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The Little Envelope

by Takis Michas1 [1] ,2 [2]

As Greece is going to the polls this Sunday, the recent wildfires understandably preoccupy the public. Sixty-six people were killed and over 200,000 hectares of land destroyed in the worst forest fires in nearly a century. But the debate over whether conservative Prime Minister Costas Karamanlis mishandled the crisis has also further sidelined Greece’s number one problem from this election campaign: the public sector’s inability to deliver basic services like health care and education. The long-term economic damage of these shortcomings by far surpasses the destruction caused by the fires.

Take secondary education, for example, which in principle is free. Yet in practice, teachers lack the motivation and professionalism to provide students with an adequate education. As a result, most parents are forced to pay for private tutoring—in many cases provided by the very same teachers that teach their kids in the state schools. Others send their children to expensive private evening schools.“No kid can expect to enter a university or to learn a foreign language if he relies on what he learns in the state school,” says Georgia Mastoraki, a math teacher at an Athens high school.

The failure of the state to provide basic services is compounded by wide-spread corruption

The failure of the state to provide basic services is compounded by wide-spread corruption. According to a 2006 report by Transparency International, a Berlin-based think tank, Greece is one of the most corrupt countries in the European Union. That sad reality is known in Greece as “fakelaki” which means “the little envelope” and refers to the bundles of cash Greeks need to navigate the corrupt halls of their public administration.

When a Greek has to undergo surgery in a public hospital, for instance, he knows that he’ll have to grease the surgeon’s hands with some “fakelaki” underneath the operating table. Such payments—depending on the type of surgery they can range anywhere from Œ1,000 to Œ20,000—are of course illegal since the services in public hospitals are supposed to be free. By making this payment the patient hopes not only that the doctor will do his best but will also ensure that during his stay at the hospital he will be treated with at least a minimum of dignity.

Theodoros Pelagidis and Michael Mitsopoulos, two Greek academics, speak of the “predatory expropriation” of the public sector by the very same employees and organizations that are supposed to provide those services. “The Greek State is huge yet hollow,” the two authors wrote in a recent book on Greek reforms. “It intervenes in all aspects of economic and social activity, yet at the same time it has been taken over from the inside by organized groups that prey on the national welfare in the same way the Vikings were preying on other European societies a few centuries ago.”

As a result, services that are in principle free require considerable expenditures on the part of the population

As a result, services that are in principle free require considerable expenditures on the part of the population. In the case of health and education the Greek citizens must in effect pay twice. Once through taxes to fund the system and then again through direct payments, such as to the doctor or to the private tutor. And while the recipients of these payments do not pay taxes, the person providing the funds cannot deduce the “fakelaki” from his taxable income. This is especially hard on the lower income groups, who are supposed to be the primary beneficiaries of such “free” public services.

This system encourages the growth of a civil service culture where the job is not seen as an end in itself but as a means to make additional tax-free money.“Getting a civil service job in Greece is widely perceived as being granted a sinecure and not as entering into a contractual obligation to work,” says Nikos Dimou, one of Greece’s best-known authors and intellectuals.

During the previous elections in 2004, Mr. Karamanlis successfully campaigned on a platform to erase corruption from the public sector. But after three years in power, his New Democratic party was unable to make any progress on this front. What’s more, it ended up being itself tainted by sleaze. Managers of state-controlled pension funds and government officials are suspected of having colluded with brokerage firms and bankers to sell over-priced government bonds to pension funds, swindling them out of an estimated Œ100 million.

Pervasive corruption of course breeds cynicism and resignation among the public

Pervasive corruption of course breeds cynicism and resignation among the public. There are few other places in the Western world where the average man so readily expects the worst of the men and women leading them as in Greece. Greeks habitually refer to their politicians as “liars” or “crooks.”“Politicians are only interested in promoting their own well being,” says George Sidiropoulos, who owns a souvlaki joint in downtown Athens.

At the same time, many citizens also know that their future may depend crucially on carrying favours with the people in power. In Greece’s patronage system, knowing the right politician or carrying the right party book is crucial if you want to get that coveted job in the civil sector or that EU subsidy for your small business. This mutual dependency helps keeping down public outrage over corruption.

Given the clientelistic nature of Greek politics, who wins Sunday’s elections won’t matter much for public governance. “Fakelaki”, I’m afraid, is here to stay.


  1. The Wall Street Journal, 10/09/2007 [ [3]]
  2. Mr. Michas is a journalist for the Greek daily Eleftherotypia [ [4]]