Brussels, Belgium: headquarters of the European Union.

Meeting face to face with German chancellor Angela Merkel is a man with a lanky figure: Greek prime minister, 59 year-old George Papandreou.

In Greece's cabinet system of government, Papandreou is effectively the head of state, as were his father and grandfather before him. Two thousand years ago, Papandreou's ancestors laid the foundations of today's pan-European civilization – democracy, science and mathematics – deeply influencing the European Renaissance.

At that time, Germanic tribes – Merkel's ancestors – were viewed as nothing more than northern barbarians.

Today, however, Germany stands as the leading power in continental Europe, the capo di tutti capi of the European Union, the world's largest economic entity. As for Greece, with but one-tenth the annual gross domestic product of Germany, its recent sovereign debt crisis has turned it into something of a basket-case pariah.

Merkel's brow is tightly knit with perplexity. That's because Germany and the rest of the European Union have worked themselves into a quandary over whether or not to financially bail out their smaller member nation.

Total Collapse of an Ancient Civilization

It's a sweltering midsummer July in Athens, Greece.

Temperatures hover around 40 degrees Celsius with not a drop of rain in sight. Protesters holding banners aloft in their twos and threes march through a downtown normally empty on weekends. Tourists from around the world as always jostle one another in their climb up the hill to see the Parthenon, as the immigrant Afghani and Pakistani vendors lining the streets hawk their wares and a sparse contingent of police lean against their motorbikes chatting and cooling off in the shade.

This place, Syntagma Square, has recently been the site of unruly protests, now famous around the world. What one doesn't see in the images of foreign news dispatches, however, is that the government has forced half the protesters to another location, and the other half are off on holiday.

"I'm afraid you'll have to wait until September after they all come back from vacation before there'll be another wave of protests," locals reveal with a laugh.

If the Germans are the "ants," busily working and storing away for the future, then the Greeks are like the "cricket" in Aesop's Fables, enjoying a carefree life and living in the moment.

The weekend the European Union called an emergency summit to discuss a bailout for troubled Greece, the vacation bungalows of the Peloponnesian Peninsula in southern Greece and the islands of the Aegean Sea were crammed with sunbathing Greek vacationers.

The leisurely facade cannot mask the truth of a Greek government facing imminent bankruptcy and economic depression. Ermou Street adjacent to Syntagma Square, long Athens' most fashionable shopping area, is now lined with shuttered shops due to the economic decline. Those that remain are all offering deep discounts, but the throngs of shoppers of yesteryear are nowhere to be seen, and the only places where business is booming are the coffee shops.

Nary a taxi can be found on the streets of Athens, as they are all on strike, and now even the public transportation system workers are agitating for a strike as well. Pharmaceutical giant Roche has halted shipments of drugs to public hospitals as outstanding accounts have ballooned. Meanwhile, the suicide rate among the populace has climbed steadily. "Unemployment," "salary cuts and tax hikes," and "reductions in welfare benefits" are now the most commonly heard phrases in the modern Greek lexicon.

Financial problems aside, another major problem looms over Greece: three consecutive years of economic contraction.

The economic malaise has not only led to declining tax revenues and rising public debt, but has deeply impacted every facet of the people's economic livelihood.

So how in the world did this once glorious ancient civilization fall so far?

Key Factor 1: Low Industrial Competitiveness

At seven in the evening the treetops covering the hillsides surrounding Athens are awash in the colors of the setting sun. Most of the tender green fruit ripening on the branches in the vast olive orchards will be pressed to make olive oil, an indispensable dietary commodity throughout the Mediterranean region.

Primary agricultural products like olive oil are one of the main drivers of Greece's export sector. Additionally, Greece exports raw minerals, electrical appliances and machinery, but these mostly lack high added value. Electronic products, shipbuilding and automotive components industries are all reliant on imports.

This precisely reflects Greece's number-one economic issue: low industrial competitiveness.

"Greek products are lacking technology, they are lacking in quality, and they are more expensive," says Michalis Vassiliadis, a research associate with the Greek think tank Foundation for Economic and Industrial Research (IOBE), sitting in his office a few streets away from the Acropolis. "So even producing something that's of the same quality, the production is more expensive, because wage increase is more rapid in Greece than in other countries."

Over the past decade, unit labor costs in Germany have risen just five percent. In Greece, labor costs have risen nearly 45 percent during the same period. How could wages possibly rise so fast? The cause, surprisingly, is rooted in government. Public servants account for 22 percent of the total Greek workforce.

Vassiliadis notes that public-sector salaries have nearly doubled, and that became the benchmark for labor groups in the private sector to demand wage increases, leading to progressively higher private-sector wages.

"The private sector's wage increase was linked to the wage increase in the public sector, although a lower increase. They won't link to productivity measures," he sighs.

According to Nikos Malkoutzis, deputy editor of the English-language edition of the Greek daily newspaper Kathimerini, "If you look at the big problem in Greece, it's the public sector is right in the middle of everything. Everything you want to do, you have to go through the public sector… The second problem is: this, in the middle of everything, is fantastically inefficient."

Malkoutzis has personally felt the pain. Several years ago, he and a friend wanted to start a business. In Taiwan, he would need only negotiate six procedural channels and could resolve everything and be up and running in 21 days. But in Greece, not only would he have to navigate 15 procedural channels, but the preliminary paperwork reviews, as well as legal and accounting audits, would take six months, all at immense expense.

The most recent research published by the IMD business school in Lausanne, Switzerland, ranked Greek state enterprises in the bottom ten in its business efficiency index. This has resulted in Greek business and state power lagging far behind, despite Greeks logging more total work hours than their counterparts in Germany and northern Europe.

The impact of years of piling up enormous current account deficits has been far-ranging: prior to joining the EU monetary union, the Greek drachma depreciated substantially.

For import-dependent Greece, currency depreciation translated into commodity inflation. Prior to 1994, Greece's consumer price index (CPI) rose at an alarming clip of over 10 percent annually. After joining the Euro zone, commodities got even more expensive as commodity prices began to be calculated to the nearest Euro.

It's not like Greece does not have a chance to turn things around. For years Japan, Taiwan and South Korea levied high tariffs on imports to support local industries and build foreign exchange reserves.

Greece, however, has taken the opposite approach. In 1981, its industries uncompetitive and government subsidies to domestic industry at a nadir, Greece opted to join the free trade, zero-tariff European Economic Community (EEC).

When their industries are failing, many nations rely on infusions of foreign capital to build new plants and learn new technologies. This however, leads us to the second major economic issue Greece faces, and that is "lackluster foreign investment."

Key Factor 2: No Efficiency, No Foreign Investment

Democratic Greece initially possessed the traits to attract foreign investment. But FDI inward stock in today's Greece as a proportion of gross domestic product is the second lowest in the entire Organization for Economic Cooperation and Development (OECD), far lower than many former Soviet Bloc Eastern European countries.

What is the problem? Again, the answer is the same: government.

As Malkoutzis relates, more than a few foreign companies have expressed keen interest in setting up wind power generation facilities on the Peloponnesian Peninsula.

"I think they tried for over a decade, but in the end they gave up," he says. "It's very difficult. The application is always pending for someone's approval. Government will change, and the minister will change… There is no continuity, so it's not like you put your application in and get it going. It's just like stop, start, stop, start, and in the end you give up."

Born in Cyprus and now running the family's Piraeus-headquartered shipping business, United Marine Agencies, S.A., which also serves as the Greek agent for Evergreen Marine, Constantinos Mouskos is forthright about the difficulties foreign companies face in Greece.

There are many gray areas in Greek law, unlike the clear black/white delineation in British or American law, he notes. Indeed, laws can often been found that contradict other laws or contradict EU law.

Flagging exports, lackluster industry and apathetic foreign investment have resulted in an embarrassment for government tax revenues, an empty national treasury and no foreign exchange reserves.

Consequently, the underlying motivations behind the Greek government's wanton borrowing spree have been twofold: To compensate for a lack of foreign exchange reserves and to continue paying public employee salaries and funding construction projects.

But ultimately the greater portion of these funds go toward public employee salaries and retirement pensions or simply disappears into the pockets of government officials.

The Greek government has never been shy about borrowing money. Beginning in the 1980s, growth in Greece's government debt as a proportion of GDP began to outpace economic growth: In 1981 it still stood at 26.7 percent of GPD. Ten years later it had exploded to 74.8 percent of GDP. Current forecasts are for Greek government debt to stand at 152 percent of GDP by the end of this year, more than half of which will be foreign-held debt.

Key Factor 3: Legions of Government ‘Crickets' Unsupportable

The Greek government now employs a vast, 800,000-strong legion of public-sector "crickets." Greece has a population less than half that of Taiwan, yet its government employs nearly 300,000 more civil servants than Taiwan.

And when it comes to hiring practices for Greek government jobs, connections matter above all else.

Securing a job in the Greek bureaucracy requires passing an examination, but even those who fail can often secure a position on a contract basis if they have the right connections. After a few years of service, they may be "brought aboard."

Salaries, pension plans and insurance premiums for this army of bureaucrats eat up at least 10 percent of Greece's national budget annually. What's more, civil servant salaries have doubled during the past 10 years. Even before the financial crisis, Greece had a legally mandated retirement age of 58.

This "big rice bowl" culture, coupled with self-fattening legislation, has generated serious financial losses within Greek state-run enterprises.

During the first three quarters of 2010, of the 46 Greek state enterprises, 43 percent were operating at a loss, and nine had cumulative debts in excess of total assets and should have long ago been declared insolvent.

Even Priests Expect a Bribe

The corruption has even progressed to the point of seeping into the private sector. Chen Hsuan-ching, a Taiwanese woman who moved to Greece more than four years ago after marrying a Greek national, says although seeing a doctor at one of Greece's public hospitals costs nothing, an appointment must be made months in advance. If you want to see your doctor or have surgery performed a little earlier, you'll have to pay a bribe.

"The prices of bribes for doctors are there, all that's missing is a catalogue," she laughs bitterly. "Over here, if you want to get married, you even have to bribe the priest."

Over the past three decades the political party controlling the government has occasionally changed, but government corruption and lack of efficiency are constants. Why in democratic Greece is the electorate unable to demand massive political reform through the ballot box?

Alexandros Stasinopoulos, a Greek industrial designer working in Taiwan, is gripped by a range of emotions when describing his native country: "The political parties were giving financial benefits to individuals – such as a promise to hire members of a family within the public sector, or to make legal and illegal buildings or houses, etc. etc. – or groups of people – labor unions, or unions of professionals... In this kind of ‘system,' everybody was happy."

The interest groups then ratcheted up their demands on government.

Whether it's the left-leaning Panhellenic Socialist Movement (PASOK/green) currently in power or the previous ruling party, the New Democracy Party (NDP/blue), "reform" is nothing more than a slogan used in political struggles among political factions and cliques. The government ultimately swaps tangible benefits for voter support and whether the greens or the blues are in power, there is little consequential difference between the two.

Government in Greece has wrought economic destruction. It is, however, the education system that has produced a shortsighted populace willing to support this sort of government.

Cheat Street

One Taiwanese student who received an MBA from a top Greek university recalls an unforgettable scene during his first semester final exams: The majority of the students were shockingly engaged in mass cheating.

Exam proctors looked the other way during this episode, chatting away on their cell phones in the hallway. In another examination hall, a USB drive containing all of the test questions and answers was openly circulated throughout the examination hall.

"Afterwards, a friend told me that this sort of thing is common in Greece," and when graduation time rolled around, the school honored a habitual cheater as class valedictorian, the student relates.

Even the Greeks themselves have become exasperated. Once upon a time, they too were diligent "ants." Older generations of Greeks remained thrifty and kept their noses to the grindstone through a seemingly endless cycle of conflict. Cheating in school was virtually unheard of.

At that time, Germans, today lauded for their "conscientiousness," were viewed by the English as lacking efficiency and full of duplicity.

Three decades of seemingly bottomless government largesse have transformed the erstwhile Greek "ants" into the "crickets" of today. Summer months once spent assiduously working are now a time of pleasure-seeking indulgence. But now the party is over for the crickets.

Quayside at Piraeus Harbor, the azure waters of the Mediterranean seem timeless.

But today the ancient Athenian city-state's most prosperous commercial port has become Chinese turf: The Greek government has leased wharf No. 2, Piraeus' most profitable, to the shadowy China Ocean Shipping Company (COSCO) at bargain rates for 35 years in exchange for a share of the revenue.

After the fall of the empire of Alexander the Great, outsiders ruled Greece for 2,000 years. Greece had the past three decades to get its house in order and seize its own destiny.

But a group of crickets saw fit to rewrite the destiny of this ancient civilization through a series of bad choices.

Translated from the Chinese by Brian Kennedy