GREECE

Greece has been a stable democracy since the 1974 transition to a democratic system. In order to participate in elections, parties must register with the country’s highest civil court (Areios Pagos). Parties submit their lists of candidates to the same court, which does not decide on any substantive issues, but performs a purely procedural function. It simply checks whether parties and candidates fulfill the requirements of the constitution. An example is the age requirement – candidates must be at least 25 years old. A second example is the requirement that government and regional officials, such as general secretaries of ministries or prefects, must resign from their official post well in advance of election day in order to be admitted as candidates for a parliamentary seat. The reason for this requirement is to avoid allowing candidates to use their official post to boost their candidacy. Essentially, the court plays a purely formal role, without examining matters such as whether a party is insolvent, or whether a party advocates the overthrow of Greece’s liberal democratic regime. In practice, this means that extreme parties are fully entitled to compete in elections.

In 2002, the Greek parliament passed Law 3023/2002 on the financing of political parties and media access by parties and candidates during electoral campaigns. This law, which regulated access to the media during the parliamentary elections of 2004, 2007 and 2009, stipulates that individual candidates and parties have unlimited access to media. Three organs are entrusted with the monitoring of the law’s implementation: first, a government authority called the Secretariat General of Communication-Secretariat General of Information, which is headed by a secretary general. This is a political appointee, who works closely with the incumbent government’s spokesperson. Second is an independent administrative authority, the National Council for Radio and Television, which is entitled to regulate the media sector in Greece. In reality, this council bends easily to the incumbent government’s preferences, as formulated by the Prime Minister’s Office (PMO), the government’s spokesperson and the aforementioned secretariat. Third in this regulatory arena is a committee convened during electoral campaigns, including representatives of all parties holding at least one parliamentary seat. The TV and radio time slots allocated to parties during campaigns are proportional to the share of the vote each obtained in the preceding national election. During the 30 days of an electoral campaign, a party can freely use a 10-minute long slot every week to propagate its electoral messages. Parties can buy additional time by paying what are generally high fees to state-owned and private media organizations.
This system provides incentives for every party to try to outspend the others, and a disincentive for new parties to enter the electoral competition. Newly founded parties, parties which failed to obtain any parliamentary seats in the previous elections, and parties with poor financial resources are discriminated against.

There is fair and equal access for citizens in terms of electoral participation. All Greek citizens are required to participate in national elections, as voting is compulsory. However, the law requiring all citizens to vote is not enforced, which means that people can in fact abstain from voting if they choose to do so. Voter registration takes place efficiently and impartially, and is performed by prefectural authorities in a nondiscriminatory manner. There is no political interference in the administrative tasks involved in voter registration, which are carried out by low-ranking civil servants who process citizens’ registration petitions. If an individual is denied the right to vote, which hardly ever happens once he or she is registered as a voter, he or she can appeal to independent judicial authorities which are competent to rectify the situation.
There are three issues to note in this context. First, convicts can also vote, unless a criminal court decision has imposed a temporary suspension of voting rights. Second, citizens without a permanent residence in the country have the right to vote (under Article 51 Paragraph 4 of the constitution), but as of the time of writing, no law or presidential decree had specified the details by which Greek citizens could exercise their right to vote while living abroad. In practice, this means the right is not upheld.
Third, on the basis of a new law passed in March 2010 (Law 3838/2010), permanent residents, including legal migrants, have the right to vote in local government elections. This is a vast improvement over the situation of the previous years. However, the new voter registration requirements have multiple conditions to be filled, and are linked to acquisition of permanent resident status.

Parties are obliged to keep financial accounts, and to publish them on an annual basis. However, they are not required to specify either the sources or the value of donations received. While the state budget funds parties on the basis of their performance in the most recent parliamentary elections, parties’ electoral campaign costs in practice far exceed the funds allocated to them by the state. The very high costs are the result of the high prices of printing and distributing electoral material, organizing electoral rallies, and buying time in the electronic media, a sector which in Greece has the structure of an oligopoly. Thus, parties regularly resort to soliciting funds from private sources (e.g., private donors or big business leaders). Such revenue is not included in the parties’ published accounts. In other words, parties essentially keep two sets of accounting books. After the close of parliamentary elections, a parliamentary commission is supposed to audit the finances of candidates who won parliamentary seats. In practice, the committee performs a largely rubber-stamp role. The lack of enforcement of the relevant legislation, pertaining (for example) to candidate expenditure ceilings, means that in Greece today there is no real way to monitor party financing.
Moreover, there is no independent body or other effective mechanism to oversee, investigate and sanction parties in regard to their finances. The political class as a whole resists any substantive inspection of its finances. There is even one party (the Communist Party of Greece) which has consistently refused to publish its accounts. Finally, infringements of the relevant legislation are not punished.

Though the state-owned media offers news coverage in a pluralist fashion, the incumbent government nevertheless retains channels through which to influence the content of media coverage. For example, the government appoints the board of directors of ERT (Hellenic Radio and Television), which is a large public organization overseeing all state-owned TV and radio stations. The Secretariat of Information - Secretariat of Communication fully controls the finances of ERT, which is funded by the general population in the following compulsory manner: All legal persons and house or apartment occupiers who use electricity (i.e., practically everyone) pay a compulsory fee to ERT, which is included in their electricity bill. Bills are issued bimonthly by the country’s single, state-owned energy company, the Public Power Corporation (DEI). In other words, the state-owned media tax the population as a whole, but such media are at the disposal of the governing elite. Through its control of the ERT governing body, the incumbent government appoints and dismisses all ERT directors. In that respect, there is insufficient protection against potential government influence, although compared to the past (the 1980s and the early 1990s) the government has loosened its grip over the electronic media.

Since 1989, it has been legal to own and manage private TV and radio channels in Greece, while government control of the state-owned TV and radio stations has been somewhat relaxed. Whereas the 1989 decision led to a flourishing of private radio and TV stations both in the urban centers and in peripheral regions, it also provided the opportunity to create a private electronic media oligopoly with the capacity to broadcast news, films, sports and entertainment programs nationwide. On the surface this may appear to be a diversified environment conducive to the pluralism of opinions, but in practice the system airs only a few selected viewpoints. Often, because of the fierce competition among media owners to attract and preserve a share of the market, only the most popular opinions are aired. For example, if the public opinion leans toward staunch nationalism in foreign affairs, the media will not give any publicity to voices critical of established ethnocentric opinions.
In the period under review here, private media companies belonged to owners of traditional newspapers or of companies active in other sectors (e.g., construction, shipping). A few private media companies influenced public opinion, the day-to-day political agenda, government policy decisions, and even the rise and fall of individual politicians. Indeed, politicians’ public image can be severely tainted by negative publicity diffused even by a single newspaper or TV channel.

On the basis of legislation passed in 1999 and 2006 (Laws 2690/1999 and 3448/2006), access to information is ample and free. There are a few reasonable restrictions referring to matters of national defense and security. In the 2008 – 2010 period, there were a few changes to these regulations. First, a new ministerial ordinance was issued by the ND government in April 2009. The ordinance required all public services, including regional and local authorities, to create a separate section on their website where all administrative documents they produced would be published. Each public service would thus create its own “Service Gazette.” However, the ND government lost the elections of October of that year, and the ordinance was not fully implemented.
Second, a new law was under preparation at the time of writing. The new PASOK government planned to extend access to information through a new law, the first draft of which was ready in late April 2010. The new law extended to state-owned enterprises the aforementioned requirement for electronic publication of documents, and also created a very detailed list of all documents which were required to be made publicly accessible through the Internet.

Several concerns can be noted regarding civil rights. In Western Thrace, the north-eastern portion of Greece that is home to a Turkish-speaking Muslim minority, the level of protection of civil rights, equal access to the law and equal treatment under the law are not up to the standards guaranteed to the majority of Greece’s population. This remains the case despite reforms introduced in the early 1990s by the Konstantinos Mitsotakis government. For one thing, the rights of women are not protected. Owing to Sharia legislation still held as valid among the members of this minority on issues of marriage, family and inheritance, Muslim women in that region of Greece do not enjoy the same rights as men. Married men can divorce their wives more easily than vice versa; inheritance laws favor male over female offspring; and other such matters are decided by local religious judges (muftis), while the Greek courts of first instance, to which the muftis’ decisions are submitted for final approval, do not change the muftis’ decisions.
Significantly, there is still no mosque in Athens, for example, despite the influx of migrant Muslim workers. Moreover, neighborhood and police pressure has repeatedly disrupted the ability of minority faiths to establish a settled place of worship. One such case in 2009 involved Muslims being ejected from a converted warehouse in Athens.
Furthermore, the civil rights of religious minorities more generally display unequal status. The position of the Orthodox Church of Greece is privileged on both a de jure and de facto basis. Laws against proselytism by other faiths, and a requirement that local Orthodox bishoprics must approve the establishment of new places of worship (an effective veto right) place important restrictions on minority faiths. Underlying such policies is the cultural sense that to be non-Orthodox is to be non-Greek.
Similarly, one may doubt the level of protection of civil rights and equal access to the law enjoyed by nonnative speakers who are migrants or family members of migrants. Most of this population has come from Southeastern and Eastern Europe (Albania, Russia, Georgia, Ukraine, Moldova) or from South Asia (Iraq, Afghanistan, Pakistan, Sri Lanka). Most of the migrants entered Greece in the post-1990 period, legally or illegally, as economic migrants, asylum seekers and/or refugees. Official statistics estimate their number at over 700,000. However, their number could be as high as 1 million. First-generation migrants and their families usually have poor Greek, little knowledge of their rights and a lack of experience with a Western state administration. Few of them have acquired Greek citizenship, as this was very difficult to achieve until 2010, when a new law was passed. In this respect, the level of protection of migrants’ rights and their access to law leaves much to be desired.

The Greek constitution of 1975 (as amended in 1986 and 2001) guarantees a wide range of political liberties, which since the 1974 transition to democracy have flourished in Greece. There is no government or private interference with individual freedoms of thought, expression, worship or petition. There are no constraints on collective rights of organization, assembly or public protest. There are many channels through which individual and collective citizen preferences can be expressed, including petitions and demonstrations, the latter of which frequently take place without any interference.
However, this does not mean either that civil society has flourished or that interest groups and civic associations are equally capable of organizing and exerting pressure on the government. Public sector unions and party-dominated interest groups, including large confederations of labor and farmers’ associations, are much more vocal than other interest groups, while business associations and associations of liberal professionals (medical doctors, lawyers and engineers) find it easier to attract the government’s attention. This and other power inequalities are attributable to longstanding preferential relations between the state and well-placed, powerful groups such as those mentioned above. These groups enjoy better access to decision makers than do social movements and voluntary associations active in environmental, human rights or other post-materialist policy sectors.

In addition, the restrictions on religious freedom noted above (see Civil Rights) are relevant here as well.

In Greece there is no discrimination based on social status or political views. In regard to religion, however, there is some discrimination. The Greek constitution protects religious freedom, but at the same time recognizes the dominant position of Greek Christian Orthodox dogma. This amounts to providing that dogma with a position effectively like that of a state religion.
The preponderant position of the Greek Christian Orthodox Church in the Greek state and society is evident in the very close relations between church and state, reflected in tax breaks enjoyed by the Greek Orthodox Church before the new taxation legislation was introduced in March 2010; in the financing of the Church through the state budget; and in assigning a specific and important secretariat of the Ministry of Education the task of overseeing religious matters – in effect, the affairs of the Greek Orthodox Church (notably the ministry’s full official name is the Ministry of Education, Lifelong Learning and Religious Affairs).
All other religions and dogmas are equally protected, but proselytization is prohibited. The Greek government and bureaucracy have long posed various obstacles to the building of a mosque in Athens, with the result that Muslim residents of Athens must resort to private or makeshift places of worship. Officially, there is still a regulation requiring representatives of dogmas other than the Greek Christian Orthodox to petition their local Orthodox bishop for his opinion when constructing a new place of worship. However, the country’s highest administrative court (the Council of the State) has decided that the bishop’s opinion, even if negative, cannot prevent town planning authorities from issuing such a building license.
The situation is better in regard to education. There are state-owned, mixed, Greek-and-Turkish-language primary schools for children belonging to the Turkish-speaking Muslim minority in northeastern Greece (the Thrace region). The schools are staffed by Turkish-speaking Muslim teachers. In the same region, in the cities of Xanthi and Komotini, there are also two Greek and Turkish language high schools with teachers who are Turkish-speaking Muslims (minority members) and Turkish nationals. The limited number of places available, however, means that a majority of Turkish-speaking pupils still cannot attend such a school. Turkish-speaking Muslims who are graduates of these schools and are also Greek citizens are admitted by Greek state universities on the basis of a quota. On this matter, more can be done to facilitate the flow of pupils from primary to secondary education, and to attract more members of the minority to Greek state universities.
Officially there is no discrimination on the basis of gender and physical ability. The Greek government has transposed the relevant EU directives on gender equality in the workplace, and has passed legislation to protect the disabled. In practice, however, there remains a persistent wage and salary differential between male and female employees. Women are still pensioned off much earlier than men, and disabled persons encounter substantive difficulties in terms of their everyday physical mobility (for instance, the headquarters of public services continue to present problems of access).

Greece displays a problematic mix of heavy regulation with an ill-coordinated process by which to cross-check other relevant legislation. This problem is evident throughout the regulatory process, from the drafting of legislation to the application of laws.
There is a plethora of regulations, including laws, presidential decrees and ministerial ordinances covering the same subject. Even though decrees and ordinances are necessary in order to interpret and specify laws passed by the parliament, the end result is an unmanageable and self-contradictory body of regulation. This pattern is very evident in taxation and town-planning legislation.
The large number and often contradictory substance of regulations contributes to the unpredictability of government decisions. The same holds for the tendency of ministers taking office after a cabinet reshuffle to amend or even reverse legislation passed by their predecessors, even if they come from the same political party.
The bulk and complexity of existing legislation dampens legal certainty, as middle- and low-ranking civil servants can be left with contradictory guidelines as to which regulation applies. In certain extreme occasions, civil servants have opportunities to negotiate with citizens and their legal representatives the exact meaning of the letter of the law. Paradoxically, with so much regulation and legalism, scope is created for corruption.
Often, courts are called upon to resolve issues stemming from contradictory and inconsistent legislation. Even though courts play a corrective role, at the end of the day the Greek government and administration have ample room to make unpredictable decisions.

Greek courts can review actions taken and norms adopted by the government. Administrative courts, which are entrusted with reviewing executive acts, are differentiated and stratified into first- and second-instance courts, spread throughout the country. A third-instance court, the Council of the State, serves as an appellate court. Judges are trained not only in the law faculties of universities located in Athens, Thessaloniki and Komotini, but also in a post-graduate, specially designated school for judges based in Thessaloniki. Proceedings are rational, and there is considerable professionalism in the judiciary and court administration.
What is lacking, however, is a larger pool of resources (administrative staff, judges, infrastructure) and better management to cope with the large number of cases under review. As a consequence of understaffing, lack of funds and insufficient infrastructure, reaching a decision on an appeal made by a citizen against a government body may take years. The situation is grave in the larger urban centers (Athens, Piraeus and Thessaloniki) where more than half of the population lives and where many cases have been accumulated. For example, in Athens it takes approximately five years between the filing of an appeal related to a simple taxation issue and the issuing of a decision by a first-instance administrative court.
Another problem is the sporadic delay in government conformation to the court’s decision. Citizens and businesses find themselves sometimes at a loss, having won a legal battle in court but discovering that civil servants and their politically appointed supervisors (general secretaries of ministries and ministers) simply delay compliance or even refuse altogether to comply with the court’s decision.

There is no constitutional court in Greece. There is an appellate court, in effect the highest administrative court of the country (the Council of the State). The highest-ranking justices of this court are its president and vice presidents. The constitution (Article 90) stipulates that these justices are appointed by the incumbent government. However, the new PASOK government passed a law in March 2010 to limit its own competence on this matter. The new law provides for a different arrangement, according to which a committee consisting of the president and the vice presidents of the Greek parliament (who come from different political parties) compiles a list of candidates from among the appellate court justices. This high-level parliamentary group should decide on the list with a four-fifths majority. The list will be then submitted to the government, which makes the final decision in a cabinet meeting. The government has to take into account the opinion expressed by the parliamentary committee.

In terms of perceptions of corruption, Greece is usually ranked low on comparative lists. One such well-known list is the 2009 Corruption Perception Index (CPI), compiled by Transparency International and containing estimates using a scale from 0.0 (very high perceptions of corruption) to 10.0 (almost no corruption perceived). In 2009 Greece obtained a score of 3.8 and was ranked 71st, tied with Bulgaria, Romania and FYR Macedonia, among 180 countries. This represents a decline from 57th place on the same index in 2008, when its CPI score was also higher (4.7). The CPI is indicative of the extent to which third parties (citizens, businessmen and more generally users of public services) perceive corruption to have permeated the bureaucracy of a certain state.
The index also reveals the way in which perceptions of corruption vary either by policy sector or hierarchical level of bureaucracy. Generally, there is more public service corruption involved in the sectors of customs, taxation and town planning. High-level corruption became very evident in 2008 – 2009, when a scandal broke out involving bribes allegedly paid by Siemens Corporation to Greek politicians in the late 1990s and the early 2000s.
Compared to the period covered in the SGI 2009 report, the prevention and prosecution of corruption have not improved. In the period currently under review (May 2008 – April 2010), there was no new legislation aimed at fighting corruption. However, the new PASOK government has pledged to introduce new legislation on the issue, and has already announced that a new anti-corruption law is under preparation.

As has been evident since the autumn of 2009, when an acute fiscal crisis erupted in Greece, economic policy in 2008 – 2010 was not able to provide a reliable economic environment in Greece. Even though the high annual economic growth rates of the 2000s (4% in 2004 – 2007) improved the country’s competitiveness, and made Greece a more attractive economic location than it was in the 1990s, the Greek economy’s basic structural deficiencies saw no change. Economic growth was not followed by a more equitable distribution of income. The fact that in 2007, GDP per capita stood at $28,423, making Greece the 21st richest country in the world (according to OECD data), does not tell the whole story. In the period under review, the poverty rate remained at 20%, and economic inequalities were not curbed. In addition, Greece was the least competitive among all OECD countries.
The budget deficit amounted to 13.6% of GDP in 2009 and public debt soared to 115% of GDP by the end of that year. Inflation reached approximately 4% in 2008, decreased to 1.2% in 2009, but rose again to about 3% in the early months of 2010, in the wake of the crisis.
Throughout the period in question, the Greek economy continued to suffer from relatively low international competitiveness. Levels of inward foreign direct investment (FDI) are low; the openness of the economy is constrained by various barriers to market entry (as evidenced by the World Bank’s Ease of Doing Business reports); and heavy, inefficient state regulation of the domestic product markets sustain higher costs. A new debate emerged in 2009 about the benefits of opening up the so-called closed professions in order to create more competitive pricing. The new government is expected to introduce reforms on this issue as a result of the EU/IMF loans it has received.
The stability of the macroeconomic policy framework has been repeatedly called into question by doubts as to the credibility of the fiscal data supplied by the government. EUROSTAT revealed that it had questioned the validity of the Greek data five times in the 2005 – 2009 period. The credibility of the data could not be relied upon, it indicated.
The consequence was that international financial markets became alarmed as to the ability of the Greek government to cover its high levels of debt maturing in 2010 and onwards, given that public debt was set to rise to 120% of GDP that year, and was forecast to rise to 140% thereafter. An unprecedented fiscal crisis arose for Greece and the euro zone, prompting an EU/IMF bailout. Thus, the stability of the domestic economic setting was shattered, accompanied by major political and social unrest.
The crisis brought Greece to the brink of defaulting on high levels of maturing debt. This eventuality still cannot be ruled out over the next three years, but the aid package provided by the euro zone countries and the IMF, as well as the new measures announced for those euro zone states in fiscal difficulty, hold out the change of preventing such default.
The Greek economy is largely based on services such as tourism, construction and public sector services (including transportation, education, health, and utilities supplied by public bodies and state-owned enterprises). Roughly three-fourths of the Greek workforce is employed in the tertiary sector. The economy is heavily dependent on imports of energy (oil) as well as imported capital and consumer goods, to the point that in 2009 the total value of exports was just one-third the total value of imports (the value of imports was $61.47 billion, and that of exports only $18.64 billion). Unemployment hovered around 9% in 2009, but had already surpassed the 11% mark by April 2010.

Successive Greek governments since the early 1990s have struggled to implement greater labor market flexibility. Such attempts, and related efforts to create active labor market policies (ALM), have largely been prompted by EU-level commitments (e.g., the Lisbon 2000 Agenda). Thus, this is a policy area that displays both low domestic reform capacity and the problem of non-implementation in a practical sense, or the limits to “Europeanization.”
Labor market policies are still much more passive than active. ALM policy measures have not been implemented, or have met with the indifference of the labor force. For instance, only 3.5% of eligible Greek workers have participated in any kind of nonformal job-related education and training program.
The labor market shows a Janus-type character. Workers in the public sector and the in the largest private enterprises are well protected from dismissal, and have a loud union voice. It is particularly difficult for employers to implement large-scale layoffs, as regulations in this area are strict. By contrast, few relevant regulations are adhered to in practice in the very large numbers of micro- and small-sized enterprises in the urban centers where young and/or underemployed Greeks find precarious work, or in the agricultural sector where many migrants are employed. The Greek economy is marked by a very flat pyramid, with few large companies and a very high number of very small enterprises. This shapes the relationship between the state and the differentiated markets.
Minimum salaries and wages are set every two years through nationwide collective agreements by representatives of employers and employees. However, in the large underground economy – estimated as the equivalent of at least 25% of GDP – an unknown but probably large number of unskilled migrant workers and skilled Greek employees work for less than the minimum wage.
In general, labor market policy has been rather unsuccessful in combating unemployment. This rate was over 11% in April 2010, up from 7.7% in 2008. The rate of youth unemployment is double the national average, and about half of all unemployed have been without work for more than 12 months.
To conclude, ALM policies have been the subject of legislation, but are rarely applied. Labor rigidity, while present in some sectors of the economy (state-owned enterprises, large private businesses), is completely unknown and irrelevant in the case of small and medium-sized enterprises and farms, where workers and employees receive little protection from labor law regulations. There is a long-term, rising problem of structural unemployment affecting the young in particular, leading to growing fears of social exclusion and conflict.

During the period under review, Greece tried to improve enterprise policy by limiting restrictions on investment, proceeding with privatization operations and lowering the top corporate tax rate to 25%. However, investment restrictions remain in some utilities: Greece applies restrictions to prospective non-EU investors in sectors including banking, mining, broadcasting, maritime services and air transport. In contrast to its stated intent to welcome innovation, investment and entrepreneurship, the Greek government has been unable to overcome the sluggishness and corruption rampant in some quarters of the public administration (particularly among tax, customs and town-planning authorities). The negative impact of bureaucracy on enterprise policy is compounded by rising labor costs, particularly non-wage labor costs. This is true for the reporting period even though monthly salaries remained very low: On average, unit labor costs rose by 4.9% between 2008 and 2009, which is close to the OECD average (4.2%). However, in 2008 the monthly salary of a newly hired unmarried worker without children was only €681.
The data too shows contradictory indications, perhaps indicative of the mix of good intentions and partial enterprise policy failures. Gross fixed capital formation by the private sector as a share of the GDP rose by almost 17.9% in 2005 – 2008, which is close to the OECD average (19.2%). However, GDP growth in Greece averaged 0.95% in 2007, 0.15% in 2008 and -0.65% in 2009. It is currently estimated to be at -0.80%, while inflation is as high as 3.9% (April 2010). The new government has also talked of easing enterprise regulations. To sum up, enterprise policy was more successful before 2008 than it was in the reporting period, and is currently tied to the downturn of the Greek economy as a whole.

The tax collection system – like the wider budget management framework – displays endemic problems associated with poor institutional capacity. With respect to taxation, the biggest and most-well known issue in Greece is tax evasion. This is rampant, producing an unfair and inefficient outcome: Every year, wage and salary earners pay (on average and per person) more taxes than any category of the self-employed, including lawyers, physicians, engineers and businessmen. Tax evasion is particularly pronounced among the liberal professions, but also in small and medium-sized enterprises (restaurants, bars, garage, plumbing and other services).
Tax authorities are unable or unwilling to track the exact sources and assess the size of the income of self-employed tax payers. Tax evasion also flourishes because of widespread corruption on the part of tax authorities, and the very slow or very lenient reaction of ministerial authorities in punishing civil servants implicated in cases of corruption. It thus comes as no surprise that the black economy is estimated to amount to about a third of the total economy.
Before 2009, the Simitis and Karamanlis governments attempted to tackle these problems, for instance by requiring various categories of self-employed tax payers to pay taxes on the basis of incomes estimated by the authorities rather than on what had been declared by the citizens themselves. In 2009 – 2010, the Papandreou government extended such measures to other occupational categories (such as taxi drivers and owners of petrol stations). The Papandreou government also imposed additional taxes on real property.
In other words, there is neither vertical nor horizontal equity. Competitiveness is not supported by the taxation system. The final result is very wide discrepancy between public revenues and expenditures. By 2010, issues of poor institutional capacity loomed large as a cause of Greece’s fiscal crisis and its need for foreign loans.

The Greek fiscal crisis of 2009 –2010 received widespread international attention. Since the mid-1990s, Greece had been running a high “mortgage,” with public debt levels consistently at or above 100% of GDP. The sudden announcement of dramatically revised deficit projections in September 2009 created major concern in the financial markets as to Greece’s ability to continue to cover its borrowing costs.
In 2009, the Greek budget deficit reached 13.6% of GDP. Among OECD countries, this was surpassed only by Iceland. In the same year, the Greek government’s net debt interest payments as a percentage of nominal GDP were the highest in the OECD, on a par with Italy and Iceland. In April 2010, the Greek government resorted to a rescue package guaranteed by the IMF and the rest of the euro zone countries in order to meet its financial obligations. The purpose of this action was to pay Greece’s soaring debts, to which France, Switzerland and Germany were exposed.
This outcome was the result of many different factors: the accumulated interest to be paid for a large public debt incurred over decades; the decision after entry into the euro not to take advantage of low interest rates and high growth to pay off some of the public debt; the continuation of the tendency to hire unnecessary personnel in the public sector, often for political reasons; the falling competitiveness of the Greek economy in 2008 – 2010; the endemic low capacity of the Greek state to raise taxes; the long-term propensity of successive governments to use inflows from the European Union to raise incomes rather than to restructure the economy; and the long-term, very high Greek expenditure on defense (in 2009, Greece spent 2.8% of its GDP on defense, compared to an average of 1.7% in the other European NATO countries). In sum, there is no doubt that this type of budgetary policy is not sustainable. The new government has, of necessity, prioritized a more effective budget management and tax collection process.

Health care in Greece is organized through a British-style national health system (NHS), covering the population as a whole and funded on the basis of general taxation. However, health care is also organized along occupational lines: certain professions, such as liberal professionals and bank employees, have their own health care programs that mirror their occupation-based pension plans. At the same time, owing to fiscal constraints, inefficiency and the unpredictable quality of service offered by the Greek NHS, there has been a shift over time toward private health care by those who can afford it. This trend was evident in the increase of the ratio of private to public health spending in 2003 – 2007, as OECD data shows.
This situation is reflected in basic statistics. In 2006, Greek public expenditure on health care amounted to 11.5% of total public spending, the lowest such level among southern European countries (Greece, Italy, Portugal and Spain). The same low ranking held true for Greece’s per capita public expenditure on health. However, compared to the rest of southern Europe, Greece has the highest number of hospital beds and the highest number of physicians (50 physicians per 1,000 residents in 2005). The country’s rate of infant mortality at birth is as low, and its life expectancy is as high as the rest of its southern European peers (respectively 4.0 deaths per 1,000 live births, and 80.0 years). Still, the NHS is in disarray, as the very large debts incurred by public hospitals testify. These debts are the result of mismanagement and comparatively large expenditures on pharmaceuticals, as OECD data show.
As a result, while health care policies do not generally provide poor health care to the population, inclusiveness is doubtful and cost efficiency leaves much be desired. Problems with poor budget management in the health system are profound and endemic; they also provide ample scope for corruption.

The Greek welfare system is rudimentary and offers only partial support. Unemployment benefits are very limited, as are other state benefits. The exception is state pensions; very few also have private pensions. Government efforts to tackle poverty are also limited. The traditional reliance on the family and other social networks remains important in the context of high unemployment.
Compared to the previous reporting period, the current period (2008 – 2010) saw no dramatic changes in terms of social inclusion policies or social cohesion outcomes. This is because the global financial crisis did not hit Greece, which has a less open economy than many other European countries, until late in 2009. The fiscal crisis of the Greek state did not erupted fully until the first months of 2010, and the austerity measures taken by the Greek government did not start taking their toll until after the spring of 2010.
In 2008 – 2010, the poverty rate remained steadily high, at about 20%. The income differential between men and women remained large, with Greek women earning on average half that earned by men. Income inequality, already large, did not grow substantially, leaving Greece on a par with the rest of the southern European countries (Italy, Portugal and Spain), and in a better position than the most unequal OECD societies.
In 2008 – 2010, government policy aiming to prevent poverty risks and enhance equal opportunities was haphazard. The ND government, in power between September 2007 and October 2009, passed laws which provided for the foundation of new special funds. Those laws were never really implemented, and the funds were ultimately dismantled. After October 2009, the new PASOK government made an initial effort to exempt the poorest wage-earners from the austerity measures, but the final shape of such policies remained to be determined as the review period drew to a close.

In Greece, the extended family remains a prime provider of social support, including housing, health care, child care and transfers to any unemployed or socially excluded family members. The persistence of extended family networks is probably responsible for the comparatively low incidence of child poverty (which in the mid-2000s was 13.2% in Greece compared to an OECD average of 12.4% among children aged one to 17 years). The functioning of these networks as a cushion against child and family hardship has also provided an excuse for not devoting more public funds to child care. Despite the high number of nursery school teachers, state-owned and local-government-managed nurseries are insufficient to cover the needs of the population. The same holds true of kindergartens. These patterns are evident in the very low enrollment rate of three-to-five-year-olds in Greek formal preschool services, as OECD data show.
Support policies for women who want to combine parenting and employment are generous for women employed in the public sector, but slim in the private sector, where pressure from employers and the absence of state-owned child care facilities create an impasse for young mothers. In brief, as in the past, Greek family and child policies remained underdeveloped – that is, underfunded and not equitable –throughout this period of review.

Pension policies in Greece are not fiscally sustainable, and do not guarantee intergenerational equity. At the current rate of public pension expenditure, the deficit shown by the public pension system is expected to reach 7.7% of GDP in 2030 and 15.7% in 2050. The system’s distributional principles favor today’s pensioners as well as the currently middle-aged cohort whose pension rights will mature in the next few years. Younger generations will face many more constraints unless the government urgently embarks on a streamlining of the pension system. At the same time, the protection offered to pensioners is currently very uneven. As comparative OECD data for 2009 shows, the net income replacement rate of the median pension earner in Greece was 110% (down from 113% in 2007). The OECD average for 2009 was 71.8%.
The apparent Greek generosity does not mean that the elderly in Greece thrive on pensions. Large shares of pensioners coming from the private sector receive minimum pensions and live close to the poverty line. At almost 23%, senior citizen poverty is almost double the OECD average. However, retired people who receive pensions from the liberal professions’ occupational programs, from state-owned enterprises or banks do comparatively well. The remainder of pensioners struggle to make ends meet, often relying on minimum pensions plus a small allowance. In Greece, the labor-force exit age (the real retirement age) in 2007 was 60.9 years, which was close to the OECD average of 62.3. However, there were large discrepancies among public pension programs, with some allowing for very early retirement. In brief, pension policy in Greece fails to meet fiscal criteria and criteria of distributional justice.

Cultural, education and social policies focused on integrating migrants into Greek society are still in a stage of infancy. Legal immigrants who are active in the labor market make contributions to the Greek social security system out of their wages and salaries, but the insurance and health care services they receive are very uneven. This is attributable to the lack of funds, the absence of sensitivity in matters of intercultural interaction, and discrimination encountered in state insurance agencies, hospitals and social care centers.
There is a lack of reliable data on the education of foreign-born pupils and students. Education is provided in primary and secondary schools for first- and second-generation migrants, who are often able to do well. OECD data show that 16% of migrants have attained tertiary education. Since many first-generation migrants from southeastern and eastern Europe obtain tertiary education skills in their countries of origin, it is not possible to draw conclusions simply by looking at data on the presence of university graduates among migrants.
Cultural policies aimed at integrating immigrants are inchoate. This is exemplified by the continuing absence of an official (rather than makeshift) mosque in Athens, which is necessary to support the worship needs of Muslims from Southeast Asia, the Middle East, Africa and Albania who have settled in the greater Athens area.
During the course of the reporting period, tensions between natives of Greece and migrants rose. Migrants concentrated in very large numbers in downtown urban neighborhoods, which in the past were typical Greek middle-class areas. An example can be found in the recurrent tension between native Greek residents and migrants in the Athens quarter of Agios Pandeleimonas (in Patissia), as well as in the streets around Omonoia Square, one of the most central squares in the Greek capital.
A strong version of Hellenic identity, particularly popular among the native-born middle- and lower-class, less-educated Greek strata, hinders the integration of migrants into Greek society. This identity is characterized by a sense of belonging to a unique, introverted and embattled nation.

Greece is a longtime European and NATO member state. It keeps an army which uses sophisticated equipment and is based on compulsory military service as well as the hiring of professional soldiers. These are preconditions for an effective external security policy, a goal which Greece fulfilled in 2008 – 2010, as in the previous reporting period. However, the global financial crisis of 2008 – 2009, and the Greek fiscal crisis of 2010, may eventually lead to a decrease in military expenditures as the country strives to address its soaring public debt and worsening balance of payments.
Comparative data show that Greece ranks 26th in the world in terms of its military expenditure, which in 2005 amounted to 4.3% of its GDP. Among NATO countries Greece was outstripped in this respect only by Turkey. Since that time, military expenditure has fallen to below 3% of GDP. Indeed, for years Greece had maintained one of the highest military expenditure levels in the Western world, a fact attributable to ongoing tensions with Turkey. Disputes focused on the Cyprus question and the Aegean. The potential for conflict with Turkey decreased in the 2000s, because of a rapprochement policy followed by the Greek and Turkish governments and because of Turkey’s drive to join the European Union. However, compared to the mid-2000s, relations between the two countries made no visible progress during the period under review.

During the period under review, there were sporadic attacks against banks, government buildings and police stations, orchestrated by very small groups stemming from the Greek extra-parliamentary left. However, overall internal security risks are not great. The Greek state has received technical assistance from the United States and the United Kingdom in security matters, and has generally been able to offer effective protection against terrorist threats. At the time of writing, the police had been able to capture the leaders of a group (“Revolutionary Struggle”) implicated in bombings in Athens. This group was far less significant and effective than the “17 November” group captured in 2003.
Other politically motivated outrages were rare until December 2008, when the killing of a young pupil by a policeman in the Athens city center incited a cycle of violence, destruction and looting in downtown Athens that lasted for approximately two weeks. The police proved incapable of containing the situation, which included peaceful protests and demonstrations as well as violent clashes with security forces. Private and public property was destroyed. The Karamanlis government’s long hesitation and lack of coordination and planning were also to blame for the Greek state’s weak response to this challenge.
On the other hand, the scope and penetration of organized crime in economic life is very small. Political and social institutions and processes are not affected by organized crime. Greece has one of the lowest rates of homicide and incarceration among EU member sates.
In early 2010, legitimate protests against the economic austerity measures were paralleled by hooligan and anarchist violence on the streets of Athens. Notwithstanding the arrests noted above, there is a risk that continued protests against the government’s economic policies (in the context of the external bailout by euro zone governments and the IMF) will lead to crises on the streets and challenge the government’s ability to maintain order (as in December 2008, albeit for different reasons).

The fact that Greece was never an advanced industrial economy has probably protected the quality of its environment, at least in comparison with the more industrialized OECD countries. Even to this day, close to 13% of the Greek workforce works in the agricultural sector.
Although Greece is not a heavily industrialized country, it produces a relatively large quantity of CO2 emissions. It ranks 21st among the 31 OECD countries according to the size of CO2 emissions in proportion to GDP. The contribution of renewable energy sources to Greece’s energy mix is low, at approximately one-third of the OECD average.
These patterns are probably related to the fast economic growth (4% annually in 2003 –2007), which has meant increased consumption and waste. In the largest urban centers in particular, namely Athens and Thessaloniki, where more than 50% of the population lives, the deterioration of environmental quality is visible in the low air quality and the large quantities of waste left in the streets. The latter is a problem related not only to the overproduction of waste, but also to inefficient waste management on the part of municipal authorities. Along the Greek coastline, the intensification of construction for tourism and private leisure purposes (such as second homes built and owned by the upper social strata), has also had a negative impact on the environment.
The recurrence of forest fires across Greece during the summer months is related to the conflicting interests of prospective builders and landowners on the one hand, and the state’s struggle to protect the environment during periods of considerable heat and dryness on the other. Illegal building and profit-seeking highlight the ineffectiveness of state actions.
Until 2009, environmental policy was a secondary government policy priority. Environmental protection was subsumed under the authority of the Minister for Public Works and Town Planning. After the October 2009 government turnover, a new Ministry of Environment was founded by PASOK. During the fall 2009 electoral campaign, PASOK’s electoral program emphasized the creation of a “Green Economy.” The dire financial situation, which became clear in the winter of 2009 – 2010, has of course limited the prospects for an economically sustainable new environmental policy.

Research in Greece is largely carried out in the private sector, as well as in universities and state-owned research centers. Despite the existence of high quality human capital and well-known research centers, such as the Democritus National Center for Research in the Natural Sciences or the Biomedical Research Foundation of the Academy of Athens, research and innovation policy has been inconsistent and underfunded. Successive governments have failed to provide researchers with the necessary funds and infrastructure. In 2007, expenditure on research and innovation amounted to just 0.5% of Greece’s GDP (European Commission data), which was significantly below the EU-27 average of approximately 2%. Private sector companies have shown little interest in establishing research structures either on their own or in cooperation with the state.
The lack of interest in research and innovation in the private sector and the underfunding of research by the state are visible in the corresponding employment trends: Only 2.4% of the total workforce works in high-tech manufacturing companies, while Greece ranks 27th among the 31 OECD countries (2007 data) in terms of the number of science graduates in the 25-34 age group. In part, this pattern is related to the size of firms in the economy: There are very few large firms in Greece, and this limits the capacity to support R&D.
The structures and functions of state-owned research centers are fragmented and overlapping. A recent law, passed in March 2008, attempted to rationalize the organization of research in Greece, but the scheduled mergers among research units met with opposition from the academic and research community. Part of the negative reaction to the new law stemmed from the haphazard and hasty manner in which mergers were conceived.
In sum, Greece’s state-funded research sector lacks sufficient resources (and correspondingly finds it difficult to retain or provide incentives for staff). In addition, the country faces problems with graduate quality, has a private sector that is ill-suited to supporting research, and maintains a regulatory environment that stifles innovation.

Education is one of Greece’s less well-performing policy sectors. While the population today enjoys wider access to secondary and tertiary education than ever before, the content of educational curricula and the structure and management of the public education system do not ensure high quality, efficiency or the equity of education. While in comparative perspective, the overall public expenditure on education is not impressive (4% of GDP in 2005 according to the World Bank), the student-to-teacher ratio in primary schools is a comparatively low 10.3 (students per teacher). In high schools, this ratio is 7.9 (2007 data). In primary schools, the dropout rate is only 1.8% (2006 World Bank data).
However, with respect to test results from the Program for International Student Assessment (PISA), Greece ranks among the least well-performing countries. It is also ranked 31st among the 31 OECD countries in terms of continuing education, measured on the basis of the share of the population aged between 25 and 64 years who have participated in nonformal work-related training. And while 60% of Greeks aged between 25 and 64 years have finished high school, other OECD countries have done better, putting Greece at 25th place among the group’s 31 nations. Both the primary and secondary educational levels are victims of traditional patterns, with results such as ethnocentric curricula, an emphasis on humanities instead of the sciences and excess reliance on memorization skills as a method to evaluate pupils.
Greece does better in terms of tertiary education: About 23% of Greeks aged 15 years to 64 years have finished tertiary education. This gives Greece a ranking of 21st among the 31 OECD countries. However, during the reporting period, the trends of instability and unpredictability in the day-to-day functioning of Greek universities, already visible in the previous reporting period, were intensified. The new higher education law (passed under the ND government in March 2007) was implemented in fits and starts. Student unions fought tooth-and-nail battles against the presidential decrees issued in support of the law’s provisions. The university professors’ trade union, which until February 2009 was controlled by SYN and KKE, the two left-wing parties of the Greek parliament, also opposed what it considered implementation of the Bologna Process in the Greek higher education system. However, since February 2009, the union has been in the hands of a center-right and center-left coalition which accepts the need for university reform. In 2009 – 2010, illegal student mobilizations declined .
Opposition to the new law and bureaucratic delays on the part of the Ministry of Education have meant that the new policy for tertiary education, which aims at improving universities’ management, evaluation procedures and autonomy, has not yet had visible effects.
The Greek education system has also failed to respond to labor market requirements. The academic fields and specialties offered at secondary and tertiary education institutions are not compatible with ongoing shifts in the economy and the labor market, leaving increasing numbers of high school and university graduates with few choices other than underemployment or unemployment. Overall, while Greeks today tend have received formal education to an extent broader than ever before, and many Greeks are able to pursue higher level studies abroad, the outcomes of education policy are mediocre in terms of quality.