Greece’s Golden Opportunity: Economic Crisis and Corruption

Greece’s struggles with corruption are longstanding. Greece has perennially been viewed as one of, if not the, most corrupt countries in the European Union (EU). (In 2014, for example, Greece was tied, along with Italy and Romania, for last among EU countries in Transparency International’s Corruption Perception Index). Recently, however, coverage of Greece’s ongoing battle with corruption has increased dramatically due to two interrelated factors: (1) the election of the Syriza party, which has never before held political power and ran in part on an anticorruption platform; and (2) ongoing negotiations with other members of the EU to receive additional, vitally important bailout funds as Greece continues to struggle to rebound from an economic crisis that first began in 2010 (in which some have suggested that Greece’s receipt of any additional loans should be conditioned on its ability to make “credible progress in boosting [its] tax take and fighting corruption”).

Transparency International and others are (admittedly somewhat reservedly) hopeful that the election of the Syriza party will signal a renewed focus on combating corruption by the Greek government, calling its campaign platform “music to our ears as long as [its] commitments remain strong and unwavering” and noting that the “new government seems more committed to addressing corruption than past ones.” And there have been some promising early indications of the new government’s willingness to combat corruption.  For example, its new anticorruption chief recently announced he will be investigating 80,000 of the wealthiest individuals in Greece who are believed to have funds in foreign bank accounts for tax evasion. Nonetheless, there have been some rumblings of discontent from both anticorruption activists and the broader international community. Other members of the EU have accused the government of “wasting important time” in instituting anticorruption measures and commentators have noted that too little has been done to make good on campaign promises of “tackl[ing] the corrupt oligarchical business elites that dominate the economy.”

It is likely premature to judge the Syriza govenrment’s commitment or ability to combat corruption.  Yet as Greece continues to grapple with an economic crisis that has left the country reeling – and dependent upon significant loans from the International Monetary Fund and the EU – it seems an appropriate time to draw attention to the fact that this crisis has presented both the Syriza government and broader anticorruption community with a rare opportunity to make significant strides in addressing corruption in Greece, an opportunity that prior administrations have failed to appropriately capitalize on.

While it may be somewhat unsavory to suggest that an economic crisis could potentially prove beneficial in combating corruption (and it is certainly not an anticorruption strategy others would wish to adopt) there are at least two ways that this situation could serve to dramatically decrease the prevalence of corruption in Greece:

  • First, to the extent that we believe that Greece has a “culture of corruption” (as at least one author has argued), a shock like an economic crisis offers a unique opportunity to make sweeping changes to the norms that may have given rise to this “culture.” There is an extensive debate regarding the existence of such a thing as a “culture of corruption” – and the potential problems created by evaluating corruption in other societies through this lens – that I will not rehash here. Suffice it to say that if we believe that one of the contributing factors to Greece’s struggles with corruption is a broader cultural acceptance of corrupt practices, then it seems plausible that an event as dramatic, and damaging, as an economic crisis, which has been traced in part to corrupt practices in Greece, could give politicians or anticorruption advocates the ammunition necessary to attack this culture head-on. This view is not without its critics, however.  At least one commentator has argued forcefully against the notion that the Greek government or anticorruption advocates could have capitalized upon this situation, quoting Professor Kevin Featherstone’s claim that, in times of economic upheaval, individuals are more likely to embrace corruption, because “in a crisis people struggle to get any economic security by any means.”
  • Second, the significant loans that Greece was forced to take on in the aftermath of the 2010 economic crisis, many of which were provided by other members of the EU and the IMF, offered a unique opportunity for Greece’s creditors to lobby, or even to require, Greece to take a more serious stance against corruption. Such conditions would neither have been unwarranted (after all, many trace Greece’s current financial difficulties in part to the prevalence of corruption prior to 2010 and some have raised concern about Greece’s ability to repay its debts because of its ongoing struggle with corruption) nor unprecedented (as Greece’s creditors have imposed considerable – some would say draconian – requirements on Greece in exchange for the bailout funds it has provided). Yet, the EU and IMF have, thus far at least, failed to take advantage of the opportunity to encourage Greece to tackle the problem of corruption in spite of both the potential benefits of such requirements for the international community and for Greece itself. This approach may well change as negotiations between Greece and its creditors continue. Indeed, Greece has recently submitted an “updated list of economic reforms to the European Union…in an effort to secure emergency financing and avoid a default,” which include some anticorruption proposals.  Nonetheless, it is somewhat surprising that anticorruption initiatives have not played a more prominent role in the general requirements imposed upon Greece in previous years and at least one commentator has both decried their absence and urged Europe to “focus less on debt and more on justice.” One could argue that there may well be reason to believe that the absence of such requirements has been all to the good. After all, there is a growing literature arguing that the imposition of structural adjustment policies by the IMF in other contexts may well have been counterproductive. Yet this does not necessarily suggest that anticorruption measures should not be considered as Greece and its creditors continue to negotiate the terms of any additional loans. Rather, it would appear that it would be more effective to encourage Greece to adopt initiatives that are likely to promote good governance and effective anticorruption efforts, while decreasing or eliminating conditions on these loans that would leave the Greek government without adequate funds to pursue these aims.

It thus appears that the Syriza government and the international community may have been provided with a unique opportunity to address corruption. It would be a shame to see a potential silver lining to the economic crisis that has gripped Greece for so many years go to waste.

3 thoughts on “Greece’s Golden Opportunity: Economic Crisis and Corruption

  1. Great post, Lauren! While I want to side with you on your first point, I find myself more sympathetic to Prof. Kevin Featherstone’s view. When I think about India, for example, where there is arguably an even more plausible argument for a “culture of corruption,” I think an economic crisis would spur more corruption, not less. One of the prime causes of corruption, or at least one of the main reasons people pay bribes, is because of economic insecurity, so it makes me think that if that security is further threatened, then individuals will be more likely to engage in corrupt acts to get that security back. As far as your second point, it seems like preconditioning loans on anticorruption programs is a great opportunity. I don’t know enough about the Greek crisis, but did you consider if this could possibly do more harm than good? For example, perhaps this diverts money from more seriously needed social security programs? Or maybe desperately needed money is kept away from the country because corruption simply isn’t their biggest problem right now?

    • Leveraging an economic crisis to effect a change in a nation’s “culture of corruption” would seem to turn on a number of variables, including:

      (1) How large of a role is corruption perceived to have played in the origins of the crisis? Unless corruption is widely perceived as occupying a main causal role, I imagine it is unlikely that the moment offers much of a chance to change popular norms on the matter.

      (2) Does the story of the crisis center on discrete, identifiable, and/or concrete instances or forms of corruption? It would seem to me that a mere feeling that the crisis is traceable to corruption broadly defined would not, without more, do much to inspire cultural reform; more likely, it would invite malaise and frustration. The best hope for effecting sudden and widespread cultural adaption would seem to be finding particularly egregious corruption boogeymen at the heart of the crisis. Only they can serve as both the focus of — and the means of amplifying — the public’s growing anticorruption activism.

      (3) How acute is the “economic crisis”? It would seem that the best scenario for effecting such widespread change would be an immediate and pronounced shock, but one that does not widely threaten basic survival. For as the crisis lengthens — say, e.g., as it becomes less like a sudden recession and more like prolonged life in the Soviet Union or the former Soviet republics — people will likely be desensitized to the issue and the moment will pass. Additionally, Anusha and Featherstone are probably correct to suggest that the more severe the crisis or threat to economic security, the more likely people are to embrace corruption in the name of stability.

      Query, then, whether this really presents the ideal opportunity for change: i.e. an economic crisis that is clearly attributable to corruption — of which there are discrete and egregious examples motivating substantial public activism — and sufficiently immediate and severe as to spark and sustain significant reevaluation of cultural norms but not so severe as to make people resort to an “anything goes” survival strategy. In other words, an economic downturn that invokes a sudden and severe national “crisis of conscience” regarding corruption but stops short of a “crisis of survival.”

  2. If we were to assume arguendo that cultures of corruption exist, it seems like one of the big problems anyone trying to change them by taking advantage of an economic crisis is defining the targets for reforms/the people whose norms supposedly need to change. When something goes wrong, it’s probably more natural for someone to blame others, not him/herself, and to the extent these hypothetical cultures of corruptions are truly society-wide, actually convincing someone that he/she is part of the problem is a real challenge. I can imagine using an economic crisis to try to press through reforms that the general public may previously have been ambivalent about, capitalizing on the public’s newfound anger towards elites or certain sectors (if anticorruption advocates can make a strong enough case that there’s a link between the crisis and the corruption)…but how would one even begin to go about changing practices and beliefs that are more deeply entrenched? Any politician would have a real rhetorical challenge in front of them if he/she tried to walk that line. Outside of just nice speeches, this topic seems like it’s starting to verge towards the whole anti-corruption education toolkit, something I’m still not totally convinced of the efficacy of despite how popular it seems to be becoming.

    In terms of the second point, it seems like Greece is already so resistant to coming into line with what Germany et. al. want (I’m still not quite sure how Greece is pulling that off), I’m a little skeptical that even if the rest of Europe wanted to attach more anticorruption strings, they’d be successful in doing so. Still, economics and the geopolitics thereof are definitely not my area of expertise, so maybe it would be possible.

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