Germany’s plan, reported on Wednesday, to ask Greece to offer its debtholders a seven-year term extension only underlines my country’s economic difficulties. But in truth Greece faces an even deeper political and social crisis. Given this crisis has been created by most Greeks, politicians and society alike, it will take more than a restructuring to fix.
The Greek political landscape is ingrained with vested interests, endemic kleptocracy and bribery. Since the days of Andreas Papandreou, an economist and father of the current prime minister, our politics has been predicated on the expansion of the public sector, patronage and borrowing. But while he failed Greece as an economist, as a politician the elder Mr Papandreou succeeded in turning his party into the most potent political player, with the unconditional support of trade unions in return for perks.
As a result it became nearly impossible to reverse Greece’s system of populist support and entitlements. Public debt as a percentage of gross domestic product tripled from 28 per cent in 1980 to 89 per cent in 1990. The conservatives applied the same policies predicated on vested interests and corruption, and so are currently also suffering from their history of covering up deficits and perpetuating a culture of cronyism and mismanagement.