Argument

Europe's Basket Case

Has Greece's dysfunction reached the point of permanent crisis?

This spring, a few hundred public school teachers gathered outside the Greek Parliament building in central Athens to do something Greeks have been doing for the last three years: protest austerity measures. They shouted chants against corrupt politicians, clueless eurozone leaders, and greedy bankers. Loudspeakers blared 40-year-old protest music from the resistance against the 1967-1974 military junta. Hand-painted banners declared, "Enough! The madness stops here!"

The demonstration was peaceful -- no Molotov cocktails, no tear gas -- but the crowd was also a fraction of its usual size. One reason was simply protest fatigue. But Katerina Papadimitrakopoulou, a no-nonsense French teacher in a flowing yellow sundress, suspected something more deflating. "Everyone thinks we're the problem," she told me. "They believe the narrative that civil servants don't work and still get paid, that we get our jobs through political favors, that we might as well be dispensable because we are part of some 'bloated' system."

She rubbed her temples as the protest music blared. "Everyone hates the state in Greece," she said, frowning. "And because we work for it, we're bad too."

The state-haters have a point: If there's a candidate for failed-state status in Western Europe, they say, Greece is it.

Of course, the Greek state was dysfunctional long before the debt crisis began more than three years ago, with bureaucracy and associated corruption touching everything from tax collection to urban planning to schools. But after Greece took two multibillion-dollar bailouts, that dysfunctional system had to reform and shrink at the same time -- and at a superhuman pace. The troika of lenders -- the European Union, the European Central Bank, and the International Monetary Fund -- demanded billions in budget cuts as well as reforms. To make the troika's deficit targets, a succession of governments hacked away at public-sector wages, pensions, and social services budgets.

The result? The unemployment rate is now 27 percent, a record; for Greek workers under age 25, it's more than 60 percent (that's right -- 60 percent is not a typo). Tens of thousands of businesses have closed. The number of suicides has doubled in three years. Nearly a quarter of Greeks say they can't afford food.

Unpaid bills, meanwhile, have stacked up for the Greek state. State hospitals have been especially hard hit; they have been short staffed and often have run out of lifesaving drugs. Late last year, when I visited the regional hospital in the northern city of Serres, the overworked doctors there -- most of whom were making about $2,000 a month -- hadn't received months of overtime pay and had run out of basic supplies including bandages, syringes, and surgical gloves. "Some days we don't even have toilet paper for the bathrooms," said Vangelis Papamichalis, a neurologist.

"There was this idea that the crisis would stop corruption and restore order, and eventually something reliable could be built out of the ruins," added his colleague, pediatrician Charalambos Veliotis. "Instead, I am paying for supplies out of my own pocket. I'm treating little kids whose parents have been out of work for a year and no longer have insurance. How long can this go on?"

How long, indeed? Last year, it seemed that Greece was headed for sure democratic meltdown. Many declared the country a failed state, citing not only the very visible pain of austerity on Greeks but violent anti-austerity protests and a political system at an utter impasse. And it's true: Greece is certainly the worst performer in Western Europe on this year's Failed States Index, rising nine spots since 2007 -- to 138th. Of course, this is not terrible relative to the world's true basket cases, the Somalias and Sudans and even the Colombias, but it's certainly not promising for a developed European country that former Prime Minister George Papandreou vowed not so long ago to turn into the "Sweden of the Mediterranean." In 2012, the level of dysfunction -- political and economic -- only accelerated into something approximating a permanent crisis.

Consider that it took two messy elections, the demonization of leftist politician Alexis Tsipras as a euro-murdering crazy, and lots of "Grexit" panic before Greece even got a new crisis government, a coalition led by the conservative New Democracy party. The new prime minister, Antonis Samaras, a Harvard-educated economist from an old-money family, had spent the previous two years declaring himself an anti-bailout crusader before winning the post on the promise to support its terms and keep Greece in the eurozone.

Brussels may have been relieved, but many Greeks remain horrified at what the elections dredged up. In a page out of the Weimar narrative, voters gave unprecedented support to Golden Dawn, a neofascist party known for its Nazi symbolism, violent racism, and labeling of all politicians (other than themselves) as traitors who break laws instead of enforcing them. The party has 18 seats in Parliament and ranks third in public opinion polls.

The Samaras-led coalition government has now been running Greece for a year. That's a lot longer than many Greece watchers expected, and the government is eager to show Greeks that it's enforcing laws, claiming the crime rate is dropping, tax evaders are being prosecuted, and undocumented migrants are being sent home. The government even threatened to arrest schoolteachers planning to strike during the week of university entrance exams. But many wealthy, well-connected Greeks still don't pay their fair share of taxes and continue to pass the burden onto the devastated middle class. Because of the public scapegoating of immigrants, especially poor, nonwhite ones, there has also been a dramatic rise in hate crimes. Human rights groups have strongly criticized the Greek police -- another institution Greeks don't trust -- for refusing to act on these crimes and for racist behavior themselves.

The Samaras government says it has created special hate-crimes units, but Samaras is more interested in showing Greeks that he is leading them out of the worst recession in half a century. We proved the skeptics wrong, he declared on a recent trip to China: "Most of them now witness not a 'Grexit' -- an exit from the eurozone -- but a 'Grecovery' -- a recovery of the Greek economy." Although there are signs of recovery-the Eurogroup approving bailout loans without dawdling, rating agencies inching up the country's credit standing, Greek bond yields dropping to below 9 percent for the first time in three years -- many Greeks see a very different picture on the ground. They see an economy that has shrunk for 19 straight quarters. More than a million Greeks -- about a tenth of the population -- are out of work, and about 800,000 of them have been jobless for more than a year. There are 400,000 families in which nobody earns an income, as well as 300,000 workers who haven't been paid for months. Unless these Greeks see some tangible improvement in their lives, "Grecovery" will just be another myth pushed by politicians they don't trust.

The unemployed often complain bitterly about those in the civil service, who, until recently, could never be fired. But for decades, many Greeks also coveted those jobs. In the years after the dictatorship's fall, when Greeks were desperate for economic stability, Prime Minister Andreas Papandreou expanded the public sector so that people from humble backgrounds could have a chance to nab a "job for life" and enter the middle class. The Greek Constitution even forbade the firing of civil servants. The idea was to prevent new governments from sacking public servants from opposition parties and replacing them with supporters. But the parties still promised jobs for votes during election campaigns, pitting patronage hires who often flouted the rules against hardworking civil servants who had gotten their jobs through merit. Now everyone in the public sector is suspected of being a sycophant, especially by those who have lost their jobs.

The narrative has worn out Katerina Papadimitrakopoulou, the schoolteacher I met at the demonstration. The troika has asked for 4,000 civil service layoffs by year's end. The goal is to cut a total of 150,000 jobs by the end of 2015. The government has vowed to hire any new public servants on merit, not through the old patronage system.

"Well, we'll see about that," Papadimitrakopoulou said, sighing. "Can the same politicians who messed up the state now save it?"

Aris Messinis/AFP/Getty Images

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