Wall Street Journal
February 1, 2015
Greece’s moment of maximum danger was in March 2012. Eurozone leaders were meeting for the second time in three weeks to decide whether to grant a second bailout. Failure to do so would lead to a disorderly Greek default and exit from the eurozone. Despite frantic efforts by European Central Bank officials to spell out the risks to skeptical governments in Germany and France, the result hung in the balance. When the deal was agreed, the mood at ECB headquarters in Frankfurt was one of apprehension as well as relief.
“What Greece needs isn’t an IMF bailout program but a World Bank-style state-building program,” a senior official warned. “Greece doesn’t have a functioning public administration. We’re going to have to build one.”
Three years on, eurozone officials acknowledge that rebuild is far from complete. The scale of the challenge was laid bare by Greek journalist Yannis Palaiologos in his recently published book, The Thirteenth Labour of Hercules. Through a series of case studies, he shows how corruption and clientelism has brought Greece to its knees: competitive businesses are laid low by politically driven unions, major investments are deterred by 20-year planning disputes, energy prices held artificially high by an over-mighty public monopoly. And there on almost every page, siding with the vested interests against those trying to modernize the Greek economy, is the charismatic figure of Alexis Tsipras, Greece’s newly elected prime minister.