Greece – A homegrown Tragedy



With the following commentaries I don’t intend to deny Greece’s transgressions of the past 40 years in any way. They happened and remain the major cause for today’s condition. But contrary to the dominantly published opinion there is another side to this coin, and transgressions outside of Greece as well as previous Greek governments’ – consisting of sister parties to Austria’s black and red – should also be taken into consideration.

The thing about morals

Over decades, a few families (word is, there are less than 220) have been dividing the country among themselves, squirreling away billions. They set an example of morals being irrelevant and unethical conduct not leading to trouble. As you might expect, the plain citizen took this to heart and eventually stopped paying taxes as well. “Why should I get the short end of the stick”, they justifiably asked themselves. The fish started rotting from the head down, as is often the case – and eventually it was entirely foul. The year was 2010.

Where was Europe during that time? In the entry phase to the Euro participation, the EU commission initially spoke against the admission of Greece. The EU – council (known to be consisting of representatives of the individual national states) however got their way. To anybody who knows (Greek) history, it had to be abundantly clear that the Greek never did nor ever would fulfill the Maastricht- criteria. But what wouldn’t people do for an additional sales market.

Greece’s problem with the euro – and not just theirs

For decades, nations like Greece, Portugal, Spain or Italy had the option of compensating their lack of productivity in comparison with Germany or Austria  (Due to reasons as varied as mentality, climate, off-center location in Europe, corrupt governments and so on) by devaluating their currency. With the Euro in place this can no longer be done. The Euro puts all national economies on the same level, without however synchronizing a common economic policy, which has to be the base of every functioning currency. The corner shop ends up trying to compete against Aldi or Billa. Anyone gifted with a little bit of common sense must see, that this is not likely to function.

This is aggravated by the fact that Europe’s strongest national economy has been conducting unparalleled wage dumping for the past 15 years. In no other EU country have wages risen as little as in Germany – despite the fact that Germany is export world champion with an impressive productivity.

The military budget

One rarely reads about Greece having already cut its military budget by 47% in the time up to late 2014. It is still high, but compared to, say, Germany it is not so far off based on the GDP. The reason for ever narrowing leeway following such a drastic austerity program is, not least, because up until recently (2013) German and French war ships still kept being delivered. Furthermore, even this year German weaponry into the millions is still being sold to Greece.

Hang on just a sec: Isn’t Schäuble tirelessly demanding that Syriza finally (!!) cut military budget? And at the same time Germans are still selling weapons to Greece (Even including non-solvency warranties the tax payers are ultimately liable for). Well that’s the land of duplicity for you.


The ship proprietors

News have likely gotten around by now, that one particular law granting massive tax cuts to the ship owners has constitutional priority. To change it, a two-third majority is therefore needed but not held by the current government.

And even so, in nearly every country that has any naval architecture- or transport industry, ship owners are nearly exempt from taxes. Germany is front and center. So if the Greeks were to cancel these reliefs, ship owners would more than likely soon make a run for it (Most of them have already parked their billions in Europe as it is, but more of that later)

Not that a solution for this injustice isn’t needed, but isn’t this the very argument German and Austrian politicians keep using? Jobs, Jobs, Jobs…


When will the rich Greeks finally be taxed!

In Greece there is neither functioning tax administration nor a land registry. One wonders, just why these projects have not been tackled by previous governments long before. To be exact, one wonders only until having taken a closer look at said governments’ proponents. Then it becomes quite clear why nothing much has happened.

Furthermore, it is rather curious that for all the creditors’ restrictions, seemingly no emphasis was put on the buildup of aforementioned structures. Why would only the current government start serious negotiations with Bavaria to send finance experts to assist setting up the structures? The offer by German officials has been out for years, why was this not forced upon the Greeks as a precondition for monetary aid, the same way pension cuts were?

Incidentally, this collaboration has existed before, in the 19th century, in a similarly difficult constellation (after Greece’s independency). And please spare me the old excuse of the land’s sovereignty – creditors didn’t give a hoot about that when Troika associates directly intervened in legislation.

Clearly, rich Greeks‘ funds are not that easy to locate – especially the money of all those who fled abroad in the past 5 years. Capital control was introduced much too late (not before Syriza and tardy even on their watch). The abroad money is spread all over Europe and probably in a few offshore havens as well. There is simply no getting to it within a realistic time span – a fact we are well aware of ever since Grasser and company, with all their pretty phantom companies and interlacing. It’s safe to assume that rich folks in Greece are no less creative.

Then there’s the money bunkered in Switzerland. Only a few weeks ago has a treaty finally been worked out to trace down tax evasion. Why only now, why not under previous governments? One wonders… but then again… see above.

Not only in German TV-discussions do they speculate about Greek billions having been channeled to Berlin and London to buy luxury real estate by the dozen. Might this be properly taxed money? Not likely. European officials could help going after that money. For Germany – unlike Greece – actually commands the necessary tools. Altogether, according to estimations, there may be about 200 Billion Euros in Greek black money, most of it abroad. A bit of European solidarity could go a long way here.

The infamous Lagarde-list (supposedly containing 200 Names on a tax-CD) has been lying idly with Greek officials for 3 years now, hardly any lawsuits have been filed. Tsipras has a new law underway, which will help further these matters. Why not any sooner?

Verhofstadt‘s demand in european parliament: imply reforms already!

A small excerpt: Pensions have so far been cut by 50% (and yet creditors ask for further cuts), wages have declined by 30%, There is practically no unemployment insurance. Massive cuts were made to health care, same with the military. No piece of cake for the Greeks, as daily pictures and news reports show.
The supposedly very outsized public sector has long been shrunken down significantly and counts among the smaller ones in Europe by now.

There is a treaty with Switzerland concerning black money pursuit. Several lawsuits for tax evasion were started, but (go figure) still haven’t come to a conclusion after 5 months. Business taxes, along with many others, have been raised. Surveillance society is already a reality in Greece.

For all that, it should not be forgotten that the Greek government is negotiating an overall package of measures with creditors. Single actions started unilaterally by Greece simply will not be accepted. An important reason why in this – oh so long – term of office, of not even 6 months (In Germany and Austria both, it usually takes 3 months before a cabinet is even constituted), not all that was promised could be implemented.

According to a OECD-study, the claim that Greece is refusing reforms is plain wrong. Some reforms however are indeed implemented very hesitantly.


Tsipras‘ second speech

Little could be read about it in the media. Here he explains, why reforms aren’t happening at the desired speed and which ones have been set into motion. Also he is posing some interesting questions, to my mind, for which of course there was and is no answer by those addressed. For instance, why the IWF, being a non-European institution – was incorporated into the famed TROIKA, yet the most transparent of EU Institutions  – the European parliament – was not.


The depleted Bulgarians and baltics with their low pensions

It is true, that some EU countries are paying out low pensions and wages, in much the same way Greece does. This comparison however only holds, when the corresponding wage levels are checked against each other as well. And suddenly the differences (although still in favor of Greece) are not quite as big as many a politician claims. Greece was only 7% below Germany’s price plateau in 2013, Bulgaria a whopping 51%.

And after Baltics and Portuguese have actually fought their way through tough austerity programs, perhaps they should be asking themselves whether they elected the right government and just who profited from those cost-cutting measures. A look at the income gap between rich and poor could offer an answer. Like so often, (for instance regarding the refugee crisis), media and politics alike are skillfully playing poor against poor – sometimes middle class against poor – in order to distract from the true cause. Economic contestability at any price with the goal of keeping up with Germany or (even further out there) China, has its cost. And that is paid – today and more so in the future – by the middle classes before anyone else, in Greece also by the impoverished.

The greeks are left to their own devices

This may be true of Europe just now, (while proportions might change with Spain, come autumn). Therefore it is easy to explain why so much of the Greek government’s time and energy is going towards negotiations, while missing when it comes to implementation. After all, they stood against the united media landscape of Europe, most of all the TV Stations. And there, truth is being handled very negligently.

Then again Greece isn’t all that segregated. For the IWF, as well as renowned economic scientists and politicians support Syriza’s central demands, such as a European conference to deal with debt (Greek, as opposed to official propaganda, not by far being the only country incapable of escaping the pressure of their liabilities long term) or the end of the one-sided policy of austerity working in favor of the northern countries. Just calculate how much Germany and Austria are saving in interest for government bonds alone, both for the past and upcoming years, owing to the Euro crisis. These are hundreds of billions. Which makes the risks of payment default for the liable sums seem somewhat smaller. Just a side note.

The wrecked trust

In principle, I can understand the commotion. Tsipras and above all Varoufakis were not always acting smartly and sometimes left their negotiation partners out in the rain. Perhaps this was also due to facing parties that really wanted to speak about fundamentally different things. While the Greeks were looking to discuss a long term change in economic- and debt politics (which is more than sensible), the creditors were only interested in fixing the next aid package and the measures attached.

What must the Greek Government think, when a critical IWF-report is not published particularly because of the referendum?

Tsipras actually offered debt holders a way out at the last moment (Tuesday before the referendum). A deaf ear was turned to his suggestion. They were practically the very demands creditors had issued before, with just a few sensible tweaks, yet Schäuble said no.

Also Schäuble speculating openly for a temporary Euro-Exit on the Greeks’ part, doesn’t exactly serve to build confidence.


The socialization of debt

Not only in Greece the trend of these past few years since the financial crisis is clearly recognizable: while profits made beforehand flowed into private hands, the debt created in the aftermath was made or rather taken on by the states. Singular debt cuts (as in the example of Greece) are relatively small contributions on the finance business’ part.

The advantage for some politicians (mostly the ever-populist CSU) of course, is that the single argument „We lent them money and showed solidarity, now we want the money back” can always be brought forward. While Greek liabilities were ‘private’, hardly anyone in the public would have cared. Now that it is about ‘our own money’, populism works particularly well.

Merely every fourth Euro going to Greece actually ended up in their budget. So was Greece really being saved? I’d really like to hear a precise explanation from any given European politician, just how a ‘yes’ to this question can be justified.

Greece was on a good path till syriza came along

Another ever-popular argument, especially in CSU-circles. So how does one define a ‘good path’ in the first place? If you consider the low (but still not bad, considering) economic growth, then in the 4th quarter of 2014 the mini-recovery was already a thing of the past. If you take a look at debt growth and other statistics, Greece war in no way on a good path. 5 years of austerity policy, a debt cut – and yet liabilities rose dramatically.


Privatization is needed!

A volume of 50 billion Euros in privatizations was demanded by debtors. In this field at least, Tsipras was able to gain a small victory within what was otherwise an outright defeat in the last negotiation marathon. For of said 50 billions, 12,5 are being invested into the Greek economy and only 12,5 more used for direct debt clearance.

The way privatizations tend to run with the IWF is known through miscellaneous experiences in South America. They don’t even flinch away from water, as Greece and Portugal are already aware. The example of the airport area Elliniko in Athens, the bid for which was won at a massive discount, also bodes ill. It is more than understandable and from the locals’ viewpoint also absolutely justified, that a nation would resist such measures. Since it is not likely that those 50 billion Euros will be reached with the current privatization plan, chances are high that the future will (have to) hold another privatization package.

I’ll close with a somewhat flawed (one-sided, that is) analogy for the topic. The commentary by fredd however, is priceless.,4269840



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