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Is Greece a failed state?

By Alexandra Mitsotaki *

The clock is ticking for Greece, and the moment has come for Greeks to ask the right question. Asking whether we are for or against the negotiated austerity pact is not the right question. Given a choice, no one can be in favor of it.

International Monetary Fund chief Christine Lagarde’s remark about Greeks doing themselves a favor by paying their taxes is also not helpful. Of course Greeks need to pay their taxes: They all know it, and many do. But is the Greek state able to fulfill one of the basic duties of any functional state by ensuring that Greeks pay their taxes? I’m afraid it is not.

For me, after years in the development field, the question is: In a way unprecedented for a developed economy, and for a sophisticated European nation, are we facing the specter of a failed state in Greece today?

Failed states are usually seen in developing countries, as in the case of several African nations. And indeed, Ms Lagarde says she has more compassion for children in Niger than for Greeks. But she should know that one of the main causes of poverty and underdevelopment is bad governance and the failure of core state institutions.

The consequences of such failure are, I’m afraid, precisely what Greek children will soon be facing if we don’t get our act together and start asking ourselves the one question we need to answer collectively: How to build an effective, meritocratic, fair, modern Greek state -- a state that ensures the security of people’s lives and property, and also allows them to develop the unique capacity for entrepreneurship that makes Greek people so successful around the world; a state freed from dysfunctional and counterproductive processes such as when our archaeological services totally paralyze projects in the tourist sector which would otherwise contribute to the growth we so badly need.

The source of Greece’s problem and the reason it got into such trouble with its ever expanding public debt is a structurally clientelistic and profoundly inefficient, bloated state. With few exceptions over the last three decades, public resources have been largely used to satisfy individual or corporatist demands, above all by creating state jobs, and distributing all kinds of particularistic benefits and advantages.

The two main political parties, pressured by the leftist opposition and by powerful corporatist lobbies and interest groups, are responsible. Even today, prisoners of their own past, they resist undertaking the overriding structural reforms that Greece needs, preferring instead to pursue profoundly unjust horizontal pension and salary cuts.

Sadly, another important parallel can be drawn between Greece today and failing Third World states. The effect on the quality of the Greek state of abundant, steady, cheap, sometimes even free flows of European money into the country appears similar to the effect of money from oil, gold and diamond resources on governance in some African nations: the so-called resource curse effect. A historically unique opportunity to modernize the Greek state has not only been wasted, but perversely used to reinforce clientelistic behavior and exacerbate structural weaknesses by allowing Greek governments to get away with their inability and unwillingness to raise taxes.

Living in France, I observe every day the value of a quality, meritocratic independent civil service. In Greece, the declining credibility of the political system has permanently weakened and completely delegitimized the Greek state and its civil service. Our Ministry of Economy is simply unable to collect due taxes. It delegates the task to the national electricity company, which is itself close to bankruptcy and has decided to keep part of the money raised. And, running a year behind in collecting property taxes, the ministry hopes that Greek citizens will accept to pay two years’ worth in one payment.

What fiscal legitimacy can such a civil service have? None, I’m afraid. What credibility can a state have when it is unable to provide basic protection to its citizens’ lives and property from organized crime or even from all kinds of street demonstrations? Greeks, understandably, have little respect for or trust in their state. So they don’t obey its laws. The result is a vicious cycle in which the more the state fails, the more its citizens become civically irresponsible. There can be no growth, no development, no hope, and no viable future under these circumstances.

A world competitiveness survey by Swiss-based business school IMD shows Greece dropping from 46th place in 2010 to 58th and second to last, just before Venezuela, in 2011. In the perceptions of the 4,200 executives surveyed worldwide, Greece’s main shortcomings are its governance and predictability. “Business can cope with everything but needs clear rules and to know what you can and cannot do,” they say. But so do all Greek citizens, who are more and more disoriented, exasperated and in despair.

So something needs to be done. And the upcoming democratic elections are possibly our last opportunity. The kind of challenge Greece is facing -- to rebuild its state -- requires ownership and participation by Greeks themselves. It can’t be imposed by foreigners. We all have our share of responsibility, if only for having kept silent as we watched this happening for so long. Not every Greek benefited from the system -- some benefited much more than others -- but most Greeks, and many other Europeans, knew how this system worked.

This is no time for business as usual. Promising handouts and more civil service jobs disqualifies all those who pretend to still believe in such policies. Political renewal is needed, with wide democratic mobilization. We need to support all credible new forces who courageously call for structural reforms, and we need credible new leadership in the old parties. We also need to remember that we must honor our European engagement and commitments because not doing so is also a sign of a failed state.

It is only through respectful and responsible negotiations with our European partners, and after acknowledging the long-term nature of our problem, that we will succeed in improving the terms of the debt agreement and benefit from the change of approach currently emerging in Europe.

If we fail, we risk the final stage of a failed state, which is chaos and destruction. I understand the despair, the anger and the indignation of those who are suffering because they have lost so much; but they must resist the temptation to vote for chaos and destruction and risk losing it all. As the experience of developing countries shows every time, the greatest victims of a state collapse and the loss of the rule of law, by far, are the poor, the vulnerable and the weak. Absence of state means the law and the rule of the rich, the powerful and the corrupt. Dollars and Kalashnikovs successfully replace the law for those who own them. Worse, after having benefited from a failing Greek state, many of them are now planning to make even more profit from its final collapse. We must not let that happen.

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* Alexandra Mitsotaki is a founder of ActionAid Hellas.

ekathimerini.com , Wednesday June 13, 2012 (20:21)  
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