As Europe Frets, Greece Flops

by George Mesthos

Global Post
November 17, 2010

Sixteen European finance ministers meet in Brussels to address problems in Ireland.

Markets tumble following worry that the crisis in the eurozone could spread as far as Spain.

But here's why everyone's eyes should still be on Greece, which a year ago sparked the European debt crisis by revealing its budget deficit was more than double projections.

It’s not just unsustainable levels of government debt. As those who live and work in Greece know, corruption takes a toll on the economy and each family’s pocketbooks.

Greece was recently rated the most corrupt country in Europe according to Transparency International’s 2010 Corruption Perception Index, and 78th out of 178 ranked countries. According to the organization, Greece loses about 8 percent of GDP to corruption. In comparison, if all had gone according to plan, the Greek government’s austerity measures would have brought the deficit down to 7.8 percent of GDP — in other words, no corruption, no deficit.

“The economic situation of Greece could have been tremendously different from what it is today,” said Constantine Bacouris, chairman of Transparency International Greece.

It currently takes two to three weeks on average to open up a business in Greece, according to the Heritage Foundation’s Economic Freedom Index. The Greek government has pledged to bring that number down.

Corruption, “increases the cost of doing business,” Bacouris said. “Therefore we don’t have a lot of new investments”

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