Is Greece a Failed State?

Not yet. But it’s running out of time -- and money.

Two years ago, Greece's Prime Minister George Papandreou compared his country's travails to "a new Odyssey." Since then, about half a million Greeks have lost their jobs, tens of thousands of businesses have closed, the economy has shrunk by more than a tenth, Athens has witnessed several riots, and Papandreou's government has collapsed. If Greece is truly following the course of the mythical adventurer, then it's in danger of being eaten by the monster Scylla or sunk by its partner Charybdis.

Papandreou's successor, technocrat Lucas Papademos, is attempting to steer the country to calmer waters. European Union leaders are expected to give the final approval at the end of this week for a new 130-billion-euro loan package Papademos brokered to prevent the disorderly bankruptcy of Greece, which is also seeking to slash its huge debt by more than 100 billion euros through a bond swap involving private investors. Though it's the biggest sovereign bailout ever, it doesn't disguise the fact that some of its eurozone partners have accepted Greece is a lost cause, a failed state that should be cast adrift. German Finance Minister Wolfgang Schaeuble recently referred to Greece as a "bottomless pit." His Dutch counterpart, Jan Kees De Jager, expressed grave skepticism about Greece's ability to live up to expectations. "Promises are not enough, not anymore," he said. Images of a neoclassical building housing a famous cinema being burnt during rioting in downtown Athens in February and the repeated delays by coalition leaders to agree to the measures the European Union (EU) demanded for a new bailout added to the impression that Greece had gone off the rails.

How Greece ended up here has been reported ad nauseam: political corruption, economic inefficiency, and systemic failure at both a national and European level. The last two years have confirmed that Greece has trouble functioning the way one would expect of a country that has been a member of the EU since 1981 and the eurozone since 2001. Lacking a coherent crisis-busting plan of its own, special interests, partisan politics, and bureaucratic dead-ends have all held up the country's progress since it appealed to the EU and the International Monetary Fund for help in May 2010. Throw in Europe's lingering economic crisis, and there is little chance of an economic recovery for Greece any time soon.

Greece signed up in May 2010 to ambitious structural reforms as part of the first, 109-billion-euro, loan package from the EU and the IMF. While many of the lenders' demands were never met, the government proved very effective in applying austerity measures. Wave after wave of tax hikes, pension cuts, salary reductions, and drastic public spending adjustments crashed down on the crumbling Greek economy, which had been in recession since 2008. Tens of thousands of businesses closed, retail sales and industrial production plummeted, unemployment more than doubled to 21 percent, disposable income was slashed by a quarter, and the economy contracted by almost 7 percent of GDP last year alone. The lack of political will for deep reforms, the shock fiscal therapy, and the constant hounding from some of its northern European partners make Greece appear lost.

But is Greece really slipping out of the developed world, as some have suggested?

"Greece is more a dysfunctional state than a failed state," says Megan Greene, a eurozone expert at Roubini Global Economics who visited Athens in February. "There is legislation, and it is eventually upheld in most cases. The state still provides basic services such as pensions and healthcare. Despite recent violent protests in Syntagma Square, the rule of law presides over every day operations. But the Greek government doesn't do any of this very well."


The terms of Greece's new bailout show the lack of faith the eurozone and the IMF have in Greek politicians to take ownership of the program and Greece's public administration to implement the reforms being demanded. The eurozone has demanded that Greece pay money into an escrow account to ensure the country's debt is serviced before the government can cover the cost of wages, pensions, or anything else. The eurozone also wants inspectors from the IMF, the European Commission, and the European Central Bank to have a permanent presence in Athens.

The reason Athens is willing to accept what many Greeks see as a breach of their country's sovereignty is that they fear the other option -- having to quit the eurozone -- would set Greece back decades economically and break its political bonds with the core European countries. Switching to the drachma would cause a drastic devaluation that would make basic imports, such as fuel and food, unbearably expensive. If Greece's banking system collapses and hyperinflation hits, the government could have trouble providing basic services, families could find it difficult to purchase basic goods, and rioting could intensify.

Greece's fading hopes depend to a large extent on it fixing its archaic public administration system. For decades, the Greek government has been staffed largely based on political criteria while being starved of targets, training, and technology. Some modest improvements have been made since the crisis began. Tax offices are using new software that allows them to crosscheck records and as a result, dozens of major tax evaders have been arrested over the past few months. Yet too many taxes go uncollected, waste at public hospitals is not yet under control, and cases keep piling up at courts. The Greek political system is steeped in inertia and sprinkled with corruption, and fed by individuals and groups that cling to the fading hope that nothing will change. "Every stage of doing business in Greece is mired in bureaucracy, with the state impeding business activity rather than facilitating it," says Greene.

Still, Greece might be on the cusp of positive change. Before the Athens 2004 Olympics, many feared the games would be a catastrophe. In the end, they passed off without a major hitch, and visitors and pundits regarded it as one of the best Olympics in years. Stratos Safioleas, who ran the media relations department for the Athens 2004 Olympics, sees this as a similar opportunity, though on a much bigger scale, for Greece to prove the doubters wrong. "Despite being hit hard by the crisis, Greece can still be counted among the rich countries of the world," he told me.

Rather than wait for the state to fix itself and provide better conditions, many Greeks are stepping in to fill the void it has left. From the young couple that left Athens last year to breed edible snails for export on the island of Chios to the unemployed Athens man who has started a soup kitchen with his friends for the city's homeless, to the activists in the town of Katerini that have encouraged potato producers to cut out profiteering middlemen and sell directly to customers, there are many examples of people overcoming their government's failings and pushing back at the crisis.

Last week, more than 20 major Greek businesses joined forces to take out full-page advertisements in several European newspapers in an attempt to do what the Greek government has failed to since the crisis began: to convince Europeans that Greeks are serious about change. "Greeks feel let down by their institutions," says brand strategist Peter Economides, who helped design the campaign. "I sense there is a desperate need to connect, and they will connect -- with each other." Highlighting the cost of the austerity measures and the gradual efforts at reform, the businesses asked for patience and solidarity. "Give Greece a Chance" is their message.

"A new generation of Greeks, highly educated, capable and bold, are eager to take the country out of its predicament," says Safioleas. "The old political establishment that plagued the country, one that based its existence on developing a clientelistic state that passed out public money to its domestic allies in exchange for power, is finally crumbling."

Worryingly, however, there has been a surprising lack of new political movements over the past two years despite the growing unpopularity of some of the established parties. Power, be it in government, Parliament, or the civil service, still rests largely in the hands of the generation that came to the fore after the collapse of the military dictatorship in the mid-1970s.

"Over the last few decades, Greece has survived occupation, civil war and a junta. It most certainly has the potential to survive this crisis. It just has to," Safioleas says.

Odysseus survived too. He managed to navigate past Scylla and Charybdis but when he eventually arrived home in Ithaca, he was alone. For Greece, where some 60,000 small businesses alone are projected to close this year, leading to 240,000 redundancies, this ending won't do. Greece's passage to safety is growing narrower: It has to regain the trust of its eurozone partners through rapid reforms that will create a functional state capable of supporting growth, otherwise a crushing political and economic collapse loom. This might be enough to keep the country afloat while the economy improves, and Greeks who genuinely want change try to make a difference. In Greece's new Odyssey, one man's survival won't be enough. This one is a tale of all or nothing.

Milos Bicanski/Getty Images


Five Years in Damascus

How my Syrian adventure became a nightmare.

A bloated dead donkey greeted me as I entered Syria in January 2007. "Welcome to Assad's Syria" read a huge billboard hanging over the Bab al-Hawa crossing with Turkey.

The first person I spoke to upon arriving in Damascus was a machine gun-toting soldier guarding a government building. "Where is the Harameih hostel?" I asked. He had no idea what I was saying, never mind what I wanted.

Mosquito and bedbug bites, sunstroke and diarrhea. Agonizing Arabic-language classes and cold showers thrice daily. Weight loss. Dust. I had no idea how I had found myself in this country. But I would stay five years, before the horrors of the country's incipient civil war drove me away this month.

There were also delights: Christian celebrations in churches so small the mellow voices in a mini-choir of two filled the entire chapel. Visiting mysterious Druze communities in remote mountain hamlets, where men drive tiny tractors filled with the green of freshly picked apples. The green, brown, and yellow mountains. Delectable meshawe -- roasted chicken soaked in olive oil and crushed garlic -- barbeques. How Damascus smells on summer nights.

Working as an editor at the state-run Syria Times newspaper in 2007 and 2008 would see me immersed in Arab literature, politics, debate, and news -- or so I thought.

I was naive. Most workers -- they cannot be called journalists -- holding senior positions at the Syria Times were Alawite. Few even spoke English. We shared offices with the Arabic title Tishreen, and most news came down from the state news agency, SANA.

Even then, dissent simmered just below the surface. Translators fresh out of university mocked the regime and the "newspaper." The tea room employed four boys where one sufficed -- brothers, sons, cousins of someone up the chain -- but loyal. Syria Times closed in June 2008, but today employees are still being paid $150 per month.

Despite its problems, Syria seemed to be prospering back then. The World Bank recorded that Syria's GDP grew at a healthy 6 percent annual clip from 2004 to 2009. An explosion of Kia and Hyundai cars clogged the streets, and new private banks provided easy credit to anyone with a little cash or a stable job.

In Damascus, at least, laptops flourished in Western-style cafes. The $4 coffee arrived in 2010, and then iPhones and Cinnabon bakeries. Syria's rapid modernization spurred massive migration to urban centers, while in the countryside to the northeast, hundreds of thousands of farmers fled starvation from a devastating drought. They drove taxis at night and lived in Harasta, Qaboun, and Madamia, satellite towns of Damascus where rent was cheap -- and that are now centers of protest.

Then the uprising began, and everything changed. In Damascus, disbelief was followed by fear and then dejection as the protests spread throughout the country. January brought a sense of siege. Hundreds of concrete barriers appeared around security and military facilities, deepening the sense of fear and foreboding. Men queued overnight for heating fuel, already inflated in price, and returned home empty-handed the following morning to cold wives and children.

In Syria's halls of power, officials made gestures toward the carrot -- "There is corruption, and we need to root it out," numerous government officials remarked in public during the early days of the revolt last spring.

At the same time, however, regime heavyweights reached enthusiastically for the stick. The calculus seemed to be that if the regime let a single town square go free anywhere in the country, it would crumble.

Since the beginning of 2012, the state of affairs across Syria has deteriorated further. In Qatana, a largely Sunni town 20 miles southwest of Damascus, tanks have returned to the streets. Locals must now do without electricity for 12 hours each day.

In Jdeidet Artouz, a religiously mixed town of Sunnis, Christians, and Alawites southwest of Damascus where I lived for 18 months, recent weeks have seen dozens of protesters become hundreds. They block street traffic using huge free-Syria flags. Yet the security forces drive by the demonstrations in cars adorned with symbols of the regime -- and do nothing.

I asked my local shopkeeper why the authorities are not breaking up the protests.

"Do you watch Tom and Jerry?" he replied. "Here it is the same; they are playing a game."

The waiting game is also being played in the capital. Damascenes watch footage from Homs, but do not act. A few -- those who have family and friends killed or tortured by the regime -- are taking to the streets in increasing numbers, but the majority remain silent.

"We are not used to this," Damascenes constantly told me. They see Homs and think that nothing is worth the same devastation visiting their own streets and homes.

Almost every week, friends and acquaintances disappear. Close friendships are consigned to the past because, when you're on the run from the security forces, you don't have money for phone credit.

Conversation dies after 11 months of unrest. "What can we talk about?" a state employee asked me. "The news? We'd rather talk about anything else." Many are not afraid to criticize the regime, but most are too frightened to take to the streets.

Syria's minorities are frozen in fear. Christians spend hours watching the television station run by Adnan al-Arour, a Salafi Syrian cleric based in Riyadh who broadcasts videos of rebels shouting Islamic slogans and issues threats to pro-Assad minorities while calling for the establishment of an Islamic government. "Who will protect us?" one Christian woman asked me recently. "Will they make us wear Islamic dress?"

Ultimately it was the scenes at Saqba in eastern Damascus that prompted me to leave. An English journalist in Syria on a temporary visa asked whether I was interested in visiting to search out an underground, activist-run hospital. Frustrated at hearing of other journalists making it to Homs, I could not turn down the opportunity.

I saw six bloated bodies hidden under pine trees inside a schoolyard, some missing eyes, lips, noses. Another dead man blackened by fire. They were hidden by locals so that their families could bury them in dignity at a later time, when the regime's forces left.

I feared that if the Syrian security forces found out what I had seen, they would not hesitate to silence me -- perhaps blaming the "armed gangs" for doing so.

As the sound of shells thudding into the Damascus suburbs kept me awake, I got a taste of many Syrians' fears of the regime's pervasive security forces. Every morning I held my breath when turning the ignition of my car. Footsteps on the stairs outside my door made me sit upright on the sofa.

The regime remains strong, say many.

State employees are still being paid on time each month. Police can still be seen at their traffic-light posts every morning. Families continue to turn out in droves to eat sandwiches at the few city malls where electric generators help maintain a semblance of normalcy.

Damascenes have lived with this regime for decades and know it only really understands the way of the gun. It is a regime that scoffs at political ideals, a family fiefdom forged long ago in an absurd tribal pride that values a misplaced honor and personal ego over all. It can smuggle and steal, and it is not afraid to shoot and kill --but it will not negotiate or compromise.

For many Syrians, the political opposition offers little. Flying the free-Syria flag off a bridge in the capital for five minutes will not hasten the end of the regime. Blocking roads by pouring diesel in front of cars, as happened recently in the capital's center, will not draw Damascus's silent majority -- those who bought Kias and Hyundais in 2009 -- to the side of the opposition.

Nor does the opposition's ever-escalating violence hold any prospect of bringing President Bashar al-Assad's regime to its knees. This month, members of the Free Syrian Army surrounded an army checkpoint outside Homs and tried to convince the troops to "defect and join" them. They failed -- and a strategy of trying to intimidate the Syrian army through superior firepower is bound to fail on a grander scale.

The soldiers and security officers bombarding Homs's restive neighborhoods and shooting up Daraa and Idlib won't lay down their weapons and run en masse to join the defectors anytime soon. They think that the regime is right and that they are locked in a struggle to the death with the gunmen. And they are fighting armed men, now.

The regime will spend hours of broadcasting time telling Syrians how the journalists who have been reporting from Homs -- and are now trapped there -- entered Syria illegally and are probably assisting the "terrorist gangs." And they will convince thousands.

Although perhaps inevitable, the militarization of the opposition has been the greatest disaster of the uprising. The regime has exploited this fact by granting visas for dozens of foreign journalists to make the case that the regime is, in fact, fighting armed gangs.

And support for those armed men is far from universal. "When the army sees men with guns, they will try kill them; they will shoot them down," a youth in Saqba told me this month. "I hate the Free Syrian Army. They are gone, and we are here with our smashed homes."

Bearing witness to a country falling apart is a sobering experience. Cars don't stop at traffic lights or for traffic police. Security officers manning checkpoints slip their hands into cars' glove compartments without asking. But when I speak to Syrians, the most troubling aspect -- though few appear to realize it -- are the growing divisions between them.

Christians complain how beggars take all their money back to the mosque. Most Damascenes, who as one observer eloquently noted "are waiting for a winner and then they will support them," don't give a damn about their fellow Syrians in Homs and Daraa.

But one thing is certain: The Assad regime will fall. Its policy of maintaining thousands of security minions at dozens of locations across the country is unsustainable. The cash it has hoarded and stolen will run out, and it will no longer be able to pay its gangsters and public-sector employees, leading to millions more hungry Syrians on the streets calling for change. At some point, probably within 18 months, army defections will reach a tipping point, and massive numbers of Sunni soldiers will run home or rush to defend besieged neighborhoods such as Baba Amro. Meanwhile, Christians and other minorities will refuse to pick up guns and shoot their fellow Syrians for Assad.

Syria's uprising, however, may not end with Assad's demise. Even after the dictatorship crumbles, there will be 22 million people who will have a hell of a lot of issues with one other -- and Assad will no longer be around to be blamed for the poor state of their lives. Responsibility for Syria will not come from the Syrian National Council, the Free Syrian Army, or the local policeman -- it will have to come from each individual. Syrians will have to decide for themselves where they want their country to go.