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By now, it seems like the entire world knows something about the “Greek Crisis.” Yet, few people understand the real causes that underlie this tsunami that has swept away the assumptions of generations of Greeks. Even fewer are clear about what has to be done to restore Greece to growth and prosperity.

Professors Odysseus Katsaitis, Dimitris Doulos and Nicholas Prirounakis of the DEREE Economics Department, wrote a three-part treatise on the origins of the crisis, the current developments, and the way forward, respectively, in order to give readers an overview of the most dramatic developments to be faced by post-World War II Greece.

Also, Dr. Nickolaos Travlos, dean of the ALBA Graduate Business School at The American College of Greece, writes about private higher education – once one of the mightiest taboos in Greek politics – can actually prove an economic boon for the country.

Finally, London criminologist, Dr. Leonidas K. Cheliotis, a DEREE alumnus, writes about the not-so-obvious correlation between crisis and crime rates.

DEREE Business Week 2012, a four-day business-oriented conference organized by students of the DEREE School of Business in cooperation with their faculty, acquired additional poignancy this year, when its opening speaker, Greek enterprises union president, Dimitris Daskalopoulos, ventured to say that Greek society suffers from a deep-seated and short-sighted ideological deformation that amounts to “left wing conservatism.” Daskalopoulos said that this is one of the main causes of the current crisis, since it has consistently stifled reform and entrepreneurship in the country (see Daskalopoulos’s full address [http://www.youtube.com/watch?v=b4nNCw1WiJA&context=C4168f3fADvjVQa1PpcFMkn1sb-1awTS4vOlMu4G9CJoy2dMA_dLg= ] in English).

Four days later brand strategist Peter Economides, closed the conference in front of a standing-room-only audience of students with a stirring oresentation about the need for learning in an interconnected world. Economides said that Greece has to learn its way out of the current, severe financial crisis. (see Economides’s full presentation in English [http://www.youtube.com/watch?v=m66R1Guncw4&context=C4e14a97ADvjVQa1PpcFMkn1sb-1awTYWdcOzwLhTGKjoE6xrOlFo=]).

Throughout the week a series of high profile speakers discussed the week’s topic, “The Learning Organization: A Key to Competitiveness?” They included Aegean Airlines CEO Dimitris Gerogiannis, TNT Greece CEO Christina Alevizou, Costa Navarino General Manager hotelier Peter Alatsas, venture capitalist Onic Palandjian, journalists Babis Papademetriou and Antonis Papagiannides.

Dozens of DEREE Business School students worked hard to bring off Business Week. In fact, Business Week stands out as a learning experience that teaches students the exhilarating results of cooperation and teamwork. They were assisted and advised by faculty members who brought to the table years of experience with similar events and ensured that the choice of speakers served the core theme of this year’s event.

What did you study at DEREE?

I decided to study at Deree when I was 17. I don’t really remember why I chose Deree instead of the economics department of the law school where I was also accepted. The truth is that at that time I didn’t have many factors to influence me. My decision was probably based on the simple fact that Greek university started with a two-month delay because of strikes, and the much more appealing Deree facilities.

How did it help you in your life so far?

I almost all ways it has been a very influential experience. As a personality, it gave me the chance to become more organized, fast thinking and alert. In the professional field it gave me from day one a better understanding of how a multinational environment feels like and also the chance to meet great people (fellow students, professors, staff). As a businessman, today I continuously recall words and actions from classes and basketball training sessions at Deree.

Which was your favorite course?

I cannot exclude many courses. However, I was always attracted to courses that were closely related to real market action; that were marketing and sales related. I remember I enjoyed my last marketing course most – although I do not recall its title…

Your favorite professor?

Many! Nikos Koumettis and Sotiris Kyriakos for being so inspiring as to the reality of the workplace. He doesn’t know it but I chose my first company because Koumetis was working there. He was certainly the best for me. Also Professors Gounaris , Burke and Valahas. I still use the presentation rules of the last two.

Your favorite activity at the College?

Playing for the Deree basketball team; great experience and some great sweating moments there with coach Papahatzis pushing us to the limit.

Your favorite spot on campus?

The gym, [the then] Wendy’s and the pool. Also Room 330 – a great classroom for presentations – that has now been converted to office space.

Did you make any close friends at DEREE?

So many I cannot make any exceptions by mentioning anyone. Except Chris Koukios, who is also my best man.

How did your come up with the idea for your business?

Ever since I can remember myself I was talking about ventures. All sorts of ventures – online ties to whatever one can think of. I was an MBA student at Bocconi when I did this research for online travel in Greece. While presenting, a professor started asking questions and pushing me. At the end he said “If it is so good, why don’t you proceed?” And here I am…

As you went about setting up figame.gr, did any lesson learned at DEREE stay in your mind?

What I, and the whole team of Figame.gr LTD, do is very closely related to marketing. I remember Koumettis talking about bringing results in any possible way. He was talking about innovation in all the ways you are operating. All these marketing courses are being applied in our company now. We innovate everyday: new processes, new applications and new ways of operating.

Entrepreneurship is not valued in Greece as it is in other countries. Where did you find the drive to become an entrepreneur?

The truth is that in other countries you have the option to fail as an entrepreneur and it’s OK. In Greece, if you fail, you might end up in jail without having done anything illegal. The drive can come only from you. No one can inspire you or show you the way when starting something new. And there are moments that it hurts a lot. So now, when younger people me ask me if they should start a new business, after examining all the pros and cons and giving some directions I tell them not to do it. I do that because if my opinion is to affect their choice they are not ready to do it. If it won’t, they will do it anyway.

Did you anticipate this kind of crisis when you were starting?

There are different definitions of crisis. In Greece we have been talking about crisis for the last 20 years. So if the question refers to whether I was expecting 20% unemployment, a currency-change threat, massive income reductions and a dry-out in bank lending to companies, then I certainly did not.

Would you have started figame.gr had you known how severe the crisis would be?

Yes, but not in Greece. As a professional and as a businessman I never accept reasons like “crisis” for continuing to run companies in any environment. It is always in our hands to change sector, market or anything else necessary in order to make the company viable at the very least.

Greece is notorious for its bureaucracy. How has that affected you and your business?

It is very difficult at the beginning, when you open the company and start operating it. It is a real nightmare. Also it creates many problems in effecting radical change in companies. But after a point things happen more smoothly. From time to time you always remember the bureaucracy though. Problems are also very much related to high taxation.

What special adjustments have you made so that your company can survive the crisis?

We are in a constant adjustments process. We decrease operating costs and at the same time invest in new travel software products that we are building. We know that crisis is here to stay. So we expand in niche travelling markets having to do with corporate travel, congress travel and also better solutions for the Greek traveler.

Tell us a few things that you would change in order to make life easier for entrepreneurs.

The speed that things can be done must change. We should be able to open and close companies very fast, to open accounts in foreign countries, to move capital and resources. We have to become business-friendlier in all aspects. Entrepreneurs and companies must deal with the core of their business and not spend time with irrelevant legal and other bureaucratic matters. In short: cut bureaucracy in all parts of the economy.

Tell us a positive and a negative lesson you learned from running your companies.

I cannot find negative lessons. I can only think of negative things that happened and gave me the experience not to do them again. So all the lessons are positive. Some of those I can think of: no matter how pressed you are, keep thinking where you want to be in a year from now and take steps towards that; don’t shortchange the future by spending all your time trying to solve current problems. After all, the future is all you have! The past is already gone and the present will expire very-very soon.

Have fellow alumni supported your venture?

No.

Are you optimistic for the future?

It’s my job to be optimistic. I lead people and a company. If you cannot formulate the future so that you are optimistic, there is something you are doing wrong. So keep restructuring, rethinking, reshaping and everything will be turned around.

What did you study at DEREE?

I studied Marketing Management.

How did it help you in your life so far?

Marketing offers you a wealth of information that if applied correctly virtually can ensure your success. When you know how it works, you will significantly increase your odds of success! On the other hand, the total education offered at DEREE challenged me to see the world in a different way; to recognize the opportunities in obstacles, the unexplored potential in all situations and gave me the energy to knock the door! My creative spirit and leadership affinities have been unleashed, and I have been motivated to continue striving in all that I do.

What was your favorite course?

Operations Management with Professor Harry Athanassopoulos

Your favorite professor?

If I have to choose only one…then, Professor Gounaris is the one!

Your favorite activity at the College?

My favorite activity and the most refreshing break was the ballroom dancing with Mrs. Maria Nomikou.

Your favorite spot on campus?

The Fitness Center as I recall! I’m not sure though if this was the most preferred or most familiar spot on campus!

Did you make any close friends at DEREE?

Not many! Let’s say I have many friendly faces to remember but few that have an effective role in my life!

How did your come up with the idea for your business?

It was a time of great restlessness for me! I had just left my job as a senior sales manager for a big fashion distribution company and I felt it was time for me to “start putting my money where my mouth is”! So, I decided to take a leap of faith in a very uncertain business environment such as the one in Greece. FASHION CIRCUS was created in 2010 with a view to trade designer clothes at extremely low prices. The idea that gave a boost to the company’s creation, deals with the utilization of and endless supply of merchandise from a large number of retail stores and distribution companies, a fact that allows its sale at knockdown prices. During a period of economic depression, discounts can function beneficially in all directions, for both merchants and the public.

As you went about setting up Fashion Circus, did any lesson learned at DEREE stay in your mind?

Always be focused on your goals (this way you save time and money!). Be able to adapt and evolve in an ever-changing environment. Be unique in whatever you do!

Entrepreneurship is not valued in Greece as it is in other countries. Where did you find the drive to become an entrepreneur?

Denis Waitley said “A dream is your creative vision for your life in the future. You must break out of your current comfort zone and become comfortable with the unfamiliar and the unknown.” That is exactly what motivated me to become an entrepreneur.

Did you expect this crisis when you were starting?

The reason we thrive in our business venture is because of the crisis!

Would you have started the [business] had you known how severe the crisis would be?

Definitely! There is always room for a successful business even in the most hostile business environment.

Greece is notorious for its bureaucracy. How has that affected you and your business?

It has not only affected us psychologically for every single day since the beginning of our business but also financially due to corrupt public servants.

What special adjustments have you made so that your company can survive the crisis?

The company was founded during the crisis, so we had the advantages of knowing what lay ahead. The most important factor we had to ensure was our uniqueness! Our principal goal is to offer our customers a total shopping experience with high quality products at very low prices, under a highly amusing vibe that will drive them away from their problems (especially in this difficult time), at least for as long as they are in the world of “Fashion Circus”!

Tell us a few things that you would change in order to make life easier for entrepreneurs.

A) Bureaucracy

B) Bank Lending

C) Recent Legislation

D) Government Funding

None of these factors helps small businesses

Tell us a positive and a negative lesson you learned from running your companies.

If you respect people, people will always support you on whatever you do! On the other hand, bad copiers can cause damage to what you do!

Have fellow alumni supported your venture?

Yes, a lot!

Are you optimistic for the future?

Yes, I have big plans ahead!

Part II

The Chickens Come Home to Roost

By Dimitris Doulos, Ph.D.*

The October 2009 elections brought the socialist government back to power after five years of conservative governance. The fiscal condition of the Greek economy was the worst ever.

Two developments changed the attitude of foreign investors towards the Greek sovereign debt.

A. On November 26, 2009, Dubai World, the investment vehicle of the emirate, proposed a delay in the repayment of $26 billion of its debt by six months, raising the specter of the largest government default since the Argentinian debt restructuring. This caused significant turbulence in world financial markets. International investors started taking a closer look to those economies that were heavily in debt, including Greece.

B. The newly elected socialist government in Athens announced that the deficit and debt figures reported by the previous government were not accurate and needed to be revised upward.

These two developments resulted in more thorough scrutiny of Greek economic conditions and a quick reduction in the ratings of Greek bonds by Standard and Poor’s, Moody’s and Fitch. As a result, the demand for Greek sovereign bonds plummeted, prices declined sharply and their yields increased to levels that made borrowing from the international markets prohibitive for the Greek government. Considering the large borrowing requirements of the Greek state and the imminent threat of default, in March 2010 the European Council decided to help Greece. However, markets were not persuaded and the spread (the difference between the yield of the Greek 10-year bond and the German equivalent) continued to climb. Greece was kept out of the markets, unable to finance its deficits and debt.

The fear that the Greek debt crisis could spread to other southern European countries led the European Commission, the European Central Bank (ECB) and the IMF (the so-called “troika”) to reach a deal with Greece. Athens was provided with 110 billion euros, the largest ever loan given to a country. In exchange it agreed to proceed with a number of measures listed in detail in the so-called “Memorandum I.” The agreement required that Greece proceed with fiscal consolidation (raising tax revenues and lowering government expenditures) and structural reforms in the public sector as well as in the products, services and labor markets. All these measures aimed at improving Greece’s finances and restoring its lost competitiveness in the world markets.

Unfortunately, very few – if any – of these measures were implemented and the credibility of Greece in the world financial markets was not restored, as this was reflected by the ever-rising spreads. Memorandum I failed for basically two reasons: First, and most important, it was never really implemented. The Greek government did not dare to go ahead with drastic structural reforms. And, second, several of the suggested actions were in the wrong direction (i.e. increased taxes in the midst of a recession). The deteriorating condition of the Greek economy led to a growing impression that the Greek debt was not sustainable.

In an effort to resolve the Greek sovereign debt problem, which in the meantime had spread to Portugal, Ireland, Spain and was threatening Italy and France, the Troika, on July 21^st, 2011, decided to proceed with what was regarded as “unthinkable” up until that time: a voluntary 21% “haircut” of the Greek debt. That meant that for the first time the private sector was being asked to participate in the cost of the Greek bailout. This is Private Sector Involvement I (PSI-I), a good deal for the banks (creditors) since only the maturity of the bonds they held would increase and they would receive the face value of the bonds they held at a later date. Therefore, the “haircut” was only on the present value of the bonds. Obviously, the markets quickly sensed that the deal could not make the Greek debt sustainable since the “haircut” was too small. Spreads kept on rising.

A leaked report by the IMF confirmed the markets’ sense and on October 26, 2011 EU, ECB and IMF recommended PSI+. This new proposal called for a 50% “haircut” of Greek bonds worth 206 billion euros held by private investors. The deal, if successful, called for an exchange of these bonds for new ones. For every 100 euros, bond investors will receive 35 euros in new bonds with a lower coupon (below 4%) and longer maturity along with 15 euros in cash. The objective was to reduce the 206 billion euro portion of the Greek debt held by private investors (the total Greek public debt exceeds 350 billion euros) by approximately 60-70%, considering the decline in its present value, and reduce the total debt-to-GDP ratio to 120% by 2020. Once again, Greece was required to agree to proceed with fiscal consolidation and structural changes, as these will be listed in a new agreement – dubbed Memorandum II. In exchange Greece will receive 130 billion euros financing which will hopefully be enough to cover its needs until it is able to borrow from the international markets again. A significant amount of this loan will be used for the recapitalization of the Greek banking sector.

How will the Greek debt crisis end?

The Greek debt crisis will end when market trust on the Greek economy returns and Greece will be able to borrow again from the international markets. The success of PSI+, even though it will only offer a temporary relief, is essential for the survival of the Greek economy. The agreement should be followed by a plan, based on Memorandum II, to restore fiscal balance and proceed with structural changes that should have been implemented years – decades! – ago.

With PSI+ successful following its approval by both the creditors and the Greek parliament, the Troika is free to provide Greece with the agreed upon loans, so that the country can meet its immediate obligations. Greek bonds worth of 14.4 billion euros expired in March and Greece was able to meet its payments and avoid a disorderly default and the consequent exit from the Eurozone. For the time being, Greece remains a member of the common European currency club.

What does a return to a national currency mean?

A return to a national currency, which is advocated by some, would result in an automatic conversion from euros to the new currency – say, the ‘new drachma.’ All payments and reciepts domestically, deposits, salaries etc., would be denominated in drachmas. The external debt, government and private, however, would remain denominated in euros. The drachma would devalue by 50-60%, which means that the value of the external debt would almost double. Imports would become very expensive and essential imported goods like fuel and heating oil would become scarce since they would have to be paid for in hard currency, and in cash. Any gains in the competitiveness of Greek exports would be partially offset by domestic inflation, which would probably surge to 50-80%. The Greek banking system would suffer large losses and probably collapse since it would lose its access to liquidity in the interbank market, as no foreign bank will be willing to lend with Greek bonds as collateral. This would inevitably lead to the nationalization of those banks that will manage to survive. In a nutshell, exit from the Eurozone would be a huge shock for the Greek economy and society.

Which raises the question: proceed with the proposed measures of Memorandum II or exit the eurozone?

For now, the country has decided to go with the former.

* Dr. Doulos is professor of Economics at DEREE-The American College of Greece. He holds a BS from DEREE, an MA and MBA from Western Michigan University and an MA and Ph.D. from Wayne State University.

Part I

A Slow Descent to Economic Hell

By Odysseus Katsaitis, Ph.D.*

Contrary to popular economic folklore, the collapse of the Greek economy did not come as a surprise: the crisis was an accident waiting to happen. What should come as a surprise was that the party lasted for so long.

This crisis is not about economics. It is about a society, or, at least a significant part of a society, including most of its politicians, that decided to live its myth. Like the song, Greece “put on the pink glasses and life was like the movies.” Except that with this movie the ticket had to be paid at the end. Unfortunately, it turned out that the ticket was so expensive that this society and the next generation and, most probably, the generation after the next will have to keep paying for the ticket.

Starting our analysis from the sixties, the period 1960 -1973 can be described as the “golden era” of Greek development. Consumption, as a share of GDP, was actually dropping (!) during the period, while savings and investment were rising. As Figure 1 indicates, consumption dropped to about 55% of GDP while investment rose to, approximately, 40%. Thus, it was not surprising that GDP grew at an impressive 7.1% per year. The contribution of each component of GDP is presented in Table 1 and it is obvious that consumption and investment were equally important. The negative contribution of net exports (exports minus imports) was not especially worrisome because most imports were machinery and equipment for industry.

The period 1974 -1994 can be described as the period of “missed opportunities.” By the late seventies / early eighties things change radically. Society, unilaterally, declares itself wealthy, consumption as a share of GDP increases, savings and investment decline dramatically. It is hardly surprising, that the economy grows at a pathetic 1.4% per year. Moreover, this growth comes from consumption while investment has a negative impact.

From today’s perspective poor economic growth was the least of Greece’s problems of that period. The actual problem was that society entered into a self-destructive path that ended with the 2009 crisis. By 1980, politicians began discovering the joys of government deficits. Rather than fighting tax evasion or trying to attract new investments and, therefore, increase tax revenue, they just borrow money. Public debt, which was only 20% of GDP in 1980, doubles to 40% in just five years (see Figure 2). Consequently, demand in the economy increases, putting pressure on prices. At the same time, Greece receives substantial amounts of EU money[1] which was supposed to be spent on projects improving the competitiveness of the Greek economy, but, unfortunately, was spent on consumption[2]. Thus, besides government deficits, demand was also increasing because of EU subsidies. Bottom line, inflation went out of control (see figure 3). As prices were rising, wages had to follow. But, as the cost of production was rising, exports declined and imports increased (see figure 4). Given the foreign exchange constraint that the country was facing in those days, the easy solution was devaluation of the national currency, the drachma. Devaluations, eventually, increase the level of prices (because the cost of imported goods increases). So Greece entered a vicious cycle of devaluations: price increases, wage increases and, consequently, more devaluations. Just note that in the mid-seventies the exchange rate was 30 drachmas to the dollar and by the mid-nineties it was 300 drachmas to the dollar.

These problems could have been addressed by increasing the productive capacity of the economy, i.e. by attracting investments, especially, foreign investments. In principle, Greece, like Portugal or Spain, should have been able to attract foreign investment. However, Greece attracted a minute fraction of the funds invested in those countries. The reasons are well known: an institutional framework unfavorable, to put it mildly, to business, a corrupt bureaucracy, an unpredictable tax system, an ill-defined framework for obtaining the necessary operating licenses for a business, highly regulated markets, archaic labor legislation, a dysfunctional judicial system.

The last period, 1995 – 2008, can be described as the “party time” period. Investment increases a little bit, but growth (3.4% per year) is driven primarily by consumption (see Figure 1 and Table 1). The government is forced to reduce the budget deficit (net lending of the government) in order to satisfy the Maastricht criteria (budget deficit less than 3% of GDP). So, the deficit drops from 9% to almost 3% (possibly with a little bit of help from “creative accounting”). As soon as we enter the Eurozone the deficit increases and by 2004 reaches an impressive 7% (see Figure 5).

During the 2001 – 2008 period consumer and housing loans increase at a rate of 30% per year. By 2008 private consumption reaches an astonishing 73% of GDP compared to less than 60% for the rest of EU. Imports increase accordingly (see Figure 4). In 2008 net lending of the economy equals 16% of GDP. To put it differently, we were spending 16% more of what we were producing while the sum of public and household debt was over 220% of GDP. It was just a matter of time for our lenders to realize that Greek bonds might be a risky investment.

* Dr. Katsaitis is Professor of Economics and head of the Economics department at DEREE. He is a graduate of the University of Athens and holds a Ph.D. from the University of British Columbia.

Figure 1

Evolution of Greek GDP: 1960 – 2008

Source: AMECO

Private Higher Education:
An opportunity for Greece

By Nickolaos Travlos, Ph.D.*

The severe economic crisis that Greece is currently going through offers a unique chance to explore hidden opportunities for economic growth in the areas that Greece has a competitive advantage. While tourism and shipping are usually considered as areas with great potential, less emphasis is given to the area of higher education. However, as I will argue below, higher education is an area where Greece can play a key role in the international arena with significant economic impact in various sections of the economy.

Historical reasons: Greece is recognized internationally as the cradle of western civilization. The significant contribution of Greek thinkers to almost all sciences makes Greece a natural place to establish a modern cluster of academic institutions. These can attract a large number of foreign students, especially in the area of Liberal Arts and Sciences.

Natural Beauty and Climate: The climate along with the natural beauty of the country can potentially turn Greece into a dynamic international academic center, attracting students from Europe, the Balkans, Asia, Africa, and even the Americas and Australia.

Human Resources: It is widely known that Greeks place a high value on education. There is a large number of distinguished Greek professors living in Greece and abroad who could staff several colleges and universities similar in quality to some of the famous international institutions. There is also a plethora of Greek young professionals with graduate degrees who possess international experience. They could offer high quality administrative services required by such institutions of higher education.

Despite the aforementioned strategic benefits Greece is endowed with, it is disheartening that the country has not taken advantage of them. The reason for this is simple: the refusal of the political system to accept the establishment and operation of private universities in the country. The problem goes as far back as the mid 1970’s when the conservative government of Constantine Karamanlis included a clause in the new constitution (Article 16), which does not allow private universities in Greece. Although there have two attempts to amend this particular article and the two major political parties had agreed on this issue, eventually the socialist PASOK party refused to support the amendment in 2007. The establishment of Postsecondary Education Centers (KE.ME) under the Laws 3696/2008 and 3848/2010 constitutes only an ambiguous and halfway attempt to acknowledge the existence of private institutions of higher education. The result is that Greece is one of the few countries in the world which do not recognize private higher education. It is interesting to note that Turkey has long introduced private colleges and universities. As a matter of fact, at least two of them (Koc University and Sabanci University) are competing successfully with well-established European and North American institutions. In Europe, Spain has established several private universities which are ranked very highly in the various international ranking lists. For example, in 2012 two Spanish Business Schools are included in the top 100 Business Schools of the Financial Times. It is also interesting to note that in their MBA programs 70% of their students come from abroad. Even Cyprus has introduced private universities, allowing the country to attract several thousands of foreign students.

This refusal to introduce private universities in Greece, even not-for-profit ones, consequently has left the role of attracting foreign students to the state universities. Given that their infrastructure and funding from the government are not adequate, state universities cannot fulfill this need. While struggling to accommodate the Greek students, it is impossible, to pay attention to the international market.

A window of opportunity arises for our country. The introduction of private colleges and universities, at least in the form of not-for-profit institutions, is a must. The social, economic, political and international conditions have changed relative to the ones in the 1970’s. The country can no longer afford to forgo its competitive advantages. The economy needs a stimulus; society needs diversity; people demand additional choices; democracy requires the freedom to choose; Greece must put the brakes on its brain drain and provide a vehicle to bring back the renowned Greek academics of the diaspora. Recognizing private colleges and universities is a necessity.

The state universities will benefit from liberalization as well, because some of their students will transfer to the private ones, resulting in better services for the remaining students. In addition, the competition will force state universities to explore the opportunities the new legal framework offers in attracting private funds and establishing collaborations with foreign universities. The Greek economy will benefit because the private universities will invest in facilities and infrastructure that will attract thousands of foreign students and support a cluster of industries around them, revitalizing Athens, Thessaloniki, Patra, and several islands. High caliber faculty of state universities will benefit as well from these developments because the Greek academic community will be enriched and enlarged. The only group which stands to lose is those academics who use the university merely as a source of prestige and networking with old-style politicians.

It is time Greece stops accommodating the vested interests of a minority of Greek academics and politicians; it is the last opportunity to serve the interest of Greek society at large. Recognizing private colleges and universities should be a top national priority.

* Dr. Travlos is holder of The Kitty Kyriacopoulos Chair in Finance and dean of the ALBA Graduate Business School at the American College of Greece.

Crime and the Financial Crisis: Greece and beyond

By Leonidas K. Cheliotis, Ph.D.*

It is commonly assumed that the ‘credit crunch’ of 2008 has fuelled a significant rise in crime on either side of the Atlantic. Indeed, it is also commonly assumed that this rise builds on a supposed inexorable growth in crime rates over the last three decades or so.

Yet study after study reveals that the prevalence of crime has long been falling both in the United States and Britain, whilst the ‘credit crunch’ of 2008 has scarcely functioned to reverse this trend. What has actually increased in these jurisdictions over recent decades is public fear of criminal victimization and support for the harsh punishment of offenders. Indeed, there is an accumulating throng of surveys demonstrating that levels of fear of crime and punitiveness amongst Americans and Britons bear little if any connection to the prevalence of crime, and that they rather reflect spreading economic insecurity and associated frustrations.

In Greece, few have questioned the relationship between crime rates and fear of criminal victimization. Yet, as Sappho Xenakis, of Oxford University, and I have shown in our recent book Crime and Punishment in Contemporary Greece: International Comparative Perspectives, police-recorded crime rates in the country rose only modestly between 1980 and 2006, and most of this rise was due to offences of little criminological interest (for example, traffic offences such as speeding and illegal parking). By contrast, fear of crime, as well as punitiveness, have been disproportionately high amongst Greek citizens. Strikingly, ever since its inclusion in pertinent international comparative analyses in the early 2000s, Greece has ranked amongst the most crime-fearing and punitive nations in Europe and beyond. We argue that, here too, the evidence points to the role of socio-economic insecurities in triggering and inflaming fear of crime and punitive attitudes.

Of course, the biggest question today domestically is the extent to which crime rates in Greece have risen in the wake of the recent and ongoing financial crisis. This, unfortunately, is hard to determine in the absence of reliable up-to-date data. The Anglo-American experience would suggest, however, that there is no axiomatic relationship between a financial downturn and the rate of crime. Expectations of a rise in public fear of crime and punitiveness, on the other hand, sadly have a far more solid empirical grounding.

Even if data are to confirm that there has been as spike in crime rates in Greece since the onset of the financial crisis, it would be wrong to succumb to the temptation of using such data to retrospectively justify what have been longstanding trends of disproportionately high levels of fear of crime and punitiveness in the country.

* Leonidas K. Cheliotis graduated from DEREE with a BA in Sociology in 2003 and earned his M.Phil. and Ph.D. at the Institute of Criminology, University of Cambridge. He is currently Lecturer in Criminology and Deputy Director of the Centre for Criminal Justice at the School of Law, Queen Mary, University of London.