The Greek crisis reveals a nation crushed by ancient history

Sitting at the café of the Technopolis cultural centre in downtown Athens, cigarillo in hand, Antonis Kafetzopoulos, one of Greece's best-known actors, gives a quick digested history of Greece's travails. "Greece is a failed state and has been since our independence in the 1830s. We have not managed to build the kind of state we wanted. France had a revolution and an Enlightenment. But we didn't follow that model. We always tried to compromise between the old Ottoman establishment and modern Europe," he explains through a haze of blue smoke.

In the struggle between modernism and myth, the latter triumphed. "Our narrative focused on national values and our ancient history, rather than the state. That is partly because we were not a homogenous nation then," he says.

"So every time we try to make reforms, the new authorities find that the previous ones left the situation untouched. One reason nothing seems to work in Greece is that we have so many layers of the old system under any new rules."

The Technopolis at least, does work. With its raw brick walls, post-industrial chic, large open spaces and buzzing atmosphere, the Technopolis could fit in anywhere from Brooklyn to Berlin. A former municipal gas works, the site has been converted into a cultural centre and imaginative museum that transports visitors back to its 19th-century heyday. A hub for music, dance, theatre and performing arts, it has helped revitalise the city's Gazi neighbourhood.

Now 63, Kafetzopoulos has joined the Athens municipality as a deputy mayor, he says, to try and make a difference. "When Greece joined the European Union, the money was channelled through the wrong people. It made a new rich elite. But now there is a new class, of people who are not corrupt but who are interested in making reforms and making Greece work. They are not united yet but reality will bring them together."

Building a new Greece will be a long haul, everyone agrees. The crisis has deep historical roots, emphasises Yannis Palaiologos, a reporter with Kathimerini newspaper, and author of The Thirteenth Labour of Hercules. "There is a fear and suspicion of the West, a fear of globalisation and change, and behind the bravado we have an inferiority complex. We have a heavy inheritance from the ancient world and were never able to make the transition to modernity. We were shielded from our faults and now they have caught up with us. But we are shocked and blame others for them."

Local potentates still exert enormous power, says Palaiologos. "Even now all kinds of business and union leaders have their own power bases and prevent the creation of a strong central state. Instead they exploit the state for rent-seeking purposes."

Greek culture brought the world its richest myths, and myths still play a central role in perceptions nowadays, says Palaiologos. "This ambivalence towards the West goes back to the idea that we are the playthings of the Western powers. But it was the great powers that gave Greece independence. If it was Slovakia that was causing so many problems in the eurozone, it would be long gone. But one of the reasons we were allowed into the EU was our classical heritage."

Centuries of rule by outsiders have left a disconnect between the citizens and the state and a tradition in which avoiding paying taxes and outwitting that state became a patriotic duty. Greece only declared independence in 1829 after centuries of rule by the Ottomans. Ioannis Kapodistrias, the first Governor, tried to build a centralised modern state, thus threatening the interests of powerful local warlords, and was assassinated in 1831. The following year Otto, the first modern king of Greece, was crowned. But Otto was a Bavarian prince and, though he ruled until 1862, the imposition of a foreign royal further widened the gap between Greeks and their new state.

In the 20th century, the country was badly buffeted by forces far larger than itself. After the trauma of the First World War, in 1923, hundreds of thousands of Greeks were expelled from Turkey, and Turks were forced to leave Greece. In the Second World War, Greece suffered a savage Nazi occupation.

"Greece emerged from the Second World War completely destroyed," says Professor Neni Panourgia, author of Dangerous Citizens: The Greek Left and the Terror of the State. "The country had no railways, no roads, her bridges were blown up, her infrastructure wrecked and 400,000 were dead from war, famine and retaliations. The country was completely destroyed financially, and then there was a civil war."

The civil war against the Communists lasted from 1945 to 1949, leaving the country with psychological scars that last to this day. After it, Greece was ruled by a US-backed military junta from 1967 to 1974. Now the troika – the International Monetary Fund, the EU and the European Central Bank – and the Germans in particular are being blamed for Greece's woes.

The struggle against the troika has been subsumed into a deeper historical narrative of the fight for independence. And whatever the faults of successive Greek governments, there is no doubt that for many Greeks austerity has been a disaster. Unemployment and poverty are soaring, and beneath the Mediterranean bonhomie is a bleak undercurrent of despair.

"We feel like we are back in a situation like after the First World War, where the great powers are deciding the fates of other countries," says Professor Stathis Gourgouris, author of Dream Nation: Enlightenment, Colonisation and the Institution of Modern Greece. "Greece has never managed to extricate itself from the network of foreign powers fighting over their regional interests.

"The idea that Greeks don't pay their debts is overstated. We need to create conditions that enable us to pay our debts and create growth. All this was imposed from the outside. If it had been explained to the Greek people, they would not rebel, if there was a sense of justice. Austerity has produced such misery, but the problem is also the way it was done, which has fuelled this sense of injustice. They say we are being reckless, but it's the Germans that are being reckless, with Greece and the EU."

And when things go wrong, society takes a darker turn. A population ruled by outside forces for so long, and once again feeling under siege, easily turns to conspiracy theories. Most Greek Jews were killed in the Holocaust and only a few thousand remain. But 69% of Greeks harbour anti-Semitic attitudes, according to the Anti-Defamation League, the highest proportion outside the Middle East and North Africa, and 85% believe Jews have too much power in the business world.

"Greeks buy into conspiracy theories, that the whole world is against us and trying to destroy us," says Constantinos Koufopolous, managing director of Axia Capital Markets, an Athens investment banking group. Koufopolous represents a new generation of business people who have no patience for the old excuses for Greece's economic torpor. "The Jews, the Americans, there is always a bad guy to blame for what is happening. Now it's the Germans. Greeks have a superiority complex because they feel inferior. We don't respect ourselves and our legacy and our ancient history. We feel that the world owes us, which may be true but we have to do something ourselves."

A hard bargain

On a bright sunny Sunday morning, Plaka, the tourist heart of Athens, is crowded with visitors from around the world. The maze of streets and alleys spreading out on the slopes of the Acropolis echo to a babel of languages. But the global downturn means that while many are looking, few are actually buying and when they do they try to drive a hard bargain. The golden age of Greek tourism has taken multiple blows: from 9/11, the global recession and the imposition of the euro. When $1 bought 400 drachma, it was easy to feel like a millionaire on holiday.

"We see more people, but they aren't spending money because of the recession in Europe," says Margaret Stylianou, of Zorba's Odyssey, a jewellery shop. "The people who can afford to buy here aren't coming. They are going to other countries. I think things will be difficult for many more years and it will take time before we can recover."

A few doors away, at the Athens Shop, Christina Ifanti tells a similar story. "There are many tourists but they aren't buying. They try and bargain a €1.50 fridge magnet down to €1." The shop sells handmade replicas of Greek antiquities, and the walls are lined with Spartan helmets, friezes and statues. The business was set up in 1935 by Ifanti's grandfather, who opened the first workshop, and Ifanti, 24, is optimistic about the future. "We are in the heart of Athens. People always want a nice holiday with friendly people. This is my country and I want it to get better."

Greece is a tough environment for entrepreneurs, says Koufopoulos. "Greeks have a Left-wing heart and a Right-wing pocket. This is a very divided economy. There is a private sector that works very hard and a huge public sector that was has been brought up without taking any risks and an increasing sense of entitlement. People are very strong for socialism, but when it comes to their pockets they don't want to pay taxes."

Successive governments have fed the public sector to build their electoral base, says Koufopoulos. "The public sector is so big and so organised, they keep feeding it for votes. Pasok, the socialists, were amazingly good at this."

All of this hampers entrepreneurs and business people. "It's extremely difficult to do business in Greece. It's very bureaucratic, the licensing and the permits all have to go through the public sector. It can take years to go by the book."

Decades of rule shared between Pasok, the socialists, and the conservative New Democracy party, saw a cosy consensus about patronage networks, says Palaiologos. "Pasok and New Democracy disagreements were about who would run the state and spread the patronage networks. All this relativises citizens' allegiance to the state. They ask, 'why should I pay taxes when the government just lines its pockets?' When roads and hospitals are built, it's without any cost control. "

And now it goes as it goes

And where it ends is Fate.

And neither by singeing flesh

Nor tipping cups of wine

Nor shedding burning tears can you

Enchant away the rigid Fury

Two-and-a-half thousand years after Aeschylus wrote Agamemnon, his words still echo across Greece. It was that "rigid fury" with the former ruling elites of Right and Left that swept Syriza to power in January. Founded in 2004 as a rainbow coalition that included social democrats, radical Leftists and feminists, Syriza is now the largest party in the Greek parliament, ruling in coalition with the Right-wing Independent Greeks party.

"Syriza politicians are different to those from the old system," says councillor Eleni Kyramargiou. "Other governments showed no interest in our problems. Syriza have only been in government for five months, but they are trying to find solutions."

We meet in a garden bar in Exarcheia, an edgy student neighbourhood in downtown Athens. Exarcheia is a veteran redoubt of the radical Left, its graffiti-covered buildings now home to trendy cafés and publishing houses. But not all visitors are welcome. When Yanis Varoufakis, the motorcycle-riding former Syriza finance minister, came here for dinner in April 2015 with his wife, Danae Stratou, he was assaulted by a gang of youths wearing balaclavas.

Kyramargiou, 34, is a councillor in Drapetsona, a deprived area by the port of Pireaus, near to Athens. "Syriza cares about poverty and unemployment. They have programmes for the unemployed and for poor people to find jobs." In Drapetsona these are sorely needed. Many of the inhabitants are descended from Greek refugees who were forced out of Turkey in the 1923 population exchange. The tanneries, cement and fertiliser factories that provided jobs have closed. There is high unemployment and social deprivation, and a substantial immigrant population.

Yet despite economic adversity, a community spirit is flourishing, says Kyramargiou. There is a strong sense of social solidarity. "The school communities help each other. Every school has a social market, where richer families provide food or financial help to poorer families."

Kyramargiou welcomed the referendum result. "It gives us the opportunity to decide not just financial things, but our own future, and that is something that is good to decide yourself, and not by the European gods. For me, that is a more important question than financial issues."

The view from the top

Kifissia, a northern suburb of Athens, is another world to Exarcheia. Its quiet, tree-shadowed streets are home to luxury apartment blocks and graceful villas, home to the country's political and business elite, such as George Papandreou, prime minister from 2009 to 2011.

Papandreou is a name with resonance in Greece: his father Andreas Papandreou served as prime minister in the 1980s and 1990s, his grandfather, Georgios Papandreou, in the 1940s and 1960s. There seems little danger of balaclava-wearing hoodlums bothering the former prime minister as we meet at Dante's café, a pleasant outdoor venue.

George Papandreou was an experienced politician when he took power, a former foreign minister and minister for education. But even he was shocked at the wastefulness and inefficiency of the Greek state. "The legal system is very slow. It can take seven years to resolve something. When you have a heavy bureaucracy and a slow legal system it causes corruption because people want to get things done."

Getting things done, especially where an intrusive, over-regulated state is involved, is never easy in Greece. "I asked how many civil servants there were. Nobody knew. Nobody knew how many government agencies existed."

Eventually he got the answer: 716,000 civil servants, for a country of 11 million people. Britain, in contrast, with a population of 64 million, has 447,000. Within two years the number of Greek civil servants had been reduced to 560,000. The state sector is still bloated, but at least now there is an annual survey.

The medical sector was especially problematic, says Papandreou. "We knew there was corruption within the medical sector, with doctors over-prescribing. We thought that doctors were getting kickbacks from international drug companies, then they would send the bill to the taxpayer."

Papandreou proposed that all prescriptions should be monitored through an online system, but the health minister responded that the doctors said it would not work because they could not use computers. Papandreou was incredulous. "Doctors are contracted to the state, so I said to end all the contracts of doctors who cannot use a computer. In two weeks 95% had learned. The cost of prescription drugs was cut by €2.5 billion a year, more than was raised by property taxes."

The 2008 global crisis brought out two things, says Papandreou, "the imbalances of the eurozone and the weakness of Greek governing structures. Greece had access to cheap money but funnelled it through a system of government that was wasteful and partially corrupt. Greece could access euros, but without a centralised support system, economic imbalances worsened."

The lack of a proper monitoring system by the EU accentuated Greece's problem. "When the US economy is in trouble, the Federal Reserve can intervene, but there is no equivalent in Europe."

What's needed, says Papandreou, is an EU equivalent of the IMF, a European Monetary Fund, that would not be beholden to any country. "Without that agency, it is the strongest country, Germany, that decides, but its decisions were not always technically correct, as it had no experience of this situation. Then these decisions are beholden to parliaments. Once this gets politicised you cannot deal with it logically. The effect of this was to box the troika into German domestic politics. When the IMF gives economic aid, it does not ask all its parliaments to agree."

Strong verbal support could also have been a game-changer for Greece, instilling confidence in global financial markets, Papandreou believes. In July 2012, Mario Draghi, the president of the European Central Bank, said that the ECB was ready to "do whatever it takes" to preserve the euro. The euro strengthened, Spanish and Italian borrowing costs fell and European stocks rose. "If Europe had done something similar for Greece, had said, 'don't worry, this is a situation we can deal with', then we would have had a different programme," says Papandreou. "We would not have had to cut so quickly, we could have had more focus on reforms."

Despite the volatility of national politics, Left and Right agree that things cannot continue as they are. "We need a deep structural reform programme to make the changes that we want," says Papandreou. "Pensions are not the real issue. We need to fix the tax system. Corruption and high taxes lead to more corruption. We have made changes, we have introduced property and luxury taxes, but not enough changes."

All sides also agree on the need to stay in the eurozone. A return to the drachma would be catastrophic, at least in the short-term. The currency would rapidly devalue," says Papandreou. "If we had done that in 2010 it would have been dramatic and it will be more so now. We have made a lot of economic adjustments since then. We have made progress and we are almost there. There are a lot of positives with the euro: credibility, cheap interest rates and stability."

For visitors at least, Greece is still a holiday paradise. It has good weather, beaches, culture and history. The people are friendly and hospitable, passionate and vivacious. And they are coping. Apart from long lines at ATMs, life continues in Athens.

"Nobody could imagine such a situation, it's a shock to society," says Yiorgos Kaminis, the mayor of Athens. "But the people are coping very well, they are waiting patiently to take their €60 from the ATMs, and Athens still has so much to offer. "

Greeks need to engage with the problems of Greek society, says Angie Athanassiades. "There is a deep distrust of the system and it is very difficult to get people with different views to sit down together. We need to fix that."

A writer and teacher, Athanassiades also sees parallels between Aeschylus's writings and Greece today. "Aeschylus's belief is that one must make sacrifices and suffer, in order to come out of what might seem like an impossible predicament. Now it has become evident that what Greeks perceive as sacrifice has to be internal, rather than externally imposed."

The collapse of the post-1918 ordering of the Middle East, the destruction of Syria and Iraq, and the rise of the Islamic State make Greece more important than ever, says Palaiologos. "This is a very troubled neighbourhood. Even in our appalling state we are a beacon of stability. Even if we changed our currency there would be a humanitarian aid package and measures taken to prevent us leaving the European Union."

Some murmur of a coming catastrophe if no new agreement is reached. Others argue that this can be a pivotal moment. Kostis Karpozilos, of analyzegreece.gr, an influential website, says that three things need to happen. "We need a national discussion about the future of a country on the periphery of Europe, an international discussion about the future of the European project in the 21st century and about Greece's relations with Europe."

Greece has been here before. Eric Ambler, in his classic Balkan spy novel, The Mask of Dimitrios, recounts the quest of Latimer, an English writer, to find out the truth about Dimitrios's death. The book is set in the late 1930s. In Athens Latimer meets Santos, a Greek government official, who promises to help him. "Organisation," says Santos. "That is the secret of modern statecraft. Organisation will make a Greater Greece. A new empire. But patience is necessary."

But for Greece now, time, like euros, is in short supply.