Troika Finds Greek Bureaucracy Costly

ATHENS – As international lenders check Greece for reforms, they’ve discovered that the infamous labyrinth of the country’s notoriously inefficient bureaucracy is so bad that it’s costing millions of euros in losses to businesses each year.

That was the finding in a report by the Organization for Economic Cooperation and Development (OECD) which urged an overhaul and elimination of hundreds of rules and regulations that it said is stifling the economy.

The report focuses on four key sectors – food processing, the retail trade, building materials and tourism – identifying close to 1,000 regulations in those industries alone.

“Through the scrutiny of legislation in key sectors of the Greek economy, the OECD Competition Assessment Project identified 555 problematic regulations and 329 provisions where changes could be made to foster competition,” the report says, according to the Wall Street Journal.

“Greek businesses, consumers and citizens and society pay a very heavy price for this situation – according to this report, a total of €5.2 billion [$7.1 billion] in lost efficiency and higher prices for goods and service,” it added.

The Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) has been struggling to get successive governments to change the country’s ways that promote corruption and protect special interests, but is finding it difficult, if not impossible because so much money changes hands with bribes at virtually every level of government.

Particularly irritating to the lenders is that Greece keeps dragging its feet on opening closed professions which enjoy near monopolies and guaranteed profits, ranging from pharmacies to lawyers, engineers, architects and other professions.

Two years ago, months after it received its first bailout, Greece attempted to remove restrictions on those professions, which were sheltered from competition by a web of quotas, licenses or other regulations. In May, Finance Minister Yannis Stournaras said that 72% of the professions, ranging from notaries to taxi drivers, had been fully liberalized.

But many others remain entrenched with government agencies moving slowly to make any changes, drawing the ire of Prime Minister Antonis Samaras who told his ministers to get cracking.

In an interview with Greek newspaper Kathimerini Sunday, Poul Thomsen, the IMF’s mission chief to Greece, also criticized the country for its uneven efforts in overhauling the economy.

“There are areas where progress has been insufficient, such as attempts to open up closed professions, that will reduce costs and prices, which have not been completed after attempts of two years,” said Thomsen. “Many professions have not been touched and even in the cases where legal obstacles have been lifted, often new bureaucratic or other obstacles arise.”

The IMF and Troika is discovering what Greeks have long known, critics said, that the country’s rich and powerful prosper even during a crushing economic crisis and the bureaucracy takes care of its own no matter how much the government or outsiders try to make reforms.

The EU’s man in Athens, Horst Reichenbach, said reforms will fail unless there is political will to make them, which hasn’t happened yet.

“Attention must now focus on the second part of the job—adoption and implementation of these recommendations. This will require courage and determination to make tough decisions,” Reichenbach said.

“Changing legislation will also have to be accompanied by changes in administrative practice and the behavior of civil servants, so that businesses really benefit from the removal of restrictive rules.”