What Greece’s Next Government Must Do To Save The Nation

Hopefully, a new Greek government will emerge after the elections on June 17. The first major decision the government must make is whether the country will continue to abide by austerity measures imposed by other members of the European Union, renegotiate them, or refuse to comply. One of these three options must be embraced, and whichever one it is will set the tone for Greece’s future in or out of the eurozone. This commentary offers some recommendations in the areas of economic growth, tax evasion, immigration, political corruption, and accountability in the executive and legislative branches of the government.

The next government in Athens needs to take serious action to stimulate the economy by moving away from dependency on government jobs, and creating a competitive private sector. It takes 15 different procedures and about 38 days for a person to open a business in Greece; it takes five procedures and about five days in the United States. Decreasing the barriers to starting new businesses will create jobs for the unemployed — whose ranks have been increasing steadily –and boost overall revenue in the country. Also, businesses should abandon hidebound practices and focus more on electronic commerce to improve efficiency, which might enhance prospects for attracting foreign investors.

Tax evasion is rampant in Greece — its income tax revenue is 7.3 percent of GDP while the rest of the eurozone averages around 11 percent. The wealthiest people of Greece are in the shipping industry, which generates revenues of about $85 billion per year. Yet many executives in the industry do not pay taxes; previous governments tolerated this out of fear that foreign investment might decline if shipping executives felt squeezed. No one likes paying taxes, but the shipping tycoons need to recognize that Greece’s economy is on the very brink of collapse, and their failure to meet tax obligations borders on treason. A second area of improvement is reinforcing transparency for companies not listed on the stock market; transparency currently is only seen in companies listed on the stock exchange. Ensuring shipping tycoons and companies not listed on the stock market are true to their tax obligations would materially strengthen the nation’s finances.

Due to Greece’s vast shoreline and outsiders’ desire for European citizenship, immigration in Greece has spiked– immigrants account for about 15 percent of the country’s population today. These mostly unskilled and uneducated immigrants are from Asia, Middle East, and Africa, and organized crime leaders have made a career of stashing them away by the thousands in substandard housing — making 200,000 to 500,000 euros per day as slum lords. Also, money transfers from Greece to other countries are estimated to total over five billion euros per year –an enormous amount of unrecorded revenue in a nation of only 11 million souls. In response to ineffective immigration policies, some citizens view members of the Golden Dawn political party as the “good boys” who are looking out for their community by serving as body guards so the elderly can run errands safely. Athens mayor Giorgos Kaminis publicly admitted, “I’m losing my city. Something has to happen fast.” Until an effective immigration policy is implemented, nationalists like the Golden Dawn political party — which has been stigmatized in American media as neo-Nazis — will continue to use extralegal methods, and the country will continue to lose large amounts of cash that it desperately needs.

A strong stance against political corruption must be taken by the next Greek government. Greece has laws against corruption, but some of its laws also enable corruption, such as allowing ministries to have “special accounts” where normal rules of budgetary transparency do not apply. Politicians are also bribed to sign contracts, like founding member of the socialist Pasok political party Akis Tsochatzopoulos who is accused of pocketing $26 million in bribes associated with purchases of submarines and missile systems as well as funneling money from offshore accounts to buy homes. Another example of corruption was the case in which German industrial company Siemens agreed to an out-of-court settlement with Greece in the amount of $355 million when accused of bribing politicians to secure contracts. Greek anti-corruption laws need to remain consistent and must be fully implemented. Greece actually has a number of anti-corruption agencies, but they tend to operate inefficiently and inconsistently; this can easily be fixed by forming a single anti-corruption body that would also protect whistle blowers.

The executive and legislative branches need to bolster accountability mechanisms. The oversight power of the legislature should be enhanced, especially in the budget process, parliamentary immunity must no longer be used to avoid accountability, and post-employment restrictions ought to be created to prevent conflicts of interest. Lifetime employment for civil servants needs to be replaced by a merit-based approach for employment and compensation. Public agencies should be required to disclose the salary of every civil servant, and measures should be taken to distance citizens from direct contact with public servants through the use of electronic systems which will increase efficiency and decrease bureaucracy. The public administration should also be detached from the political part of the government, and an independent authority should be established for its supervision. All individuals in the public sector, politicians and civil servants, should be required to have their assets declared, verified, audited, and discrepancies investigated.

According to Transparency International’s President of the Greece department, “Political leaders [in Greece] must realize that this crisis is a unique opportunity to redefine lost values and re-establish national institutions.” That is arguably the most constructive interpretation that can be put on the current crisis in Greece. Yes, it is a time of great danger, but precisely for that reason it is an opportunity to start over, with voters now seeing all too clearly the consequences of past corruption and incompetence.