Greece Lacks A Modern Land Tenure System – Property Rights Vague, Litigation Common Lack of clarity on who owns what makes buying and selling complicated, hurts the Greek economy. Greece just like Africa?

image_pdfimage_print

By Paolo von Schirach

May 27, 2013

WASHINGTON – What do Greece and Madagascar have in common? Well, not much in terms oh history or geography. But they have one common negative feature which stunts economic development. Both countries lack a modern land registry system. In practice this means that, lacking proper land ownership records, it is very difficult or totally impossible to determine who really owns any given piece of land or real estate. Needless to say, this is not a good basis for worry free transactions. The New York Times recently reported about the problem in Greece. 

No modern land registry

Still, it is important to stress that Greece, at least in theory, should not be like Madagascar or Nicaragua. In theory, Greece is a proud member of the European Union. Greece is a country that over many decades received help from Brussels aimed at filling the gap between its antiquated systems and economy and the rest of Europe. Yet Greece  today, in the year 2013, has some of the same problems of ultra poor developing countries struggling to engineer an economic development takeoff.

Why is this relevant?

Now, of all the issues plaguing Greece, (debt, unemployment, shrinking of the economy),why should we focus on land registries? Because they are one of the key foundations of any modern, capitalistic economy.

Indeed, already long time ago Peruvian economist Hernando de Soto convincingly pointed out how lack of clear property rights is a major obstacle to development in emerging countries.

A clear land title system is a foundation of modern capitalism

Lacking a clear and enforceable land title system, real estate transactions are risky and therefore rare. Furthermore, lacking clear title on the land or real estate they use, most people are excluded from commercial credit, as credit usually requires collateral –and land or real estate are the  most obvious forms of collateral. Lacking clear title on the home where he lives, a small entrepreneur cannot use it as collateral to get a commercial loan aimed at expanding its business. No loan, no expansion. Multiply this by thousands of similar cases and you have a huge drag on economic growth. 

This explains at least in part lingering poverty in Africa or Central America. And this explains why Madagascar made land tenure reform a priority within an aid package it negotiated with the Millennium Challenge Corporation, a US Government donor agency.

A primitive system

Well, Greece has some kind of a system in place. But it is so complicated and primitive that in fact, it is no system at all.  Lacking defined boundaries, most land claims especially in rural areas are tenuous and therefore vulnerable to legal challenge, sometimes multiple challenges, as many individuals may claim title to the same piece of land. One expert stated that if all deeds registered were valid, Greece would be at least double the size it is.

In this mess, there is a predictable proliferation of “services” provided by eager lawyers and surveyors who provide technical expertise in the many cases in which there is litigation.

A modern country?

There you have it. A supposedly modern country and a member of the European Union that has no clear land tenure system. And all this is made even more complicated by antiquated or non existent zoning rules.

The EU demands a swift modernization of this primitive way of handling a land registry. But it is not clear how long  it will take to bring Greece’s appallingly backward system up to modern, internationally accepted, standards.

There you have it. Poor Madagascar, with donors’ help, is tackling the problem. Greece is in no hurry; so it is taking it easy.

,

Leave a Reply

Your email address will not be published. Required fields are marked *