Tuesday, 8 November 2011

The role of Greece’s oligarchs in Papandreou's downfall

Below is a sympathetic article on Giorgos Papandreou from the Financial Times, written by Misha Glenny, which attributes Greece’s PM’s downfall to the oligarchic families that have run – and looted, according to Glenny – the Greek economy and would like nothing more for the Greek crisis to deteriorate so that they can buy up Greek state assets at knockdown prices. The article is too generous to Papandreou, but it does draw attention to some of the lesser-known culprits in the plundering of Greece. (Thanks to Maria Karamitsos for pointing article out).

The real Greek tragedy – its rapacious oligarchs
Capricious, unreliable and ideologically driven were some of the more printable epithets hurled at George Papandreou in his final week as Greek prime minister. We should look at the motives of his detractors before taking such critiques at face value. While engaged in titanic political struggles at home and abroad, he has been quietly trying to tackle one of the most intractable root causes of the Greek tragedy – crime and corruption.

As the new Greek government struggles to convince Europe of its resolve to cut the country’s bloated public sector, it also has to decide whether to face down the real domestic threat to Greece’s stability: the network of oligarch families who control large parts of the Greek business, the financial sector, the media and, indeed, politicians.

Since Mr Papandreou became prime minister, his government has been trying to crack down on habitual tax evaders. He made clear in a speech to parliament on Friday how deep his concerns are regarding the more dubious activities of some of Greece’s banks. We can only hope that the BlackRock audit, ordered by the troika, will be suitably forensic in uncovering what has really been going on in the financial system.

In the same speech, Mr Papandreou also revealed dramatic information about a pan-Balkan fuel smuggling operation which is allegedly losing Greece an estimated €3bn annually. He spelt out exactly how damaging such criminal activities have been, all but naming those involved.

The oligarchs have responded in two ways. First, they have accelerated their habitual practice of exporting cash. In the last year, the London property market alone has reported a surge of Greek money.

Second, they have mobilised hysterical media outlets which they own in order to denounce and undermine Mr Papandreou at every opportunity, aware he is the least pliable among Greece’s political elite.

Their aim is clear – they are waiting to pounce on the state assets which, under the various bail-out plans, the Greek government must privatise. With the domestic economy in free fall, the share price of these hugely valuable entities such as the electric grid and the national lottery has been collapsing steadily over the past two years. A 10 per cent stake in OTE, the Greek telecoms provider, was sold to Deutsche Telekom for around €7 a share over the summer, down 75 per cent on its price three years earlier.

The oligarch conglomerates are waiting to scoop them up at anything up to less than a fifth of their real value – a poor financial return for the state but in 5-10 years time a bonanza for the purchasers. Some have been even banking on Greece exiting the euro so that they can then use the billions of euros squirrelled away outside the country to purchase the assets for knock-down drachma prices.

If the crises in Greece and Italy tell us anything, it is that the European Union has tolerated widespread corruption, criminality and malign governance not just in supplicants from eastern Europe but in some of its core western European members. As we Europeans lecture the world on the importance of European values – transparency, good governance and competition – too often we turn a blind eye to Mr Berlusconi’s monopoly on broadcast media, the influence of the Camorra on the politics of Campania and the chronic cronyism of the Greek economy (about which the British and German governments, to name but two, are fully informed).

If anything is to come from the catastrophe facing Europe it is essential these patterns of corruption are broken. Otherwise neither Greece nor Italy will ever be free of the institutional sclerosis that allows these practices to prosper. Before we look lovingly at northern Europe for the answer, let us remember the billions of dollars in bribes of which German companies, like Siemens and Ferrostaal, have been guilty of paying their Greek interlocutors. These were made in order to secure lucrative but overpriced contracts which have been funded by those decent Greeks who earn relatively little but, unlike the country’s super-rich, actually pay their taxes.

For Greece, the big question is whether after Mr Papandreou, the country possesses the requisite political talent and vision both to introduce root-and-branch reforms in order to revive the cankerous institutions of state, and to halt the pillaging of the Greek economy by its wealthiest and most powerful citizens. This is something that the country’s international creditors might wish to ponder, too.

My guess is probably not and that Mr Papandreou’s efforts will come to be regarded as the last real attempt to save the country.

The writer is author of The Balkans: Nationalism, War and the Great Powers. His latest book is Dark Market: Cyberthieves, Cybercops and You

5 comments:

lastgreek said...

While engaged in titanic political struggles at home and abroad, he has been quietly trying to tackle one of the most intractable root causes of the Greek tragedy – crime and corruption.

Pray tell, I had no idea. I am impressed.

Btw, any major covictions? Arrests? Any fines? Anything?

He made clear in a speech to parliament on Friday how deep his concerns are regarding the more dubious activities of some of Greece’s banks.

The first activity that comes to mind is money laundering. But to fair to the Greek banksters, most banks (e.g.: Wachovia) do this sort of criminal activity anyway.

The second activity that comes to mind is bogus loans, but let's not go there :-)

... let us remember the billions of dollars in bribes of which German companies, like Siemens and Ferrostaal, have been guilty of paying their Greek interlocutors. These were made in order to secure lucrative but overpriced contracts ...

How much did a former Greek defence minister allegedly take in kickbacks, 100 million euros? That's 100 million euros less for the Greek military thanks to this bozo.

(Thinking, trying to remember ... Oh yes, the Greek military helicopter that crashed last year. Something to do with no money in the till, so the military had to cut back on maintenance. Two Greek pilots dead as a result ...)

Their aim is clear – they are waiting to pounce on the state assets which, under the various bail-out plans, the Greek government must privatise.

The solution is simple: Pass a law that prohibits the sale of state assets, that is, the Greek nation's assets. Actually, forget about passing a law -- I would put that in the Greek consitution and ... in bold lettering!

I would take it even one step further than just public/state assets. In my opinion, all Greek land should be held in trust for the Greek people. You can "lease" the land, pass the lease on to your children, sell your lease to another Greek, etc., -- but the land belongs to the Greek nation in perpetuity. If anyone doesn't like it, they can move to Londonistan.

Anyway, the G-Pap had his opportunity and blew it big time. If I had to choose between him and Rufus T. Flyer, I'd chose Rufus.

lastgreek said...

Check this video out. It's a "Rock Me Amadeus" parody of who else ... Papandreou.

http://www.youtube.com/watch?v=SkvsplJpH3g

As one guy commented on the video ...

Γελάει ο κόσμος!

Anonymous said...

The European Union has tolerated widespread corruption ??. Of course they have tolerated corruption because they, this stupid impractical union parading as a Union is a product of corrupt, venal and deracinated minds. The problem was never Greece, the problem was the corrupt EU. As for Papandreu, the man was made of mediocre genes, he was an ambling fool at the head of a spent socialist political body not knowing wether they are coming or going and hell bent in transforming the Greek nation into a multicultural cesspool.

Hermes said...

The appropriation of state assets by cashed up unpatriotic Greeks is a serious problem. Does anyone remember what happened in Byzantium after the death of Basil II? However, the answer is not keeping all national assets under government ownership because this will end up costing Greeks much more in inefficient services, bloated payrolls, poor investments, future bail outs and so on. As a first step, the government should finalise its agreement with Switzerland to tax Greek deposits in Swiss banks. The Greek government should also arrange similar deals with other offshore centres. If those wealthy Greeks want to buy Greek state assets then they should be taxed as if they had their deposits in Greek banks - then let's see how much money they have. A second step, is to offer shares in some of these State assets to retail investors. Of course, Greeks do not have the funds at the moment but the government can offer payment in instalments like an instalment warrant. The Australian government was relatively successful in doing this when it privatised state assets. Then, ownership of these state assets will be more widely dispersed amongst the Greek people. Thirdly, a better framework needs to be established that if some of these State assets pass into the hands of wealthy Greeks then there are effective measures to protect consumers and citizens from price hikes, poor corporate governance etc.

John Akritas said...

I agree with you, LG; that Papandreou – who identified himself as an agent of change and spoke as if he knew what was wrong with Greece, cronyism, corruption, clientelism – blew his chance. In this regard, I don't think his intentions were bad – though, anon. is right to remind us, that Papandreou had another agenda too – which was to turn Greece into a multicultural society and, given his weird antics the last ten days or so, it now also seems clear that he's a bit of a fantasist and that this is what motivated him in particular in his opening with the Turks – a naive, almost childlike idealism.

H. I bet you any money the privatisations don't go ahead as you would like; but will be the looting of assets feared. In the UK, which pioneered privatisations, they were done not just to raise money for the state but as part of an ideological drive to persuade the public of the virtues of private enterprise. Shares were also offered to the public at knockdown rates, to get them to (literally) buy into the capitalist ethos, and turn Britain into a 'share owning democracy'.