22.12.09

Party’s over for Greek graspers

The carnival of corruption and waste has brought the country close to ruin

A black mood has settled upon Athens. After the bonanza of European Union development aid and the euphoria of hosting the Olympics, the Greeks are shocked to realise that their gravy train has rolled off the tracks.

Forget about British MPs putting the occasional duck house on expenses. Sumptuous villas have sprouted around Athens on altogether more lavish government spoils. The carnival of corruption and waste has brought Greece close to ruin.

“The party is over,” said a senior official in the former conservative government last week as fears grew that Greece might default on its £270 billion debt and trigger another global financial crisis.

The former official, who now works in the private sector, offered a candid assessment of the Greek malaise on condition that he would not be identified. He slapped a newspaper down on his desk and jabbed at it with his finger. “This is what it is all about,” he said.

On the front page the newspaper reported that the health minister was talking to drug companies about cancelling 8m doses of swine flu vaccine. Her predecessor had ordered 16m doses, considered excessive in a country with a population of 11m. Only 320,000 people have been vaccinated since the campaign began a little more than a month ago.

“It’s a terrible waste of money,” said the former official. “It happens all the time. This is the Greek reality.”

He estimated that hosting the Olympic Games in 2004 cost Greece more than £12 billion, double what it would have been without “money flying this way, that way and often under the table”. Bribes are routinely paid by Athenians to speed up bureaucracy. Tax evasion is also rampant.

As for the new, centre-left government of George Papandreou, the prime minister, who is also the son and grandson of Greek prime ministers, the former official was dismissive. “They’re a bunch of amateurs,” he said. “Not one of them has ever earned a penny in the private sector.”

The previous government — of which he had been a member — was just as incompetent. He confirmed a rumour that Costas Karamanlis, the former prime minister, spent long hours on a PlayStation computer game at home when he might have been attending to matters of state.

No wonder Greece is in so much trouble. It is, however, far from being the only one. Just as things are stabilising from the last financial crisis — and aftershocks such as last month’s announcement that Dubai World, the emirate’s investment vehicle, was delaying debt repayments — experts can feel another quake coming. This time the culprits are the Piigs — Portugal, Italy, Ireland, Greece and Spain, some of the most economically troubled members of the EU.

After Greece’s credit rating was downgraded this month, the government pledged to do anything necessary to save the economy. Investors were unimpressed by the measures announced last week and speculation grew that the country might eventually be forced to go cap in hand to the International Monetary Fund (IMF) or, as seems more likely, the EU.

“The measures being proposed [by Papandreou] are too vague,” said Antonis Samaras, leader of the conservative opposition, “and the more he procrastinates, the more painful it will be in the end.”

There was so much waste and misuse of funds, said Samaras, that Greece could easily “cut fat” without pain. But it is feared that slashing perks such as an extra month’s salary, to which workers are entitled each year by law, could provoke a repeat of the rioting that set central Athens ablaze last year after a schoolboy was shot by the police.

Police have declared a “zero tolerance” approach to riots but attacks on police stations with home-made bombs and the emergence of new anarchist groups with names such as Revolutionary Struggle and Conspiracy of Cells of Fire could presage more violence to come. There are suspicions that 17N, the terrorist group that was said to have been disbanded in 2002 after the trial of several of its members, may still be operating behind the scenes.

Talk of revolutionary groups and an IMF bailout is not the only thing about Greece these days that is evocative of a banana republic. Women were rooting in rubbish bins for food in one area of Athens last week and children were begging in the city centre.

With only a few days to go before Christmas, the shops, restaurants and bars seemed eerily empty in some districts. Many had closed. “It’s like a ghost town compared with before,” said Yannis, a waiter forlornly surveying an expanse of empty tables.

Some of the great sporting complexes built for the Olympics have today been abandoned to weeds. A gypsy camp has sprung up outside one.

For the time being, though, the anger is directed mainly at the credit rating agencies whose decision to downgrade Greece makes its bonds a less safe bet for investors. This means it will be more expensive for the government to borrow funds in future. Under such circumstances, the debt risks ballooning even further out of control.

“The credit rating agencies have a real nerve to be giving us lessons when they didn’t say a single thing about the banks responsible for the financial crisis,” said Agamemnon Koliatsos, an economist, angrily pacing up and down in his office and jiggling his worry beads. “Everyone should be looking at themselves in the mirror. Not just us.”

He believes that Italy, whose debt, according to some calculations, is even higher, is in just as much trouble as Greece.

Others sounded contrite over their country’s mismanagement. Announcing debt reduction measures on Monday, Papandreou called corruption “the heart of the Greek problem”, adding, : “We will change or we will sink.”

A similar clean-up campaign was announced by Karamanlis, the previous prime minister, but this did not stop him from being voted out of office by a landslide 10 weeks ago after a series of corruption scandals in which several of his closest associates were forced to resign.

“People in power,” said Yannis Panaretos, the deputy minister of education in charge of an open government programme, “were abusing it in a way that was beyond any level of acceptability.”

A new, more austere regime will attempt to convince the world that Greece is serious about putting its house in order.

Police are being brought in for the first time to combat the twin scourges of fuel smuggling and tax evasion, which cost the government billions in lost revenue each year.

Private doctors will think twice before demanding payments in cash so that they can claim their incomes are only slightly higher than the rent on their lucrative practices. An independent statistics office will be set up to give more credibility to Greek economic indicators after complaints that the country has hoodwinked the EU over the size of its budget deficit.

Samaras, the opposition leader, has proposed a law that would allow officials to be pursued for corruption for 15 years after leaving government. At present they have immunity once they leave office and few government officials have ever been prosecuted for corruption. That may soon change.

And, sceptics will say, one day pigs will fly.

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