A City accountant friend of mine once took up an appointment as Compliance Manager at a firm of Italian stockbrokers. He was a conscientious and precise person but when I later saw him he always had a bemused and puzzled look about him and I quietly concluded that my unhappy friend had landed one of the worst jobs in the world.
I see the same bemused and puzzled look on the face of George Papandreou, who has landed what truly must rank as the worst job in the world as Prime Minister of Greece. To see Mr Papandreou on one of his frequent visits to Brussels, trying to hobnob with the powerful and ingratiate himself with the dismal apparatchiks of Euroland is really a pitiable sight. The body language is so eloquent: George puts on his lop-sided grin and hovers hopefully around the edges of many an informal group. Angela adopts her frozen mask, Nicolas briefly finger-prods and smiles but soon turns away and George is left to chat with the 3rd X1 representatives of Latvia and Cyprus. For George is not really a participant at these gatherings, he is an abject and unwelcome petitioner from a country whose problems bore Euroland and perplex and stupefy all Greeks.
It is little comfort to George that these problems are not wholly of his own making. Since its liberation from the Ottomans in 1830, Greece has struggled to become a viable and effective state. It is estimated that Greek bonds have been in default for about 50% of this period. Successive governments, run by a selfish and avaricious political elite, have totally failed to control the nation’s finances. George’s populist father, Andreas, made a difficult situation worse by lavish subsidies to his supporters, Mitsotakis and Simitis were no better, despite the windfall stimuli of Eurozone entry and the Athens Olympics, Costas Karamanlis baled out as soon as he saw the size of the storm brewing, leaving the luckless and unregarded George to pick up his dynastic baton.
As the IMF’s Dominique Strauss-Kahn crudely if accurately put it “Greece is steeped in the shit.” The country’s catalogue of failure is too long to set out in detail. Suffice to say, government expenditure 50% of Gross Domestic Product, a black economy estimated at 25% of GDP, generous state pensions payable after 35 years contributions (rest of Europe 40 years), relatively high wages, dismally low productivity leading to an estimated budget deficit in 2009 of 13.6%, after revisions from 6.7% (EU ceiling supposedly 3%) and an external deficit of 115% of GDP (EU ceiling 60%).
The situation is worsened by Greece’s large and woefully inefficient public administration, the endemic corruption and cronyism of its public life and slack control over the years from Brussels. When Brussels woke up it was horrified at being fed false economic data in the past and, with a very ill-grace, it and the IMF cobbled together a rescue package of €110bn, which it already has had to extend and modify. In truth Greeks do not see telling fibs about their finances as any kind of sin; it is part of the weave and weft of everyday life and if Goldman Sachs can via currency swaps make this even less transparent, Greece reckons that is a splendid wheeze. Not surprisingly the German and other North European taxpayers are reluctant to bail out the feckless and slippery Greeks and imposed strict deflationary conditions in its notorious Memorandum, which George’s government did not read very carefully and whose impositions have generated whines of pain from the allegedly victimised Greek populace.
It is possible to feel some small sympathy for the Greek man in the street. Normally wage cuts and tax rises are accompanied by some kind of safety valve promising a better future, like a substantial devaluation. As a member of the Eurozone, Greece cannot act unilaterally in this way and the loading of Greece with even more debt cannot provide a complete answer. Quite what the long-term answer is has not yet emerged, if leaving the euro is not an option.
Popular anger is not so intense that it encourages Greeks to pay a proper amount of income tax. Over many generations evading taxes has become the Greek national game, like cricket to the English, adultery to the French or marching on Poland to the Germans. Nobody likes paying taxes, but in Greece hatred of taxes is visceral. It, alas, leads to a demoralising of society, the bribing of tax officials, the corruption of judges, the squaring of politicians. The politicians have over the years passed parliamentary immunity laws and very tight statutes of limitation which in effect shield them from any kind of prosecution for graft and corruption, however blatant, so an exemplary public trial is not within the bounds of possibility, however desirable it might be. As tax revenues have little hope of covering expenditure, Greece may have to stagger on as a permanently crippled basket-case living on the crumbs from the tables of the richer Eurozone countries.
This is hardly an enticing prospect. Greeks are talented and ambitious. Surely the best and bravest will head for the exit and swell the Greek Diaspora. Maybe a Herculean strong-man will emerge, cleanse the Augean Stables (a gigantic Labour) and restore the nation’s pride – but I would not hold my breath. Otherwise, whither Greece? A Mediterranean dependency of Russia, renamed Hellarus? The Great Idea in reverse with Greece the European province of a buoyant Turkey? Odious outcomes to all Greeks!
Meanwhile George wrings his hands and keeps his sadly haunted look. Who can doubt that David Cameron, observing Greece from a semi-detached vantage point, mumbles a quiet prayer of thanks to his maligned predecessor “Bless you, Gordon, for keeping us out of this unholy mess!”
SMD
15.3.11
Copyright Sidney Donald 2011 .
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