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ATHENS (Reuters) - Just over a decade ago, Napoleon Tsanis set out from Sydney with 11 million euros and a dream to build a shrimp farm in his ancestral homeland.
What he got was years of wrestling Greek bureaucracy and a court battle with a civil servant. Tsanis eventually opened his shrimp farm, but even now the Greek-Australian has managed to invest just 2 million euros ($2.5 million), and that thanks to sheer stubbornness and a strong Australian dollar that has kept his venture profitable despite the delays.
Ask him for the root cause of Greece's crisis and his answer is simple: the enormous regulatory burden that he says crushes the country's economy.
Foreign investors have long been put off by Greece's bureaucracy and lack of clear laws. The World Bank ranks Greece only the 100th-easiest country in the world in which to do business, up one notch on last year but below places such as Albania and Lebanon. Registering property and protecting investors are particularly weak areas, it says. Corruption is another problem. Greece ranked 80th on Transparency International's 2011 corruption perceptions index, down two spots from 2010 and behind emerging economies such as Ghana and Tunisia.
If Greece has any chance of fixing its debt crisis - one which threatens the euro and has roiled global markets - the country will need to grow. One way to encourage growth, say businessmen like Tsanis, would be to rethink the state's attitude to business.
"There is mistrust in entrepreneurship; bureaucracy treats anyone trying to start a business as if they are guilty of something," said Angelos Tsakanikas, research director at the IOBE think tank in Athens.
Tsanis knows that feeling.
"The politicians may have the best intentions but it's the civil servants that are throwing you into this labyrinth on purpose," Tsanis, 44, said. "The law gives them the latitude to delay you or punish you."
For Tsanis and his family, the delays meant constant trips back and forth to Australia, which he says contributed to the end of his marriage. "I paid a personal price," he said.
Tsanis stumbled on two of the most problematic areas for would-be investors in Greece: lack of proper zoning laws or a functioning land registry, and environmental licensing.
A trained biologist and economist, he did his research before deciding to invest in fresh shrimp - a product in high demand but limited supply in Europe. Armed with money from a private investor, he arrived in Greece expecting to be farming within a year or so.
It wasn't to be.
A process that would take just two or three months to complete in Australia got stuck in a maze of official opinions and permits across several ministries. Greek politicians assured him that the paperwork would be done in 18 months, but that date came and went with no progress.
A year into the battle to obtain both an environmental permit and zoning permission for a three-hectare farm in the western coastal town of Igoumenitsa, Tsanis's project was sued by a group including Pavlos Alexiou, an engineer with the local Thesprotia district administration which is responsible for granting licenses in the region.
"He was of a communist ideology and objected to most investment projects," said Tsanis, who had, tongue-in-cheek, named his company Albatross Investments.
Contacted by Reuters, Alexiou said his objections were environmental: the area is a protected habitat and "shrimp is not an endemic species." He and about a dozen others took the project to the high court that deals with administrative and civil disputes.
Alexiou said the group could not pursue the case financially and in 2009, seven years after it was filed, the court dropped it.
By then, though, another law change that sought to keep aquaculture projects small meant Tsanis had to break up his farm into sections to go ahead.
Tsanis said politicians from both the socialist PASOK and conservative New Democracy parties did nothing to rein in the suffocating public sector during the decade he fought to open his farm. At one point he told a Greek politician that it was ridiculous for the country to be fighting a project that would create jobs and generate growth.
"He gave me the best advice I ever got," Tsanis said. "He said: 'These people don't care about the future, they only care about what you can do for them now.'"
According to the World Bank, Greece has one of the lowest levels of foreign direct investment in the euro zone. At just 0.59 percent of GDP in 2011, that compares with an average in the zone of 4.73 percent.
One of the main obstacles to more investment is the legal jumble that dictates how Greek businesses work. Even government officials admit the lack of clear laws and the endless requests for opinions, studies and permits are there to give work to unionized specialists.
"There are whole businesses and technical offices employing engineers and experts specifically for the purpose of licensing," said Tsakanikas at the IOBE think tank.
Red tape often leads to corruption.
Tsanis said he steadfastly refused to bribe anyone. In one incident, in 2005, he appealed to a minister in Athens to get a permit unstuck. "The minister called in the public servant who was refusing to give us the permit and ordered him to issue it the next morning," he said, declining to specify the minister or ministry involved. "When we went back to get it, the civil servant told me: 'Australian, that guy is a politician and he'll be gone tomorrow, but I'll be here waiting for you."
His story could not be independently corroborated. Requests for bribes are not always explicit, he said. "Sometimes people quote you a price and sometimes they drop hints about the cost of things and how hard it is to get by," Tsanis said. "I made a decision early on not to give in and it saved us in the high court" - which decided his shrimp farm case - "because we had obtained all our papers legally, no short cuts."
He survived, he said, thanks to the 30 percent appreciation of the Australian dollar versus the euro in recent years. His shrimp farm now employs 24 people and while it is still early days his return on investment so far is a very healthy 28 percent a year. Tsanis hopes production may one day top 500 tons a year.
Where Tsanis persisted, others have discovered that avoiding the state is the best way to get ahead.
That's the secret to the growth of Gaea, a food company in the town of Agrinio in the country's west.
Gaea - the name means earth - was founded in 1995 by Aris Kefalogiannis, the 52-year-old CEO of a London-based ship repairs company. The firm packages and exports Greek foods such as olives, olive oil and spreads. Turnover has increased by nearly 29 percent a year on average since it opened.
Kefalogiannis said pretax profits are expected to rise to one million euros this year, up from 428,000 euros in 2011. He attributes the company's success not just to its authentic Greek products and the popularity of Mediterranean food, but to its ability to avoid the state.
To sidestep the maze of permits that tormented Tsanis, Kefalogiannis bought an existing olive factory that had most of the licenses already in place.
"Thank God, we never bought from or sold to the Greek state," he said.
It helps too that Agrinio suffers from high unemployment: around 1 in 4 workers in the town of 55,000 people is without a job, above the national average, according to the local labor centre. Gaea's 50 workers say they are grateful to have jobs, and pride themselves on never having gone on strike.
"I don't want to tell my neighbors I work here because I don't want them to feel bad they don't have jobs," said mother of four and grandmother of seven Adamantia Kontou, 57, who has worked in the factory since Gaea opened shop.
The firm has several shareholders and is governed by a board, a far cry from the mom-and-pop model of even some of Greece's largest companies.
"We are not a family shop but a small company which has the corporate governance of a multinational," said Kefalogiannis, who comes from a prominent political family. He shrugs at suggestions that family connections gave him a head start.
"In this country we have a big fault," said George Papaconstantinou, who served as environment minister from June 2011 to the election in May. "We create very rigid laws and because they are so rigid, in the end we ignore them."
In recent years the environment ministry has attempted to streamline the process of applying for permits but the red tape persists.
"We passed a new law simplifying procedures ... for example removing the need for a major environmental study in cases where it was not relevant," he said. "But the trick is in the implementation."
For some projects, it takes months to collect signatures from the seven or eight different ministries needed.
To escape the legal muddle, investors sometimes turn directly to the ministers in charge, leaving the fate of major projects in the hands of one politician.
"We are forced to resolve issues one by one and it takes a political decision," Papaconstantinou said. "Five to 10 years of work will be needed to make the system function on its own."
The only European Union country not to have a fully functioning land registry - despite collecting EU funds to set it up and then paying penalties when it failed to do so - Greece still lacks a comprehensive zoning law and building rules.
"Several interests prefer a fuzzy system they can manipulate," Papaconstantinou said. "We must simplify building permits, which are a hub of corruption."
Greece's new finance minister, Yannis Stournaras, told parliament this month that improving the investment environment was one of the government's top priorities. "Out of 250 obstacles to private investment that have been identified, only 10 percent have been dealt with. The most important of these obstacles have to do with laws about land use and environmental permits," said Stournaras, an economics professor. "These will be dealt with immediately."
Is change possible? Critics of the way Europe has handled the debt crisis say there has been too much focus on budget cuts and too little on reforms. Fearful of unions, Athens has dragged its feet in liberalizing labor markets, cutting back the state sector or privatization.
Instead, Athens has hiked taxes. The basic corporate tax rate in Greece is now 20 percent, more than twice as much as in neighboring Bulgaria, Cyprus or Romania. What bothers investors most is the way tax rates and rules constantly change.
"The biggest problem is not the rate but the unstable system which makes business planning difficult," said Aris Syngros, head of Invest in Greece, a state-backed organization.
Officials say the tax code requires such complicated book-keeping that most companies find it impossible to follow. It also requires constant visits by tax inspectors, which open the way to corruption.
"When I had the company in Britain, we did all our tax business remotely. I didn't even know where the tax office was," said Gaea boss Kefalogiannis. "Here, we have the tax officer in our offices every week."
Changing things will require a national rethink.
Kefalogiannis said Gaea never used bribes "to get something we were not entitled to. Unfortunately, all of us in Greece have done it to speed things up and we are all responsible for the way things are now."
"We are all to blame. We could have resisted. If we had, we would have changed things."
After his shrimp farm opened, Tsanis had hoped to build a 120 million euro golf resort. But when the local authorities decided they didn't want it, he opted not to fight.
"One hopes that with the nightmare that Greece is going through at the moment, it might have a reality check and decide to change things," he said. "Let's hope someone can do it, otherwise you are not going to see any investment in Greece."
Edited by Simon Robinson and Sara Ledwith