The Eurozone presses Greek reforms: Rewind, Reset, Reform, Finally? Part 1

Reform Watch Greece has been here a long time (2011).  That’s a lot longer than the current SYRIZA government or most of today’s crop of Greece analysts.  We will look at the proposals more systematically in part 2.  Here we provide the text of Greece’s reform proposals as publicized early on February 25.  To the best of our knowledge these proposals got to Brussels after 2300 on February 24, barely making the deadline laid out in the Eurogroup-Greece agreement of February 20.

Please stand by for our commentary in part 2.

Dear President of the Eurogroup,  In the Eurogroup of 20 February 2015 the Greek government was invited to present to the institutions, by Monday 23rd February 2015, a first comprehensive list of reform measures it is envisaging, to be further specified and agreed by the end of April 2015.

In addition to codifying its reform agenda, in accordance with PM Tsipras’ programmatic statement to Greece’s Parliament, the Greek government also committed to working in close agreement with European partners and institutions, as well as with the International Monetary Fund, and take actions that strengthen fiscal sustainability, guarantee financial stability and promote economic recovery.

The first comprehensive list of reform measures follows below, as envisaged by the Greek government. It is our intention to implement them while drawing upon available technical assistance and financing from the European Structural and Investment Funds.

Truly

Yanis Varoufakis

Minister of Finance

Hellenic Republic

1. Fiscal structural policies

Tax policies – Greece commits to:

 Reform VAT policy, administration and enforcement. Robust

efforts will be made to improve collection and fight evasion

making full use of electronic means and other technological

innovations. VAT policy will be rationalised in relation to

rates that will be streamlined in a manner that maximises actual

revenues without a negative impact on social justice, and with a

view to limiting exemptions while eliminating unreasonable

discounts.

 Modify the taxation of collective investment and income tax

expenditures which will be integrated in the income tax code.

 Broaden definition of tax fraud and evasion while disbanding

tax immunity.

 Modernising the income tax code and eliminating from it tax

code exemptions and replacing them, when necessary, with social

justice enhancing measures.

 Resolutely enforce and improve legislation on transfer

pricing.

 Work toward creating a new culture of tax compliance to ensure

that all sections of society, and especially the well-off,

contribute fairly to the financing of public policies. In this

context, establish with the assistance of European and

international partners, a wealth database that assists the tax

authorities in gauging the veracity of previous income tax

returns.

 

Public Finance Management – Greece will:

 Adopt amendments to the Organic Budget Law and take steps to

improve public finance management. Budget implementation will be

improved and clarified as will control and reporting

responsibilities. Payment procedures will be modernised and

accelerated while providing a higher degree of financial and

budgetary flexibility and accountability for independent and/or

regulatory entities.

 Devise and implement a strategy on the clearance of arrears,

tax refunds and pension claims.

 Turn the already established (though hitherto dormant) Fiscal

Council into a fully operational entity.

 

Revenue administration – Greece will modernise the tax and

custom administrations benefiting from available technical

assistance. To this end Greece will:

 Enhance the openness, transparency and international reach of

the process by which the General Secretary of the General

Secretariat of Public Revenues is appointed, monitored in terms

of performance, and replaced.

 Strengthen the independence of the General Secretariat of

Public Revenues (GSPR), if necessary through further

legislation, from all sorts of interference (political or

otherwise) while guaranteeing full accountability and

transparency of its operations. To this end, the government and

the GSPR will make full use of available technical assistance.

 Staff adequately, both quantitatively and qualitatively, the

GSPR and in particular the high wealth and large debtors units

of the revenue administration and ensure that it has strong

investigative/prosecution powers, and resources building on

SDOE’s capacities, so as to target effectively tax fraud by, and

tax arrears of, high income social groups. Consider the merits

of integrating SDOE into GSPR.

 Augment inspections, risk-based audits, and collection

capacities while seeking to integrate the functions of revenue

and social security collection across the general government.

 

Public spending – The Greek authorities will:

 Review and control spending in every area of government

spending (e.g. education, defence, transport, local government,

social benefits)

 Work toward drastically improving the efficiency of central

and local government administered departments and units by

targeting budgetary processes, management restructuring, and

reallocation of poorly deployed resources.

 Identify cost saving measures through a thorough spending

review of every Ministry and rationalisation of non-salary and

non-pension expenditures which, at present, account for an

astounding 56% of total public expenditure.

 Implement legislation (currently in draft form at the General

Accounts Office – GAO) to review non-wage benefits expenditure

across the public sector.

 Validate benefits through cross checks within the relevant

authorities and registries (e.g. Tax Number Registry, AMKA

registry) that will help identify non-eligible beneficiaries.

 Control health expenditure and improve the provision and

quality of medical services, while granting universal access. In

this context, the government intends to table specific proposals

in collaboration with European and international institutions,

including the OECD.

 

Social security reform – Greece is committed to continue

modernising the pension system. The authorities will:

 Continue to work on administrative measures to unify and

streamline pension policies and eliminate loopholes and

incentives that give rise to an excessive rate of early

retirements throughout the economy and, more specifically, in

the banking and public sectors.

 Consolidate pension funds to achieve savings.

 Phase out charges on behalf of ‘third parties’ (nuisance

charges) in a fiscally neutral manner.

 Establish a closer link between pension contributions and

income, streamline benefits, strengthen incentives to declare

paid work, and provide targeted assistance to employees between

50 and 65, including through a Guaranteed Basic Income scheme,

so as to eliminate the social and political pressure for early

retirement which over-burdens the pension funds.

 

Public administration & corruption – Greece wants a modern

public administration. It will:

 Turn the fight against corruption into a national priority and

operationalize fully the National Plan Against Corruption.

 Target fuel and tobacco products’ smuggling, monitor prices of

imported goods (to prevent revenue losses during the importation

process), and tackle money laundering. The government intends

immediately to set itself ambitious revenue targets, in these

areas, to be pursued under the coordination of the newly

established position of Minister of State.

 Reduce (a) the number of Ministries (from 16 to 10), (b) the

number of ‘special advisors’ in general government; and (c)

fringe benefits of ministers, Members of Parliament and top

officials (e.g. cars, travel expenses, allowances)

 Tighten the legislation concerning the funding of political

parties and include maximum levels of borrowing from financial

and other institutions.

 Activate immediately the current (though dormant) legislation

that regulates the revenues of media (press and electronic),

ensuring (through appropriately designed auctions) that they pay

the state market prices for frequencies used, and prohibits the

continued operation of permanently loss-making media outlets

(without a transparent process of recapitalisation)

 Establish a transparent, electronic, real time institutional

framework for public tenders/procurement – re-establishing

DIAVGEIA (a side-lined online public registry of activities

relating to public procurement)

 Reform the public sector wage grid with a view to

decompressing the wage distribution through productivity gains

and appropriate recruitment policies without reducing the

current wage floors but safeguarding that the public sector’s

wage bill will not increase

 Rationalise non-wage benefits, to reduce overall expenditure,

without imperilling the functioning of the public sector and in

accordance with EU good practices

 Promote measures to: improve recruitment mechanisms, encourage

merit-based managerial appointments, base staff appraisals on

genuine evaluation, and establish fair processes for maximising

mobility of human and other resources within the public sector

 

1. Financial stability

Instalment schemes – Greece commits to

 Improve swiftly, in agreement with the institutions, the

legislation for repayments of tax and social security arrears

 Calibrate instalment schemes in a manner that helps

discriminate efficiently between: (a) strategic

default/non-payment and (b) inability to pay; targeting case (a)

individuals/firms by means of civil and criminal procedures

(especially amongst high income groups) while offering case (b)

individuals/firms repayment terms in a manner that enables

potentially solvent enterprises to survive, averts free-riding,

annuls moral hazard, and reinforces social responsibility as

well as a proper re-payment culture.

 De-criminalise lower income debtors with small liabilities

 Step up enforcement methods and procedures, including the

legal framework for collecting unpaid taxes and effectively

implement collection tools

Banking and Non-Performing loans. Greece is committed to:

 Banks that are run on sound commercial/banking principles

 Utilise fully the Hellenic Financial Stability Fund and

ensure, in collaboration with the SSM, the ECB and the European

Commission, that it plays well its key role of securing the

banking sector’s stability and its lending on commercial basis

while complying with EU competition rules.

 Dealing with non-performing loans in a manner that considers

fully the banks’ capitalisation (taking into account the adopted

Code of Conduct for Banks), the functioning of the judiciary

system, the state of the real estate market, social justice

issues, and any adverse impact on the government’s fiscal

position.

 Collaborating with the banks’ management and the institutions

to avoid, in the forthcoming period, auctions of the main

residence of households below a certain income threshold, while

punishing strategic defaulters, with a view to: (a) maintaining

society’s support for the government’s broad reform program, (b)

preventing a further fall in real estate asset prices (that

would have an adverse effect on the banks’ own portfolio), (c)

minimising the fiscal impact of greater homelessness, and (d)

promoting a strong payment culture. Measures will be taken to

support the most vulnerable households who are unable to service

their loans

 Align the out-of-court workout law with the instalment schemes

after their amendment, to limit risks to public finances and the

payment culture, while facilitating private debt restructuring.

 Modernise bankruptcy law and address the backlog of cases

 

III. Policies to promote growth

Privatisation and public asset management – To attract

investment in key sectors and utilise the state’s assets

efficiently, the Greek authorities will:

 Commit not to roll back privatisations that have been

completed. Where the tender process has been launched the

government will respect the process, according to the law.

 Safeguard the provision of basic public goods and services by

privatised firms/industries in line with national policy goals

and in compliance with EU legislation.

 Review privatisations that have not yet been launched, with a

view to improving the terms so as to maximise the state’s long

term benefits, generate revenues, enhance competition in the

local economies, promote national economic recovery, and

stimulate long term growth prospects.

 Adopt, henceforth, an approach whereby each new case will be

examined separately and on its merits, with an emphasis on long

leases, joint ventures (private-public collaboration) and

contracts that maximise not only government revenues but also

prospective levels of private investment.

 Unify (HRDAF) with various public asset management agencies

(which are currently scattered across the public sector) with a

view to developing state assets and enhancing their value

through microeconomic and property rights’ reforms.

 

Labor market reforms – Greece commits to:

 Achieve EU best practice across the range of labour market

legislation through a process of consultation with the social

partners while benefitting from the expertise and existing input

of the ILO, the OECD and the available technical assistance.

 Expand and develop the existing scheme that provides temporary

employment for the unemployed, in agreement with partners and

when fiscal space permits and improve the active labour market

policy programmes with the aim to updating the skills of the

long term unemployed.

 Phasing in a new ‘smart’ approach to collective wage

bargaining that balances the needs for flexibility with

fairness. This includes the ambition to streamline and over time

raise minimum wages in a manner that safeguards competiveness

and employment prospects. The scope and timing of changes to the

minimum wage will be made in consultation with social partners

and the European and international institutions, including the

ILO, and take full account of advice from a new independent body

on whether changes in wages are in line with productivity

developments and competitiveness.

 

Product market reforms and a better business environment – As

part of a new reform agenda, Greece remains committed to:

 Removing barriers to competition based on input from the OECD.

 Strengthen the Hellenic Competition Commission.

 Introduce actions to reduce the burdens of administrative

burden of bureaucracy in line with the OECD’s input, including

legislation that bans public sector units from requesting (from

citizens and business) documents certifying information that the

state already possesses (within the same or some other unit).

 Better land use management, including policies related to

spatial planning, land use, and the finalisation of a proper

Land Registry

 Pursue efforts to lift disproportionate and unjustified

restrictions in regulated professions as part of the overall

strategy to tackle vested interests.

 Align gas and electricity market regulation with EU good

practices and legislation

 

Reform of the judicial system – The Greek government will:

 Improve the organisation of courts through greater

specialisation and, in this context, adopt a new Code of Civil

Procedure.

 Promote the digitisation of legal codes and the electronic

submission system, and governance, of the judicial system.

 

Statistics – The Greek government reaffirms its readiness to:

 Honour fully the Commitment on Confidence in Statistics, and

in particular the institutional independence of ELSTAT, ensuring

that ELSTAT has the necessary resources to implement its work

programme.

 Guarantee the transparency and propriety of the process of

appointment of the ELSTAT President in September 2015, in

cooperation with EUROSTAT.

 

1. Humanitarian Crisis – The Greek government affirms its plan

to:

 Address needs arising from the recent rise in absolute poverty

(inadequate access to nourishment, shelter, health services and

basic energy provision) by means of highly targeted

non-pecuniary measures (e.g. food stamps).

 Do so in a manner that is helpful to the reforming of public

administration and the fight against bureaucracy/corruption

(e.g. the issuance of a Citizen Smart Card that can be used as

an ID card, in the Health System, as well as for gaining access

to the food stamp program etc.).

 Evaluate the pilot Minimum Guaranteed Income scheme with a

view to extending it nationwide.

 Ensure that its fight against the humanitarian crisis has no

negative fiscal effect.

 

 

 

 

Greek Reforms: 70+30 = 50 on a good day

It’s anyone’s guess what will happen at the February 16 Eurogroup session, the weekend European press is filled with every possible scenario and even contains detailed sequenced listings of all of potential outcomes.  We congratulate the SYRIZA media machine and its European partners for rolling out yet another wave of editorials and demonstrations in support of current Greek positions.

But our interest is in the substance, not show.  Is the Eurogroup going to put an end to the rhetoric (not our words, but US Treasury Secretary Lew’s) and get down to the business of locking down Greece’s reform agenda and its financing, or is it going to let this float for another six months? And will PM Tsipras be allowed to slip out from under the prior commitments he rejects by simply renaming the new agreement as a New Greece-whatever development bridge program? We hope not.

We chose the title 70+30=50 because its evident the Greek side is trying to pull a fast one by claiming it can easily accept 70% of the Troika’s structural reforms and will replace the 30% it rejects with 10 new measures it proposes (including elements of the OECD reform toolkit).  It will be a few days until we get the whole picture via communiques and leaks as to exactly what reform was traded for what concession, at what budgetary impact, and learn which sectors of Greek society have benefited by allying with SYRIZA for protection. But certainly the private sector will not come out near the top of the pile.

From what we have seen so far the 30% of the structural reforms the SYRIZA government rejects looks more like 50% or more of the previous reform program and certainly includes the essential competitiveness-enhancing reforms that Greece vitally needs. We are not so cynical as to suggest that the rejected 30% is the core of the reform program and the
acceptable 70% (remainder) are things most Greeks would agree on, since they are not seen as pain-inflicting “measures” by the Greek public. That means these are reforms that produce no job losses, no benefits cuts and no political costs, but sound important, like fighting corruption. 

 

But what we have seen of the SYRIZA “redlines” in these negotiations is totally unacceptable to free-market advocates and we urge the former Troika institutions to take whatever steps are needed to get the Greek side out of the clouds and back to Europe 2015.  Excluding privatization, public sector reform and downsizing, the health sector as well as labor market reform from the reforms required of Athens is essentially giving PM Tsipras a complete free hand to roll back much if not most of what little the Troika has accomplished.  This is equivalent to locking the Greek population in a room with a pack of hungry carnivores and telling them to divide up the few provisions the Eurozone will hand out.

While we see little harm in relaxing the budget deficit targets from the politically-unsustainable level of 4.5% of GDP next year, if the cash is available, the reform-minded Greeks that we work with sincerely hope the Eurozone does not make the concessions the Tsipras government is asking for.  Greece deserves better than to be hung out to dry in the face of a group of deeply anti-reform and anti-private sector ideologues, even if well dressed.

Reform Watch May 2012 Round Up…Did you REALLY expect changes?

Yes it’s an election period. And yes, you are tuned to Greece. Who in their right mind would expect a “caretaker administration/service government” to change anything?  Especially anything that involved benefits levels or public sector staffing?

Just testing…We certainly didn’t.  Nonetheless the country kept operating at deficit levels, meaning public sector salaries and pensions were supported by Troika bailout funds, as usual.  Did Greece really move any closer to financial independence over this period? Were those bailout funds well spent or just scattered randomly for public consumption and to sustain businesses/public services that seriously need to restructure?

Below is a brief listing of how certain ongoing structural reforms were “processed” in Greece over the last month. It is basically a “low-performance report.” We are certainly glad we don’t have to compile a detailed matrix of accomplishments for Troika officials prior to disbursing the next cash injection (shape not yet decided) which Greece will so desperately need next month. There is precious little to work with, even for the strongest supporters of Greece in this difficult time. And let’s not forget that the former Papademos government basically sprinted to pass key pieces of reform legislation by mid-April (mostly unimplemented) so the first round of elections could be held in May.

None of this absolves Greece in any way of its requirement to produce a large list of budget cuts for 2013-2014 for Troika approval and vote on dozens of other reform measures by the end of June.  No wonder Greeks prefer politics!

Privatization:  While work on preparing assets already held at the Hellenic Republic Assets Development Fund (TAIDEP in Greek) goes on, policy decisions and transfers of new state assets to the Fund are frozen by edict until the June 17 elections. Socialist parties are doing all they can to stop work at the TAIDEP and some even talk of reversing it.  The status of a number of government assets transferred to the TAIDEP in early May before elections is reportedly under review.

Health Sector:  The new system of electronic prescription management, designed to reduce costs by limiting drug purchases, was partially offline in May for technical reasons.

Tax Issues/Revenue Collections:   Revenue collections have fared poorly this year due to the recession and the extended election period.  Some news reports note a 20-30% decline compared to last year and certain news outlets and high-level government sources  characterized the situation as “desperate” during various political meetings and coalition-formation discussions throughout May. Reforms in the barely functioning tax collection mechanism, especially those designed to fight tax evasion, are not underway now, but major changes required by the Troika should begin in July.

Labor Market:  As of May 14, all “old” collective labor contracts automatically expired. Those contracts could be replaced by so-called individual agreements and could include some wage reductions. This important labor market reform stipulates that a collective contract had to have been signed/reauthorized in the previous three months to be considered valid after May 14.

Public Sector Personnel System:  Just days before the May 6 elections, word was released that the ambitious personnel reviews and job audits planned for the public sector would be delayed due to the elections. Nothing since then, but of course, public sector (BFGPS) paychecks keep coming.

European Community Monitoring Office:  Shortly before the May 6 elections, a site for the Mission’s Headquarters in Gazi was announced.  Public Sector employees already in that building protested immediately.  Since then, not a word.

Bank recapitalization: This is not a structural reform, but since it is linked to the overall PSI package which supports reform, it merits mentioning.  The bulk of the EFSF funds sent to Greece for this purpose in April were disbursed to four participating banks via the Hellenic Financial Stabilization Fund (HFSF) in mid-to-late May, with substantial action (Euros 18 billion) disbursed in the last few days of the month.

 

Scale of reform task facing Greece is monumental

See article below for a good summary (The Irish Times) of what Greece committed to do, under former-PM Papademos, by June 2012 as it received the first “new” bailout tranche under the so-called “Second Memorandum.”  This is not fiction, and that money, disbursed in March, has been spent. The date for the Troika’s next return/review is not yet clear.

http://www.irishtimes.com/newspaper/world/2012/0518/1224316280691.html

CORRUPTION BLUES UNDERSCORE THE NEED FOR DEEP SYSTEMIC REFORM IN HELLAS

Whilst this blog is not called “Corruption Watch Greece”, unfortunately a large percentage of the news these days requires us to focus on the subject.   Systemic corruption in Greece is widely regarded as one of the triggers of the Greek debt crisis also threatening the very fabric of the Greek nation today. According to Transparency International, “efforts to reform and rebuild Greece’s economy in the future will be undermined because the country’s government, businesses and civil servants not only fail to stop corruption but actively participate in it”. More specifically, this warning was issued on 29 February 2012 through Transparency International Greece’s first ever assessment of the ability of important national institutions to fight corruption and underscores the fact that Greece’s ranking on Transparency International’s closely watched Corruption Perception Index (CPI) worsened in 2011, with the country taking joint 80th position out of 183 countries on the list. Its ranking puts it on a par with El Salvador, Morocco, Peru and Thailand, a ranking worse than any other country in the European Union of 27 nations, below that of Turkey in fact.

What is truly amazing, therefore, is that even after the latest revelations about bogus pensions, the orgy of fraud by corrupt IKA employees, the illegal social security benefits, and bribery demands by senior public servants at the Ministry of Development, some people continue to be offended by Pangalos’ statement that “Olloi mazi ta fagame” (“We ate everything together”), to run after Dalaras (a famous popular singer and a national icon who has always been a staunch defender of Greece’s interests) throwing chairs or “moutzes [offensive gestures]” at him and partake in throwing yoghurt at politicians. The logic that it is impossible for the 300 members of parliament, along with 100 or a few more corrupt henchmen to build up a national public debt of 360 Billion Euro seems to  be dawning, finally, in the most dramatic way possible.

In fact, according to the recent audit carried out by the Ministry of Labour, a total of 63,500 main and supplementary pensions were found to be fraudulent and their cancellation has resulted in a net benefit to the long-suffering state-owned pension funds of 450 Million Euro per annum, even though no real mention has been made about recuperating illegal payments already made or firing the individuals that approved those pensions. It is notable that in the OGA (Agricultural Pension Fund) audit alone, 8,500 outright fraudulent pensions were found as well as 21,000 persons who were receiving allowances and benefits without being entitled to them. According to the Minister of Labour, the audit found that many people were illegally receiving pensions for over two decades, whilst interestingly, after their cancellation only 7-8 people turned up to claim them.  How fast the news travels, it seems.

The fact that many people were invited to and took part in the “party” that Pangalos refers to is confirmed by the data made public by the Ministry of Health whilst the full report that reveals other specific cases of wholesale fraud is expected to be released in the next few days. The scam involving welfare benefits, set up on a national basis, is estimated to have cost the state more than 4 Billion Euro over the last decade! The audit conducted by the Ministry of Health revealed that on the island of Zakynthos, of the 700 people who were receiving the “blindness benefit“  (2% of the island’s population compared to 0.6% on a global basis (including third world countries) according to the World Health Organisation), only 100 turned up to claim the benefit as part of the audit of which 60 were found not to be blind! In the municipality of Eleusina, Attika, 107 files concerning apparently fraudulent cases of welfare benefits have been sent to the public prosecutor’s office. On the island of Kalymnos, during the two months July-August 2011, 595 cases of people with severe disabilities were registered. On this basis, with a population of 8% of that of the entire Dodecanese, Kalymnos officially now boasts 31% of the cases of severe disability of the entire prefecture! Moreover in the Dodecanese, a total of 68 people receive the “Heating Fuel Benefit” of which 59 live on Kalymnos, that is 87% of the total! One could also be forgiven for believing that the rest of the population of Kalymnos  is comprised of blind people and of people with mental disabilities with 18% of all the blind people in the Dodecanese (59 out of a total of 335) and 17% of those with severe mental disabilities (53 out of a total of 311). In other words, statistically, just about every Kalymnian suffers from something and receives a social security benefit for it. This of course, reveals there is simply no oversight by these organizations’ Athens headquarters or the Ministry of Health, as one would expect when cases of certain aliments statistically exceed national or international averages. …

Recently, 7 employees of the Kallithea branch of IKA (the largest social security organisation in Greece) were arrested and charged over a massive scam involving millions of euro that were stolen from that organisation’s coffers via a primitive but effective scheme made possible through the active participation and collaboration of the public. Whilst the exact amount stolen is still unknown, as investigations are currently in progress, it is estimated that the financial loss to the state-owned fund will exceed 300 Million Euro. This scam involved fraudulent claims being approved to members of the public as beneficiaries by corrupt officials who orchestrated it over a number of years.  Both benefited. Indicatively, one of the main players, a middle-aged IKA employee, was found with nearly one Million Euro in notes in her mansion, complete with a swimming pool and private chapel for forgiveness of sins. It is beyond any doubt that the participants in this scam were not only public sector mandarins and medical personnel, but many ordinary folk who received welfare payments for bogus pregnancies, births of twins, virtual medical operations and hospitalization for non-existent illnesses.

Hot on the heels of the IKA scam comes the arrest of two senior Ministry of Development employees caught red handed accepting a bribe of 120,000 Euro which they had demanded from two businessmen to release the approval of government  grants for a hotel complex development (already agreed in principle), the paperwork of which was submitted in 2005. The ministry officials had been holding back the disbursement of 13 Million Euro’s worth of state grants for the construction of a new hotel complex in the Peloponnese. Ministry employees had apparently been making demands for a kickback since one year after the application for the grant was submitted. Initially there were demands for 700,000 Euro. The businessmen, who already own a hotel complex outside Nafplion, refused to pay the bribe and the approval to provide the grant remained locked up in a drawer at the Development Ministry. It is a well-known secret in Greece that ministry officials nearly always ask for a bribe equal to between 2 and 4 percent of the value of the grant.  The fact that this is a known “going rate” shows just how prevalent and audaciously open the practice has become.

According to Kathimerini Newspaper (article dated 14 March 2012) this case has highlighted the difficulties that the Greek justice system has in dealing with cases of alleged corruption. About 90 percent of investigations carried out by public prosecutors relate to claims of graft in the civil service and a law passed last October designed to speed up the process has yet to be implemented. Since the law was passed last year, no ruling has been issued for a case of alleged public sector corruption.

It is notable that as soon as she was appointed Development Minister, and when this scandal hit the media, Anna Diamantopoulou reacted quickly by ordering the immediate dismissal of the approximately 100 personnel comprising the Department of Investment of the Development Ministry that these two culprits derived from and their replacement.  The Inspector of Public Administration, Dimitrios Rakintzis, has been assigned to investigate the financial affairs of all these personnel from 2005 until today and their bank accounts ordered opened.

It is encouraging that the Minister has exercised such apparent determination in rooting out the rot in her new ministry, but one cannot help but wonder to what extent have the seeds of the rot spread?  Are these the final spasms of a dying decadent society on its way out, or is this merely the tip of the iceberg?

Hippocrates doesn’t live here anymore

Among the crises inflicting Greece today we must include the crisis in the health system.  To borrow from a medical analogy, the crisis in the health system is a cancer on the Greek body politic.  Like many cancers, symptoms existed long before the recent diagnosis.  Even in times of apparent economic health, the Greek health system was far from healthy.

For years now, the Greek public health system has been plagued by debts and corruption, effected, if not with official connivance, with toleration.  One of the key places a typical Greek will pay a bribe (among, of course, others) is to a physician at a public hospital.  Bribes are so commonplace as to be accepted as part of the cost of treatment.  The patient, or his family, who is not prepared to pay a bribe may be directly endangering their health.   As the system further deteriorates, even bribes are less effective than they used to be.

Greek public hospitals for nearly a decade have been known as the deadbeats of Europe within the pharmaceutical community.  Companies would often wait for years to receive payment, and often as not the state would reduce the amount paid to the companies.  Greece’s already ballooning debt increases further when considering the several billion EUR of liabilities in this sector.  Not surprisingly, pharmaceutical companies padded their invoices to make up for the late payment terms, and often enough kickbacks and bribes demanded by public servants, government officials and doctors would further increase the costs, stretching the finances of the state health system, again, even in apparently healthier economic times.

It was not uncommon, even in the good old days, for hospitals to have shortages of vital medicines and more mundane items such as bandages and toilet paper.  Often enough, patients bring their own!  The debt-plagued procurement system was a key reason but another reason stands out: outright theft by doctors and hospital staff.  It is not uncommon for those employed in public hospitals to help themselves to white goods or common medicines at the hospital.  Oversight?  Not here, most hospitals lacked even the rudiments of bookkeeping; without a paper trail, how do you prove something is missing or stolen?  The EU Commissions first Quarterly Report from the Task Force for Greece diplomatically cites a “concern . . . as [to] the efficiency of and access to the healthcare system.”  They further talk about the need to rein in expenditures and “implement best practices,” etc.  They could go much further and talk about the blatant graft by procurers, hospital staff, and even by holders of the Hippocratic Oath.

So, the story is the same here.  Bribes, graft, and a willful lack of professionalism or oversight conspire to make Greece’s health system increasingly dangerous to your health.  It simply did not have to be that way.  Greece, in spite of the debt and eroding competitiveness, did make considerable strides in its standard of living.  Greece has one of the highest percentages of doctors to population in Europe, and therefore the world.  In spite of the onslaught of junk food and stress-inducing lifestyles, the Greek diet and climate is very conducive to good health.  Greece’s health crisis is, rather, a subset of its general crisis, which is not primarily financial but rather civic and civil.

As for Hippocrates, he clearly doesn’t live here anymore.