12.05.12

Greece: Europe’s Most Corrupt Country

The dubious honor came on Wednesday, as Transparency International released its annual report on global corruption. Barbie Latza Nadeau reports.

Talk about kicking a country when it’s down. For five years, Greece has been dogged by an insurmountable economic crisis, which has created instability the world over. On Wednesday, the already beleaguered nation received another dubious honor as Transparency International, a Berlin-based NGO, named Greece the most corrupt country in the 27-member euro zone, as part of an annual report on global corruption.

The latest bad news for Greece comes at a time when the country is already on its knees. Growth has stalled and tough austerity measures have pushed many Greeks to their limit. Suicides, HIV infections, and depression are on the rise. Greeks are leaving the country in record numbers, headed north in search of jobs and hope. Each week, thousands take to the streets to protest pay cuts and layoffs in almost every public sector. The unemployment rate has soared to 25.4 percent—twice that of the European Union average, and the youth unemployment rate has topped 58 percent. “The low rating should serve as an additional wake-up call for Greece,” said Cobus de Swardt, a spokesman for Transparency International. "Fighting corruption is very much at the heart of getting Greece out of the crisis.”

Transparency International ranks 176 countries world-wide based on data from standardized surveys that rate a variety of factors including public governance, business confidence, and cultural norms. Each country is given a score of one to 100 (one being the most corrupt and 100 the least corrupt). No country scored a perfect 100 and more than two-thirds scored 50 or less. The world’s most corrupt countries—Somalia, Afghanistan, and North Korea—each earned a score of eight. The world’s least corrupt countries—Denmark, Finland, and New Zealand—each scored 90. The United States scored 73 and the United Kingdom and Japan each scored 74. Greece scored 36, followed closely by Italy, which earned a score of 42. “Corruption levels are closely linked to the economic stability of a country,” said Edda Mueller, the head of Transparency International, at a news conference in Berlin. “The countries that are hardest-hit by the financial crisis have performed below expectations despite the reform efforts of recent months.”

According to the criteria of the survey, corruption runs the gamut from basic bribery for goods and services to nepotism in public sector jobs. Tax evasion and efforts to stop it—both by individuals and companies—also play a major role in how a country is graded. Mueller says that because corruption is often a well-kept secret and rarely punished, the rankings are based on “perceived corruption” rather than on proven, headline cases where people are convicted or fired for wrongdoing.

Last year, governments in countries such as Egypt and Tunisia fell, in part due to an outcry over corruption. But the new governments that have emerged in their place still posted high levels of bribery, abuse of power, and secret dealings, according to a statement from Transparency International. “Many of the countries where citizens challenged their leaders to stop corruption—from the Middle East to Asia to Europe—have actually seen their positions in the index stagnate or worsen.”

In Greece, little effort has been made to rein in tax evaders, which is considered a major factor in the country’s current economic crisis. It is common practice in the country for stores to offer small discounts for items paid in cash as long as shopkeepers don’t have to issue a fiscal receipt, which gets reported to the tax authorities. Rental leases, work-for-hire agreements, and even big items like construction-work contracts are often registered with the government at a much lower fee than what will actually be paid as a way to skirt taxes. All the while, taxes continue to rise, putting an extra strain on those who do pay in good faith and pushing those who don’t further under the radar.

In June, Antonis Samaras was elected as Greece’s new prime minister, pledging to fight corruption as a way to improve the economy. “There will be full transparency, with everything out in the open immediately, and the whole truth to be revealed,” he said. But far from an incentive to change, the latest black-eye will more likely be seen by investors as one more nail in the country’s coffin.