Why Can’t Greece Shake its Corruption Problem?


An interesting report by Thanassis Cambanis, a columnist for The Boston Globe that originally appeared in the newspaper on August of 2014 but relevant and timely today as Greece and its European partners are in the midst of negotiating the bail out deal terms. Kambanis is a journalist specializing in the Middle East and American foreign policy, and a fellow at The Century Foundation. Visit his website here.


Why can’t Greece shake its corruption problem?

A report from a country where everyone knows a thousand ways around the rules

By Thanassis Cambanis

PAROS, Greece — A few summers ago, every merchant on this island—which means pretty much everybody with a job—faced ruin. Greece’s economic catastrophe had bankrupted the government and brought nearly every industry to a standstill. A modern European country faced the prospect of unthinkably widespread poverty. The local crisis reached up to the highest level: the European Union contemplated the collapse of the euro. Meanwhile, here on Paros, where the crisis was exacerbated by a global recession that had depressed tourism, mom-and-pop hotels, cafes, and tchotchke shops were going bust.

To avoid calamity, Europe agreed to spend hundreds of billions of dollars to bail out Greece. In return, Greece pledged to overhaul nearly everything about its economy. The government promised to fire half its employees, and liberalized laws on everything from trucking to private universities. Generous pension benefits were slashed, and once-cushy lifetime government gigs were turned over to the free market.

The reforms were supposed to rout corruption from the senior ranks of government, bring efficiency and a service ethos to a notoriously indifferent government, and make it easy for entrepreneurs to launch new businesses. Many Greeks were anguished, even taking to the streets to protest the overhaul of a welfare system that had given the working poor and lower middle class an exceptionally humane and dignified standard of living. But on the bright side, others saw a window opening: finally, the cozy and corrupt Greek economy would be cracked open by genuine market discipline. Scouring out corruption and entitlements might be painful, but it would also clean up daily life and create genuine opportunities.

Europe came through on its end of the deal: hundreds of billions flowed into the Greek treasury. This year, the island is flush again. The tourists are back, eager to spend their euros. New souvlaki joints fill once quiet alleys. Bars have sprung up in orchards. Small business owners who have exuded anxiety since 2008 are once again smiling and confident.

But not everything has changed in Greece. In daily life here, cheating, bribes, and tax evasion are still a matter of course. Even anticorruption officials reputedly accept bribes, and only one Cabinet minister has gone to prison for embezzlement. At the bottom level, freelance workers and shopowners still hide most of their income, like a workman who got angry when I filed a receipt for the repairs he did at my house.

What’s happened over the past five years shows Europe’s surprising ability to pull together as a region and avoid a financial disaster. But developments on the ground in Greece offer a less encouraging view of human nature. In response to additional laws and regulations, Greece’s corrupt system has simply upped its game. If anything, the new rules have just given Greeks more official protocol to maneuver around.

Why does this corrupt system survive, when everything points toward how it needs to be improved? Macroeconomists and development theorists have studied this problem for years, examining cases in countries that are abjectly poor and ones that are developed and comparatively rich, like Greece. There have been bold initiatives underwritten by international loans, and pointed local efforts like Italy’s long-losing battle against Mafia-driven graft. But conversations with ordinary people in Greece make it clear just why it’s so hard to reverse a culture of corruption once it becomes engrained. Even in a relatively prosperous European country, never mind Liberia or India, the most immediate self-interested move is for everyone to keep playing the game.

MY ANCESTORS HAVE LIVED for centuries on Paros, since before Greece fought for independence from the Ottoman Empire in 1821. My grandparents were the first generation to leave the island for Athens, after World War II, but we’ve been coming here every summer since then.

Although my lineage is pure Greek, I grew up with American attitudes about cheating. I spent my childhood surrounded by a certain moralism that I found appealing: you don’t cheat not because you might get caught, but because it’s wrong. You pay taxes because it’s the law and the government provides security and services in return, regardless of whether your politics are welfare-state liberal or “don’t tread on me” libertarian.

This is not how people see the bargain in Greece. Individuals refuse to pay taxes or obey the rules not just because it’s cheaper and easier to do so, but also because they don’t want to be suckers.

“I took my daughter to the government day care and they put her on the waiting list. The waiting list! Can you imagine?” a man griped to me recently. “And then they expect me to pay taxes! I’ll pay taxes when they do their job.”

The man wasn’t a sidewalk souvenir vendor or otherwise working in the gray market. He was an insurance broker, making small talk in his office while filling out a 20-page form to insure my moped, a glorified bicycle whose Greek government-mandated paperwork was more complicated than an American mortgage application.

The Greek system can feel like a Mexican standoff. Citizens won’t obey the law until the government fulfills its duties. The government shirks its duties because it doesn’t have enough revenue to govern responsibly. Small-time tax cheats refuse to bend until the corrupt elite is tried and imprisoned. The government says it can’t punish scofflaws because it doesn’t have the resources. And so the vicious circle turns.

Merchants watch out for the tax man. If they know the customer, they don’t issue the legally required receipt. Workmen offer discounts: 20 percent off a job if you pay under the table. Beach touts pick up old receipts and give them to new customers. Only nerds check carefully and demand a fresh receipt.

The electrician who rewired my house called in a panic after I deposited the payment in his bank account.

“Can you take it back?” he pleaded. There was no way to erase the transaction. Now he would have to pay value-added tax (as he was legally obligated to do).

“There goes all my profit,” he complained. That wasn’t true, but it irked him that he’d have to share a few hundred euros of his take with the government.

Cheating is so common that the few who don’t do it feel like saps. Among them are salaried employees who don’t have the option to hide their income. They must pay their ever-increasing tax bills, carrying a disproportionate share of the burden, and yet they don’t see any improvement from the government. Complaining is a social lubricant, whether it’s about the tab you escaped, or the one you paid.

“Sixteen thousand euros, my friend, that’s the name of my pain,” an antique dealer told me. “After you pay that, nothing feels good.”

“You must have made a nice profit if your tax bill was that high,” I said.

“I’m barely living,” he said.


IT’S TEMPTING to blame all this misbehavior on some kind of national character. I admit at times I’ve thought that myself, but I’ve observed enough to know that it’s not that simple. A whole web of social structures undergirds bad attitudes and practices. Historians go even deeper; they start the story with the Ottoman Empire, which dominated the region, including most of Greece, from 1453 until the end of World War I.

Greece still carries the traces of Ottoman rule, under which it chafed for four centuries. The sultanate in Istanbul tried to crush provincial uprisings, but was remarkably tolerant toward territories that paid their tribute and created no problems. The Ottomans ruled through a combination of neglect and stifling bureaucracy, which gave rise to a system of institutionalized bribes. The sultan milked his provincial governors, who in turn squeezed the citizenry. Taxes were just another negotiable kickback.

That Ottoman legacy is still alive, nearly two centuries after the first parts of Greece won independence. The Greek elites mirror the predatory habits of the sultanate, while the citizens act as if evading taxes is a heroic act of revolt against the occupier. “You know what they say about the rotten fish, don’t you? It stinks from the head,” said a restaurant owner who for most of my lifetime has avoided ringing up dinner bills at the cash register.

Those officials and the plutocratic elite have escaped the crisis relatively unscathed. One minister, Akis Tsochadzopoulos, who stole an obscene amount of money from defense contracts, was sentenced to 20 years in jail. For the most part, however, the rich and powerful have been left alone even as small business owners and pensioners have been squeezed by huge tax hikes and massive cuts in benefits. For the vast numbers of Greeks in that category, it’s hard to appreciate why they should be more accountable than the government itself. Even the new tax inspectors sometimes turn out to be on the take, shopowners say, offering to take a bribe in exchange for a lower fine that goes to the treasury.

Suspicion breeds suspicion, and everyone has a horror story. A doctor who is a family acquaintance told me that he used to be a model citizen, declaring all his income and scrupulously paying taxes. Then, he said, some years ago he was hit with a huge bill by the tax inspector.

“We know you hide 40 percent of your income,” the inspector told him. “So we’ve charged you accordingly.” The doctor promptly stopped reporting his full income, and has been strategically lowballing it ever since.

Academic economists have been fascinated by the persistence of Greek corruption since the reforms. Yannis Ioannides, an economist at Tufts University, and Costas Azariadis, an economist at Washington University in St. Louis, surveyed the topic for a forthcoming book published by MIT. In it, they offer suggestions on stanching the corruption: they’d like to see the government mount a genuine effort to punish wrongdoers at the top, coupled with a robust new independent watchdog agency to catch tax cheats and embezzlers.

Still, they’re not optimistic these measures would change what they call “the entire value system of nihilism and antisocial behavior that parents and schools have allowed to percolate through Greek society.” Research has shown that Greece’s culture of mistrust and cheating is far more extreme than anywhere in Europe. According to surveys, 80 percent of Greeks believe it’s all right to claim government benefits to which they are not entitled, while 20 percent disapprove. In most of Europe, the ratio is almost exactly flipped.

A look around the world doesn’t offer much inspiration that corrupt cultures can mend their ways. There have been some successes: New York’s Tammany Hall was once synonymous with total corruption. So were Hong Kong and Singapore. Time and reform turned them into models of efficiency, relatively speaking, though the latter two are notably undemocratic today. More common are the kinds of marginal improvements seen in places like Rwanda or the former Soviet republic of Georgia, where reformers have steadily improved police, courts, and some other government services but where graft, bribery, and inefficiency are still serious problems.

Some observers argue that Greece’s economic near-death experience wasn’t deadly enough. “People didn’t starve in the streets,” said Yiannis Vlahos, a surgeon who also writes a column for Estia, one of Greece’s oldest newspapers. “We didn’t suffer enough. Now things are a little better and everyone thinks they got away with it.”

His daughter, a marketing executive, lists a litany of banal ignominies visited upon her by the state: she had to take three full days off work to stand in line to register with the Greek tax authorities so she could pay her taxes online. She can’t count on public education or health care for her children, and must instead pay for private schools and doctors. When a neighbor encroached on a family summer home, it took 20 years for the courts to issue a ruling.

“Only one thing has changed,” she said of the reformed Greece. “Now I ask for receipts.”


WHEN I WAS A KID in the 1970s, Paros regularly ran out of water during the summer. There was no sewer system, and mosquitoes flourished in the septic tanks whose stench marred the scenic whitewashed alleys. No one had a swimming pool, and most of the roads were unpaved.

Today Paros has a better infrastructure than Beirut, the far more cosmopolitan and wealthy capital city where I live and work. A custom-built miniature garbage truck circulates every morning through the ancient streets, and immigrant workers roam around picking up litter.

The carpenter drives an Audi and the restaurateurs send their kids to university in Athens or London, but almost everyone I talked to swears to me that they still have to cheat to make ends meet. No amount of unearned money, apparently, will ever be enough.

Jokes aside, it’s obvious that there’s really no such thing as national character—just culture and history. By their nature Americans aren’t less prone to lie, cheat, steal, or kill than people from any other country. Habitual high-scorers on Transparency International’s Corruption Perceptions Index, like the Scandinavians and Singaporeans, aren’t wired to be more honest than low-scoring North Koreans and Somalis.

Corruption persists because it is a system, and it provides benefits in places where the state does not. Inefficient states create incentives for people to pay bribes to get things done—a building permit, a health department seal of approval, a new passport. Scandinavia is less corrupt than other parts of the world because it’s a better deal to not cheat; you pay really high taxes, but the government really does give you everything you need.

Overcoming corruption, therefore, requires almost unimaginable transformation. You have to build an entirely new system—for instance, a new tax code and incorruptible people to collect the taxes—and you have to convince individuals to completely overhaul their personal behavior and their view of authority. One only has to spend a few weeks in Greece to see why, not just here but in places like India and Afghanistan, this is such a Herculean task.

The resistance lies in institutions, in political cultures, and in expectations that have become deeply ingrained in daily life. Cultures and institutions are made of people; people and policies can both change. But some places, like Greece, have been stuck in these feedback loops of corruption and stagnation for so long—for their entire modern history—that it’s hard to see where the reservoir of a new public morality would come from. You’d have to look back to Pericles, two and a half millennia ago, to find a Greek leader who could claim with a straight face to be “not only a patriot but an honest one.”

Thanassis Cambanis, a fellow at The Century Foundation, is the author of “A Privilege to Die: Inside Hezbollah’s Legions and Their Endless War Against Israel.” He is an Ideas columnist and blogs at thanassiscambanis.com.

The original Boston Globe story is here.



  1. John Dinopoulos on

    Everything is rotten. Starting with the 300 members of the Greek Parliament are not voting against the diplomatic immunity they have against committing crimes (of any nature-economic/political)…


    So, it takes a Greek with a proper culture to see (and write) the truth of the matter. Even the comment made by Mr Hohn Dinopoulos is very much true. However, I believe there is a solution to all that, and it has a name: Political will (and know-how) to enforce it via a well-designed mega-computer system. It is costly, but I’m sure it will pay-off pretty soon.

    • I agree, but one we can’t mention political will without mentioning that it is really a representation of public will to endure it as well. I think the shit has hit the fan, if you will. I believe people are truly fed up. It’s evident. They finally elected a party not of the established political class. This is a major milestone in the Greek psyche. I think they’re ready for change.

      With that being said, I don’t think discrete actions like privatizations, job cuts, and pension cuts will do it without a fundamental change in how the county operates. Or else it’s business as usual and they’ll right back where they started and worse. This will have to start with constitutional changes spanning many areas: Proper checks & balances; tax reform; real estate; industrial de-centralization; individual rights; R&D; energy; education; and so on. Concurrently or shortly thereafter, the tactical changes are more likely succeed, and more importantly last.

      • A, TSAGARELLIS on

        I couldn’t agree more with your comment. In fact, when i speak of ‘political will’ I speak of the will of the people which brings politicians to power, politicians who are not members, or have received the unction from those families that have been governing Greece for as long as I can remember (mind you i was born when the Greek Civil War had just begun) as it happened in the last elections. This new government, which many Greeks had not even dared to dream of, is the reflection of the spirit of the Greek people, the spirit that is beginning to change, I hope. Nonetheless,there are still a lot of people who prefer to ‘die in their trenches’ than see anything go the way they don’t like because they were brought up with those ideas. Actually, I heard Nikos Chatzinikolaou, one of the top journalists and commentators, only a couple of hours ago, expressing his deep concern about it and characterizing it as “unbelievable”.

      • Sotiris- As long as attempts to “reform” Greece are done as if the culture and economy are American or German, they will not only fail, but will lead to the kind of catastrophe we are facing now. There has to be a Greek cultural solution.

        Take primary residences (homes). On Paros, as I am sure is the case in many island and rural areas, a home is not a physical form of wealth from which the owner expects enjoy appreciation in value to realize, for himself or for his heirs, long term capital gains. It is his abode, often inherited from previous generations, in which he plans to life indefinitely. Thus, it is security. The vast majority of Greek primary residences (over 70%) are owned without a bank loan. In America, less than 30% of primary residences are without a bank loan. Until the creation of the house tax, a typical Greek could rest assured that however bleak his circumstances might be, his home was inviolate.

        When a house tax is suddenly imposed, based upon the American or German notion of the home being mere physica; property and wealth, it sends shocks through the system. Especially for poorer people whose main source of security is their home. Wake up one morning and not only has your salary or pension been cut, or your job is gone, but the source of what little security you had, your home, is now a significant tax burden. If you don’t meet that tax burden, your home will be confiscated.

        Too much, too fast, and arising from a truly alien cultural viewpoint.

  3. Corruption in Greece – Case 1

    I came to Greece in 2008, took a job with what I thought to be a trustworthy NGO here in Athens, however as time went on the reality of what happens here in Greece unravelled before me over the course of 6 years.

    I was asked to help defraud the Ministry of Foreign Affairs and when I refused it cost me my job and six years of my life. I was persecuted by the NGO and allowed to be slandered by the press and media who many of which tried to cover up the reality of this NGO, and who worked with and alongside them to this day.

    I approached the Employment tribunal as the NGO had stolen my wages, money they took for my taxes and my IKA, and only this year, five years later was I finally awarded my Insurance for 2008/2009, now they face Insurance theft as well as several other high profile Penal cases for abusing the state for nearly 20 years.

    The day my employment trial was due to finish whereby I was to have been proven right in my claim against them, they brought out a court case against myself for exposing them as criminals which due to me having a court case now outstanding with the NGO against me, would temporarily nullify my case,

    Needless to say I put my trust in the Greek Courts and in what I hoped Justice would do, and I was repaid when their court case was thrown out and the Magistrate recommend that the President of the NGO and the Board be further investigated for all the activities exposed. A lot of people think that Greek is not getting anywhere, but it is, the problem is the amount of bullsh*t cases like this still clogging up the system. I know, I’ve spend 6 years in and out Evelpithon and had to sit and watch the misery of the system buckle under some of the most appalling cases stuck in the void.

    This NGO in particular uses it’s board of Directors to illegally pretend to be Doctors to gain access to the HIV/Aids data within Greece, whilst abusing the information it gains and by coercing the state which employs them via KEELPNO to cover it all up.

    This means that they actively and deliberately had access to who in Greece has HIV/Aids, Politicians, MP’s, Media personalities, the Press and anyone else they choose to force their involvement on. This has been an issue since 1999/2000 but all the current NGO’s and Organisations within this sector cover it up and have allowed it for so long.

    The Head of the Greek HIV plan was recently no other than the same person responsible for the financial crime who is part of the Board of Directors, and one who submitted illegal documentation claiming that two of their Board of Directors were Doctors, when not. She also oversaw and has been involved in committees set up by KEELPNO and the Greek state despite having covered up and abused her position to enable others in the NGO to be able to gain highly sensitive medical data to which they abuse.

    This is one case, which sure happens all over the world, but like the Magistrate said to me in Court not long back, only in Greece can you end up in Court for exposing a criminal faster than by being a criminal before they get prosecuted for crime!

    That’s the tragedy. – The beauty is that Justice is ongoing.


  4. panagiotis rodopoulos on

    The only solution of Greece is so simple: to be part of USA and of course the unreliable Greek Law -sintagma to be replaced by USA Law. EVERYONE IS THE SAME IN FRONT OF THE LAW …SO SIMPLE.
    Official currency will be the US Dollar and everyone is not following the rules will go into jail so simple.

  5. It all starts with the support of E. Venizelo! The common factor in regards with this past figure is that a vast majority of Greeks follow his ideals, representing foreign investment while labeling the Greek people to be classified as third class citizens in their own homeland including abroad. Now this small family of elites that inherent their seats in parliament from father to son/daughter are the core issue in Greece however the Greek people still support them by casting their support. Whether it is a liberal or conservative party they are both alike.

Leave A Reply