Greece - Sources of Corruption
Many attribute the unusually high level of corruption in Greece, at least by Western European norms, largely to cultural causes. Because of its deeply ingrained nature, it was difficult to convince Greeks that corruption could be changed: Greeks are raised to believe Greece is the &poor relative8 of the EU where Western European modes of behavior don't fit. &Ti na kanoume, Ellada einai8 (What can you do, this is Greece) is a pervasive attitude resulting from Greece being cut off physically and historically from the rest of Western Europe.
Of particular note is the lack of trust within Greek society, which even characterized relations between close family members. According to one observer, "I've seen brothers break off relations over business deals gone bad - even members of the same Greek family don't trust each other." This tendency leads Greeks to assume others are trying to outwit them, leading everyone to try to outwit others first. One of the greatest compliments a Greek can pay another Greek is to praise their &poniria8, or ability to outwit others.
This dynamic also influences U.S.-Greek relations. Greeks tend to see Americans, whom they disparagingly call "Amerikanakia", as hopelessly naive, and unschooled in the real ways of the world. In short, they view Americans as utterly lacking in "poniria." Ironically, this contempt for the individual American does not translate into a similar view of American government, which is viewed as possessing the ultimate in "poniria" and having caused almost everything that happens in Greece. "The rise of the junta - the Americans caused it. The fall of the junta - the Americans caused it. Turks in Cyprus - the Americans caused it..." This disconnect a bit humorous if sad, and it keeps Greeks from learning from American expertise in the areas of good governance and business.
Another way in which the utter lack of trust manifests itself is in the Greek view of government. "Government of the people, by the people and for the people" is a concept utterly alien to the average Greek citizen, who believes that Greek government officials aim simply to enrich themselves. "The more money they have the more power they will have to screw us". The average citizen's contempt for government was based on the experience many had interacting with mid-level bureaucrats. Most politicians, once they've been in power for a while, begin to accept the system as it is. This doesn't mean they're corrupt, just human. Although corruption in Greece was rampant at all levels, it is especially bad at the day-to-day level involving activities such as obtaining building permits and dealing with customs officials. These petty bureaucrats are very powerful, far more powerful as a group than ministers, and it is almost impossible to fire them, as the vast majority have lifetime employment.
The bureaucrats' power vis-a-vis the average citizen is only amplified by an extremely complex legal system that requires innumerable permits for even simple activities. Of course, many of these laws were developed by the very public servants who implement them and can potentially be enriched by them. The bureaucrats' tendencies were only amplified by the highly "productive" Greek Parliament, which observers savage as being utterly incompetent: "The average Greek politician is great at formulating complex laws that regulate things that don't need regulating, and doing so in the most complicated manner possible." The only potential corrective, the court system, is unable to fulfill its function as Greeks are hesitant to use it because they do not trust it to work efficiently and honestly.
Greece's tax regime lacks stability, predictability, and transparency. The government often makes small adjustments to tax levels and has not hesitated to impose retroactive taxation. Although foreign investors object to the frequent changes in tax policies, foreign firms are not subject to discriminatory taxation. The New Democracy government launched reforms in December 2004 to lower tax rates on corporations' profits (from 35 percent to 25 percent by 2007) and on partnerships and personal companies (from 25 to 20 percent).
The depth of state intervention in the economy means that there are a large number of state-owned corporations including utilities, the armaments industry, and transportation, where civil servants reign supreme. The mid-level bureaucrats and technocrats at these companies frequently write specifications that lead to sole-source suppliers, they often deny approvals for products that have been approved in the rest of Europe, and have tenders canceled after financial and technical evaluations of the bidders have been performed and made public. Very often picayune and technical non-compliance with bid-requirements is cited as the reason for cancellation. Although clear evidence is hard to obtain, the high frequency with which tenders are canceled gives the appearance that evaluation committee members are backing companies who would otherwise have lost.
Greek corruption has a negative impact on U.S. firms attempting to do business in Greece, particularly in areas related to government procurement. Although many do end up winning contracts, many others do not, and under questionable circumstances. The complexity, uncertainty and corruption of the courts reinforce the tendency of spurned U.S. companies (or their representatives) not to go forward with legal action unless the grounds for doing so are ironclad. On occasion, according to U.S. companies, senior Greek officials have acknowledged rampant corruption among mid-level Greek bureaucrats as having influenced the decision against their firms. Not surprisingly, Greece's reputation for corruption reduces U.S. firms, reluctance to enter the Greek market.
One U.S. company's bid on a $3.5 million billing system for Public Power Corporation (PPC), a state-controlled public utility, is a typical example of the kind of shenanigans frequently faced by U.S. companies. In spite of having the lowest price of any bidder (by 22%), and in spite of having the highest technical score (by 12%), the firm found out that the tender was canceled as a result of objections lodged by another company about how the tender had been handled. It is worth noting that this, and the many other difficulties encountered by the firm in the tender were mainly lodged by just one member of the tender committee.
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