound reform. Politicians, businessmen and journalists with whom I met smiled forgivingly at my worried questions, and reassured me that Greece was in far better shape than I imagined, that its structural problems were not new and that crisis is a cyclical beast.

In any event, a few months after that early 2010 visit, Greece’s agricultural minister visited Israel and asked to meet with me. An hour into the interview − during which I tried to understand the baseline problems of the Greek economy − I reached the conclusion that either I understood nothing about that economy, or the minister was trying to pull the wool over my eyes, or the interpreter was terrible, or all three. The minister dismissed my questions about corruption, tax evasion, and the Greek elite of politicians and businessmen who serve mainly their own interests.

Toward the end of 2010, the Greek government invited me to Athens for 12 hours to hear about their plans for privatization and economic reforms. I was told they hold such meetings with journalists from all around the world, with an eye to attracting foreign investment as privatization got under way.

The morning I got to Athens I was told that two of my three interviews had been cancelled, and that I had been scheduled to meet other ministers instead. The reason was that, following meetings between the Greek government and the “troika” − the European Union, the European Central Bank, and the International Monetary Fund − privatization had been put on ice.

Ultimately I met with two ministers. The first seemed remarkably cheery and was deeply interested in Israeli politics. He explained what a stellar leader the Greek prime minister, George Papandreou, was. The second minister invited me to his Athens apartment, where he received me with an entourage and spoke about the courageous legislative amendment he had spearheaded that morning in parliament. The amendment, he claimed, would allow suspected tax evaders to be arrested on the spot, without the need to wait for court approval. The texts sounded dubious, the declarations seemed unconnected to reality and the explanations in the local English-language press were weak.

During the last year I and the rest of the world have watched Greece’s tragedy: its descent from a developed economy, which was built on a history and culture that few countries in the world can boast, and which in 2004 even hosted the Olympic Games, into a crumbling Third World country, shattered and cruel.

Then earlier this month I read about the arrest of Greek journalist-publisher Kostas Vaxevanis for breach of privacy after his magazine Hot Doc published the names of more than 2,000 suspected tax evaders with Swiss bank accounts, and I felt something was starting to move forward in Greece. The masks were starting to come off. The real story was getting out. Maybe this time people there would tell me what was really going on in their country. I reached Athens a few hours after Vaxevanis was acquitted of the charges.

Swiss bank accounts are a sensitive issue everywhere, but in Greece they touch a nerve. The country is riddled with tax dodging, a culture shared by all − politicians, tradesmen and of course business leaders. An
American study has estimated the country’s loss of tax revenue at 30 billion euros a year. The Greeks seem to feel they shouldn’t have to pay taxes given the shoddy quality of service they get for their drachma.

The astonishing aspect of Vaxevanis’ story isn’t his arrest for doing his journalistic job: It’s the fact that two years ago International Monetary Fund chairwoman Christine Lagarde handed over names of Greek citizens who could be dodging taxes to the Greek finance minister. Neither he nor his successor had investigated this − even though their country was going broke and the economic system was crying loudly for new norms.

The part that caught my attention was that the publication that outed the names isn’t actually a newspaper. It’s a fringe journal that Vaxevanis, an investigative reporter, founded six months ago at an investment of 6,000 euros. It’s essentially a one-man show. So where is the rest of the Greek press?

Greek to me

Unfortunately, I don’t read Greek. But when I arrived on the afternoon of November 2, a Reuters correspondent reported that while Vaxevanis’ picture, unshaven and wearing a khaki jacket, had graced the front pages of the Financial Times and Herald Tribune, his arrest and vindication were completely absent from Greek television and relegated to the back pages of the papers.

Vaxevanis was blunter, telling the press: Greece has a huge problem, a democratic one at its heart. The country is controlled by a toxic cadre of politicians, businessmen, and journalists who watch each other’s back, he charged. He for one wasn’t surprised that while the international press covered his story and the affair of the Lagarde list, the local press barely touched it.

The press is controlled by the tycoons and banks, and is essentially paralyzed, he said: “It’s tragic. The Greek public always knows only half of the real story, and it’s worse than actual lies, because it creates an impression.”

Saturday morning at Syntagma Square, I meet the Greek journalist George Kapopoulos. He is deeply knowledgeable about historic, economic and political processes in Greece, France, Germany and the EU. I ask his opinion of Vaxevanis, and Kapopoulos wasn’t a fan, to put it mildly. He felt Vaxevanis was “populist,” and yet he agreed with what the journalist-publisher did. Greece has plenty of financial newspapers, of which most or all are losing money, Kapopoulos noted, adding: “Why do they continue to publish? Because they belong to people with other interests, mainly to influence the government and banks.”

Most of the reporters in the press and on television censor themselves, know what the boundaries are and who not to mess with, Kapopoulos told me. The entire economy is controlled by six or seven families and not a paper in the land will write about them. Nor do they compete with one another: Most branches have cartels. They’ve divided up the market like mafia dons. Not even the leftist press writes about them, Kapopoulos said.

The next morning Harris Ikonomopoulos, a lawyer who is very familiar with the Greek media and communications scene, drew me a map of cross holdings in the media. Take the Israeli system, double it and you get the map of telecoms in the so-called cradle of democracy: ten groups, cross holdings in the media, shared holdings of television networks, and countless conflicts of interest and personal friendships between bankers, journalists, publishers and politicians.

Not coincidentally, Ikonomopoulos is Vaxevanis’ lawyer. Sunday morning he took me to a shorefront cafe in a wealthy Athens neighborhood, ten kilometers from the city center. The parking lot brimmed with Mercedes, Porsches and Lexuses. Somebody claimed that the number per capita of Porsche Cayenne jeeps in one particular Greek town is the highest in the world. The country is impoverished and imploding, its healthcare system is collapsing, but there’s a huge club of wealthy people and businessmen with friends in government who don’t have to share the pain.

Sacred cows

The night before, we had been at Ikonomopoulos’ office. He had complained at length about the corrupt relations between local politicians and businessmen, big business and the media. But the conversation the next morning was devoted to his dream. It wouldn’t be that great a trick to turn Greece into a paradise, he said, if the public sector is reformed from top to toe, if red tape and stupid laws are eliminated and if corrupt politicians and businessmen could be brought before the law.

I told him about a Greek-American reporter who told me the Lagarde list had been ignored partly because one of Greece’s biggest tycoons was named. He knew whom I meant: a man rotten to the core, with ties to a lot of politicians and other businessmen. But he didn’t know if that was why the list had been spiked, the lawyer said.

George Kapopoulos is a lot less optimistic than Harris Ikonomopoulos. “Greek society has been stretched to the limit. It can’t take any more austerity. The government is paralyzed, our democracy isn’t working.” And it isn’t only Greece’s problem, he noted; this is the case in much of Europe. “We’re just the testing ground. If the austerity continues, you’ll see extremist parties on both sides getting stronger.”

Kapopoulos told me how he sees Greek politics. The two big parties are controlled by the big public-sector unions. That’s how the left, the PASOK party, controlled the state, and then the right discovered that path to government and embraced the unions, too.

“The Greek public sector is like cows in India − untouchable,” Kapopoulos said. For five years there’s been talk about cuts but hardly anybody got fired because it’s impossible to do that. It’s the private sector and small businesses that take the blows and they have no say in the political process, he added.

What about the left? “It isn’t a left in the European sense of the word,” Kapopoulos explained: The Greek left is preoccupied mainly with protecting the unions’ privileges. The leaders of the left come from the unions and from government companies; they can’t understand the plight of ordinary people, who rarely arise in protest, figuring there’s no point in that.

I told the lawyer that an inefficient public sector isn’t a uniquely Greek problem. “Don’t believe the statistics we publish here,” Kapopoulos answered. “The problem is a lot worse here. We have the most bloated public sector in Europe.” France’s is also big but it is efficient and provides good service to citizens − which is not the case in Greece, he explained. What Greece has is giant private companies, monopolies whose main clients are public sector and government companies: “We have ties between business and monopolies and the press.”

He accuses the unions of controlling politics, but, I pointed out, in
Sweden, Denmark and Germany there are big unions in both the public and private sectors, and yet their economies are strong.

Those unions and Greek’s unions have nothing in common, he countered: “The unions in Germany or Scandinavia are responsible. They don’t see the government or the public of taxpayers as the enemy but as their partner. The German unions agreed to a pay freeze ... Germany is killing us with pressure for austerity, the young are fleeing − and what you see here you’ll see in Italy, in Spain, in Portugal and actually in a lot of places around the world. This system simply doesn’t work.”

What of the young?

What do the young people in Greece say about the country’s plight? Are they pessimistic. too? Dr. Aristotle Tziampiris is a professor of international relations at the University of Piraeus, who spent several years in the United States and returned to Greece seven years ago. He isn’t thinking of moving again, he said; this is his country and he isn’t giving it up, although he hinted that he isn’t exactly hungry for bread. His salary was going to be cut a few days later, he said, but everybody’s taking pay cuts. And then along came the Lagarde list and the Vaxevanis story, Tziampiris said, and reminded everybody of how the government, at the height of the crisis, failed to tackle the enormous tax evasion of the wealthy.

Tziampiris shared the opinion that Greece has reached a watershed: “The crisis forces us to look in the mirror and what we see, we don’t like. But that also gives me hope: We have elements here who are willing to talk, to expose and admit to things that had been denied here for years by everybody, including the press. Greek society is finally ready to look at its bad habits.”

It’s like the 12-step Alcoholics Anonymous program, Tziampiris added, but Greece is just at the beginning. It’ll be a long process. Democracies don’t know how to move fast, he said, “But it’s happening.” He draws his optimism from his young students now. “I see what’s happened to them in the last year. They’re more aware, taking an interest in other things.” They realize having connections won’t ensure a cushy job any more, he added; they have to work harder and achieve excellence. But more importantly, they won’t take it any more: They won’t tolerate the corrupt practices that brought Greece to its knees.

“You have to understand,” the professor said. “The young didn’t take part in these practices, but they’ll pay the price. Now they understand it.”

They are confident that the old Greece is dead and a new one is rising, and Tziampiris too believes this, despite the factors driving the leaders to corruption: human nature, economic and social forces and sheer greed. There is a brain drain, however; his best students are running away, but to the United States, not to Europe. But the ones who remain have a different discourse.

Greece needs to be more European, with a more effective public sector and less corruption. “We need more values, leadership and expectations,” Tziampiris said.

Right now people are casting about for scapegoats: For instance the neo-Nazis, a rising power in Greece, are blaming everything on illegal immigrants, but the nature of a political vacuum is to be filled. People in Greece have grasped that they are paying the price of bloated government, the professor explained. Once, if they heard about some corruption or other they’d just wonder how to get a piece of the pie, but now they realize that this doesn’t work any more, that it’s a yoke on everybody’s neck.

The picture of the Greek economy is very complicated. For the last four years the international media have concentrated on the special relations between Athens and the European Union, the monetary union that enabled Greece to atrophy over years, and the deep rift that Greek’s collapse exposed between the bloc members, especially between hard-line Germany and Greece.

But the origin of Greece’s economic and social crises, rendering it a basket case within a mere few years, does not lie only in the union or in the aggressive, painful medicine that Germany insisted on administering: It is directly connected to the structure of Greece’s society and its economy over long years.

What do the profound faults in the political system, the business sector and public sector have to do with the type of discourse among the Greek public and in the press? Whose fault is it that one morning Greeks woke up, as Tziampiris put it, looked in the mirror and didn’t like what they saw? Should other countries in crisis learn lessons from Greece or is it a unique case?

Harris Ikonomopoulos, the lawyer, is a wealthy man. He speaks fluent English. His wife is of Iranian descent, born in Germany; their children are fluent in three languages. He could easily relocate his family to anywhere in Europe or the United States, leaving Greece behind to bleed for the fifth year in a row. But he has no such intention.

“Look around you,” he said, adding that Greece is a wonderful place, with a terrific history. It’s up to the Greeks to make it great again. “The elites betrayed the country, betrayed the people, betrayed themselves,” he said. “The politicians, the business people, the academics − they were all looking out for themselves, their interests, their privileges.”

It is imperative to wake people up before it’s too late, whatever it takes, Ikonomopoulos averred: “We will expose the corruption ... We will rebuild the public sector and we will change the laws making our elected officials responsible for their actions.”

A few days after we met, I suddenly received a long text message from Ikonomopoulos. He asked me to be gentle with his country in my article. It’s the system that is ineffective and rotten, it’s the protection the system gave to politicians that is tearing Greek society apart, he wrote. Not the people.

Bloomberg