It may eventually be both best for the Eurozone and Greece to part ways if there isn't an interest in seriously reforming a deeply corrupt system.
The Greek government on Tuesday night
survived a confidence vote, and Prime Minister George Papandreou said Athens
confronts a “moment of truth” in its debt crisis.
Hidebound vested interests mass in defence of archaic privileges that are incompatible with participation in European monetary union over the long term. Myopic politicians, in government and opposition, trade accusations over trivialities and pay lip service to the cause of reform. The public, suffering its third successive year of economic recession, is by turns angry, desperate and drained of hope."
The Irish also show little enthusiasm for reform but after 30 years, we have a credible tax collection system and in contrast with Greece, corruption never reached the scale of the system in that country.
The latest austerity measures agreed with the EU/ECB/IMF provide for public sector job cuts of 150,000 in coming years.
It's not that civil servants are overpaid but the public payroll had become a massive instrument of patronage.
Greece has 180,000 teachers and one of the world's best teacher-student ratios but 20,000 teachers "work" in administration because there are no classrooms for them.
Nevertheless, an EU report shows that private tuition in Greece was estimated at more than €950m per year, which is equivalent to 20% of government expenditure on primary and secondary education.
The current PM’s father Andreas, a former
economics professor, had worked with his father George in the 1960s and saw at
first hand how his father as prime minister had been thwarted by the forces of
the Right led by the young gullible king and that period was followed by a
In 1981, the Greek public debt as a ratio of gross domestic product (GDP) was 25%; it is now heading fro 160%.
George Papandreou said in an interview with Der Spiegel magazine in Feb 2010: "In a study done last year, the OECD described government-run Greek hospitals as deeply corrupt. It concluded that we could save 30% of the costs, which is enormous. The hospitals generated a deficit of €7bn last year.
Imagine what an unbelievably large amount of money we could save by simply introducing computers into hospitals. Until now, there has been far too little control over the purchasing of medications and equipment. In Germany, a stent for heart operations costs about €500. In Greece it costs €2,000 to €2,500. The fault lies with corruption."
Doctors take a cut from equipment suppliers and they also collect bribes from patients to gain priority on hospital waiting lists.
The Prime Minister told the Brookings Institution
in Washington DC in March 2010 that at the top of his list of priorities was tax
evasion. "To give you just one measure of the scope of that problem, fewer
than 5,000 Greeks declare incomes of €100,000 or more (in a developed country of
11m people), and that pattern must end, and it will end. We will be prosecuting
offenders, no matter how rich or powerful, to show that we mean business. The
rule of law means that the law applies to all. Such changes, we are sure, will
bring in billions of unpaid taxes and help underpin our return to fiscal
health," he said.
Daniel Kaufmann, an economist at the
wrote last year: "International Financial
Institutions, such as the IMF, need to refocus (as they did a decade ago) on the
serious challenges of corruption that afflict a number of its borrowers,
undermining the country’s macroeconomic stability. Also, these global
institutions ought to review afresh the distortive tax, public expenditure and
public indebtedness regimes in many countries and their links to governance.
If there is no support in a bankrupt country for reforming broken systems, then full sovereignty should be restored and the other members of the European Monetary System should facilitate a departure from the group.
It's not uncommon for reform to be only embraced after a total collapse of an economy.
It's of course the poor who would be the biggest victims in such a failed state.
I suggested at the outset that a rupture could also benefit Greece but that is only in the context of reality dawning in the birthplace of Western civilisation, when there is nobody else to blame.
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