Enterprise and hope are being strangled by clientelism and corruption, writes PETER MURTAGH in Athens
WHEN YANNIS Stournaras looks at the vast site of Athens's abandoned old airport, sandwiched between the prosperous suburb of Glyfada and the port of Piraeus, he sees Monte Carlo.
"It's four times the size of Central Park!" he says excitedly of the disused site.
"We need to build something there to attract money from Greeks abroad, from all the rich people in the eastern Mediterranean and the Middle East, who want something like Monte Carlo," he says, envisioning luxury living and the sort of incentives that attract wealth in their wake. "It has unimaginable potential."
Stournaras is general director of the Foundation for Economic and Industrial Research, which is privately funded and run and which is, for all that, similar to Ireland's Economic and Social Research Institute.
He was offered a ministry in the technocratic interim government of Lucas Papademos - minister for competitiveness - but he declined because he believes governments need more democratic legitimacy than this one has.
Greeks vote on May 6th for a new government in an atmosphere of deep disenchantment with the two main parties and a myriad of others, from the extremes of right and left, snapping at their heels.
But like many among the elite in Greece, Stounaras sees the crisis as a big opportunity to "get rid of clientelism, to reduce the role of the state and to end corruption".
Greece remains in many ways a Soviet-style economy with the public sector operating in darkness, he says. He instances transport.
"The most toxic constraint on business is licences for transport," he maintains. "They fixed the number of haulage licences for the industry in 1970 - 1970 and no change since! You can imagine what has happened - lorry drivers in Armani suits."
Like Dublin's taxi licences of old, haulage licences became currency, changing hands for up to €500,000, according to Stournaras. Liberalisation of the sector, which is coming as a result of the EU-International Monetary Fund double bailout of the country, will itself add a 1 per cent annually to gross domestic product.
Land ownership remains another major issue. Since the emergence of Greece as an independent state in the early 19th century with the contraction of the Ottoman Empire, about 70 per cent of land has been owned by either the state or the Orthodox Church. Bureaucracy surrounding change of ownership (and indeed almost all business activity) is numbing and suffocates enterprise.
In Stounaras's office, a February 2001 OECD report on Greece falls open on page 50 under the headline "Public sector management needs improving". The report details a litany of facts that go a long way to explaining what happened to turn Greece into the appalling mess it is today.
The government, the 2001 report notes, sees itself as the "employer of last resort" and is increasing jobs in that sector at 4 per cent a year, four times faster than expansion in the private sector that must fund it.
Public sector employment then represented 12.5 per cent of all jobs. At the start of the current crisis, it stood at about 20 per cent - some 800,000 jobs in a workforce of about four million in a population of 11 million. The public sector includes academe, where appointments are heavily politicised and the excessive number of positions (very many of them carrying "professor" titles) are of little substance and whose output is monitored little, if at all.
One of the major structural problems is that of private sector companies, some 95 per cent are SMEs, small to medium enterprises, whose expansion into larger centres of employment has been discouraged by bureaucracy and corruption. This reality was too little questioned by a compliant media, feeding off advertising from the government and loss-making or inefficient public sector companies.
One of the great lost opportunities, according to Nick Malkoutzis, deputy editor of the English language edition of Kathimerini newspaper, was in the feel-good wake of the 2004 Olympic Games, and the Euro2004 football tournament, which Greece won.
In a country where tourism remains the largest sector of the economy, "we completely failed to capitalise on these events and the publicity they generated", he says.
Between 2000 and 2010, tourism to Greece, Turkey and Croatia doubled in terms of numbers of visitors. But over the same period, Greece, which used to have about half of that market, saw its share drop by 50 per cent.
"That was one signal; nothing concerted was done to build on 2004. All we have is the Athens metro system and lots of the sports facilities built for the Olympics are now disused," Malkoutzis says.
The result of such a litany of failures is unemployment at 21 per cent; youth unemployment (ie among the under-25s) at 52 per cent; a 27 per cent increase in taxes; and widespread despair.
"We are seeing our young people go for Germany, the UK, Holland, Australia and the US," says Malkoutzis, "not yet in droves but there's a steady stream. The number of young doctors applying for certificates allowing them to practise abroad has risen 40 per cent since 2010.
"This is beyond backpacking for a few years. They can see their country is going through a transition that will take years and the people in power don't seem ready for that change.
"This goes beyond economics: it is the fact that they see the political system is resistant to change."
And change in the face of sometimes extremely hostile resistance isn't easy. Members of the EU-ECB-IMF troika team have to travel with police protection when they make their inspection visits to Athens, an EU source confirmed.
"We are being very careful having police with us when the mission is here," said the source. "We are very cautious and we are getting more so."