When a few months ago Greece found that it could no longer borrow money from the markets to service its debt, the EU and the IMF devised a plan – written down in the form of a memorandum of understanding – to carry out the rescue project. Here, however, is where the tale of the absurd begins.

The socialist Government of Greece legislates and oversees the implementation of the harsh measures contained in the memorandum while at the same time complaining that this is against its principles, its policies and its ideology. For the PASOK Government the harsh measures are but a “necessary evil” to avert bankruptcy. The “New Democracy” centre-right opposition – whose former leader Mr Karamanlis had predicted the need for such harsh measures to be taken just before he lost the election in October – voted against the memorandum. The parties of the Left are of course against everything that upsets the “working class”. To a visitor from Mars the Greeks appear to resent being rescued without, however, opting for the alternative which would be the immediate bankruptcy of their country.

The trouble is that nobody has really tried to explain to the Greeks that debt transfers power from the borrower to the creditor. When the Prime Mr George Papandreou bemoans the “loss of national sovereignty” through the memorandum he fails to mention the damage that the exercise of national sovereignty by his own party has done to the country in the past.

The truth is, of course, that attitudes to debt have changed substantially over the centuries. The Aramaic word for debt is the same used for sin so that some early versions of the Lord’s Prayer say “forgive us our debts” instead of “our trespasses”. Interest was seen as unjustified by Aristotle, an idea that is implicit in the Christian concept of usury (vividly developed by Shakespeare in the Shylock character) while Islam bans interest altogether. During the last 100 years, however, attitudes have changed radically as even bankruptcy is mostly seen as bad luck. As a result certain countries have felt free to borrow as if there was no tomorrow.

It happened to Greece back in 1893 when the country turned to its western creditors for help in paying its debts to foreigners.. After tough negotiations a Commission by Western experts was created empowered to collect import duties at the port of Piraeus , revenues from state monopolies that sold oil, salt and matches, as well as taxes on tobacco until the debts were paid off. The process was tightly controlled and proved extremely useful as the systemic waste and corruption were annihilated in the areas under the Commission’s control.

The main difference with today’s situation is that the EU and the IMF have not taken over themselves powers to control sectors of the Greek economy but only to supervise the implementation of the memorandum by the Government. This has its drawbacks as some Ministers, may be tempted to avoid taking the necessary but umpopular measures. However there is a very significant advantage in the new system as compared to the one of 117 years ago: the memorandum contains some very important clauses about the structural reforms that have to be implemented. In other words this time the foreign creditors are not simply concerned in getting their money back but want also to make sure that Greece will emerge from this crisis a better-run, modern European country to which money can be lent more safely in the future . One would really like to hear the Greek Premier say with gusto: “The memorandum is not a necessary evil but a necessary good. We welcome it as a wonderful opportunity to change our country from top to bottom”.

The truth is Greece ’s troubles go deeper than simple mismanagement. Successive Greek Governments have borrowed huge sums not to invest in wealth-creating ventures but in order to buy votes. In the old days the clientelist political system was restricted to persons, families or small communities. Ever since 1981 when Greece came under the rule of Andreas Papandreou (father of the present Premier) large masses became part of the clientèle. Farmers received subsidies to produce goods that nobody wanted to buy. Lorry drivers and a host of others created closed shops and charged monopoly prices for their “services” bringing down Greece ’s competitiveness. At the same time, borrowed funds were (mis)used to appoint a legion of employees in the public sector who created a fearsome bureaucratic structure that gave them power to mess up procedures and be paid privately the sums needed to get things straight. It is no wonder that the civil servants and those employed in the public sector (more than a million) fight rabidly and virulently against any assessment scheme that would bring about some degree of meritocracy because they know that within an abler, smaller more honest and harder-working public workforce they would certainly have no power and probably even no place.

The results have been dreadful. The state grew and grew ever bigger, greedier and more incompetent. The state-owned Greek Railways cost the taxpayer close to three million euros a day. Foreign companies refuse to contemplate investment in Greece as they cannot cope with the bureaucracy and the corruption that they encounter. The time for change has come.

So let us speculate. Suppose that at the end of the day, i.e. sometime in 2014 Greece has reduced its deficit, achieved a primary surplus in its debt, regained its credibility with the markets, implemented all the reforms imposed by the EU and the IMF and has embarked in its own “growth story”. This is possible because for the first time in its history Greece is under the closest possible supervision by foreign experts to do the right things. If a bankrupt Greece in 1893 was a nuisance, now it would be a disaster even for the American Stock Exchange as recent events have shown. It will be simply great when the thousands of gifted young Greeks who have gone abroad to make a career, start returning to Ithaka that will have become by then a new home for them.

Mark Dragoumis