By Loucas Charalambous
WHEN GREECE entered the eurozone on January 1, 2001, some analysts were taken by surprise. They all wondered how this country had managed to improve its finances so much that it could suddenly meet the targets set by the Maastricht guideline, the precondition for entry into the eurozone.
Especially strange was the staggering reduction of the budget deficit to 1.5 per cent of GDP which was well below the Maastricht limit of three per cent. What had happened, how had this miracle materialised? The truth emerged much later. The economy was in a terrible mess, as analysts had suspected, but the smart guys of PASOK had cooked the books.
Eleven years later on an Allan Little BBC show in 2012, a Greek national working in London for Salomon Brothers revealed what had happened: “I frequently visited Athens with clients. There, we always saw the head of the Statistical Service which produced all the data on the public debt, deficit, inflation etc. He was the magician who made the deficit and inflation disappear. Greece cooked the books in order to enter the eurozone.
“But how did the magic work? Take for instance the state railway company OSE. It has a loss of a billion euros every year. It had more employees than passengers. A former minister Stefanos Manos had publicly said that ‘it would cost us less if we sent them all by taxi.’ The authorities used a magic trick to make the problem disappear. The railway company issued shares which were bought by the state, so its deficit was not listed as an expense but as a book-keeping entry (its loss was turned into capital). It never showed as an expense in the budget.”
With these magic tricks Greece satisfied the Maastricht criteria and entered the eurozone in 2001. The deception was revealed in 2004. In March of that year a new government was elected and Petros Doukas was appointed minister for the budget. This was what he said:
“I invited the senior staff of the ministry and asked them to give me details about the budget that that had been approved the previous December, two-and-a-half months before we took office. I told them: ‘Do not worry about being prosecuted, just tell me the truth.’ The difference between the announced budget deficit and the real one was huge. In the state budget it was listed as 1.5 per cent but in reality it was 8.3 per cent of GDP. I told them: ‘We must start checking the budget’ and the answer I received was the following: ‘Look, we have the Olympic Games in a few months and we cannot anger the people and push them into calling strikes just before the Games’.”
The scams were hushed up and Greece carried on borrowing money, and at the very low interest rates Germany was paying. And eventually we arrived at 2010 when the colossal scale of the problem was revealed and the country had to be bailed out.
The above is dedicated to the political demagogues and our super-patriotic journalists in Athens and Cyprus, who, instead of feeling ashamed, as I do, about this disgraceful business by the ‘mother country’ have put on the national costume and are trumpeting about the ‘struggle for Greece’s dignity’ under the leadership of Alexis Tsipras. They forget that bankrupt magicians, unfortunately, have no dignity that needs defending.
I would also like to dedicate this to our own Erato Kozakou-Markoulli, who has been enchanted by the new wizard of the Greek economy, Finance Minister Yanis Varoufakis, whom she wants to clone, presumably so she could bring his copy to Cyprus.
As some might say that Tsipras, Varoufakis and SYRIZA were not to blame for the government shenanigans that bankrupted the country, we should remind everyone that the dirty wing of PASOK with all its political crooks moved en masse to SYRIZA in the expectation that the big party of the Andreas Papandreou years would be revived.
Their mistake is that they have not realised that the magic tricks no longer work and that there is a Troika, now known as the institutions, that does not give out billion as in the past but want to know where every euro is spent.