The Government of Incompetence and Scandals
After presiding over the successful 2004 Athens Olympic Games, the New Democracy Government of Kostas Karamanlis seems to have done little else except take its turn at the trough of public finances and provide jobs (often sinecures) for its own supporters. The expensively erected facilities built for the Olympic Games began to deteriorate almost immediately, and continue to do so.
In 2006, it was revealed that the mobile phones of the prime minister and several other members of the government and heads of the armed forces, had been tapped for several months during and after the 2004 Athens Olympic Games. When an enquiry revealled that the phones had been tapped from a small area which included the US embassy, and not much else, the investigation was abruptly closed on the grounds that if it continued the information that would be revealed would be dangerous for Greece's national security. Most people saw this as a mirror of his uncle's deference to the Americans during the trials of the chief criminals of the Dictatorship.
Incredibly, although the worst summer fires in history in 2007 found the government completely unprepared and totally incapable of coping with them, the Greek people later that year reelected Karamanlis and New Democracy.
They started to pay the price in 2008, which turned into a year of further scandals. It opened with a sex and appointments scandal in the Culture Ministry. It was then revealed that Siemens had paid 100 million euro of bribes into offshore Greek bank accounts. Contrversal government bonds were sold to pension funds, making a great profit for party middlemen. Since hard-headed companies like that do not hand out huge sums of money unnecessarily, this raised the likelihood that it was but the tip of a very nasty iceberg which has not yet surfaced. Since it is unlikely that it was the only company forced to behave like this. A video of a vote in Parliament showed a New Democracy ballot counter stuffing paper votes into his pocket. Than it transpired that large areas of state land were grossly undervalued and then sold to the Vatopedi Monastery on Mount Athos, or exchanged for grossly overvalued monastery lands.
This was all made worse by the fact that with a majority of votes the party in power can block any investigation of its own members. Since it is members of the ruling party who have access to power and the taxpayers' money, it is most likely that it is members of the ruling majority who are likely to need to face investigation. In addition, the law on parliamentary immunity places a limitation placed on the prosecution of crimes committed by members of parliament. They have to be prosecuted within two sessions of parliament, and so any is likely to drag on until it is too late to file charges.
In December 2008, the fatal shooting of a 15 year-old teenager in Exarchia by an 'elite' special police guard, known to his colleagues as 'Rambo,' sparked widespread rioting, not only across Athens but throughout Greece. This went beyond the apparent cause, and revealed widespread disgust and contempt for the entire ruling class and the state authority they hid their crimes behind. The widespread tax evasion affecting most classes, suggests that there was an element of 'projection' of guilt in this.
In 2004 Greece was placed under EU oversight with the excessive deficit procedure. With the cooperation of European Commission President Jose Manuel Barroso, that was lifted in 2007, allowing Karamanlis to claim he had cleaned up the economy and to call and win elections in summer 2009.
It subseqently became known that even though the EU authorities were not at that time aware that Greece's statistics concerning its national debt had been manipulated (falsified), and were hopelessly optimstic, they had already warned the government of an impending economic crisis.
George Papandreou and PASOK were elected PM on October 4th 2009 with a landslide majority. This had been anticipated, and in the Zappeon Building on the night of the count, Karamanlis attempted simply to walk away from the financial mess his government had left, and out of public life. He even had to be called back by his party to preside over it, in name at least, until a successor had been chosen.
The situation Papandreou had inherited was desperate. Successive governments, having used the EU as a source of funds to buy votes and put into their own pockets and those of their friends, arrived at a point where they were unable to pay the bills. This had been made much worse by the inactivity and incompetence of the New Democracy government. Then it became apparent that the National Debt was much higher than the false figures the Karamanlis government had issued. The annual deficit would not be the 2% suggested before the election, but 12.7 %.(Later it turned out to be more than that). The nation was effectively bankrupt.
Papandreou seemed slow to recognise the extremity of the situation, and the cost of necessary borrowing began to escalate beyond the country's reach, as speculators gambled on Greece defaulting on its debt. Appealing to Europe, Papandreou found rescue attempts blocked by German Chancellor Angela Merkel, who rightly anticipated helping Greece out of its largely self-inflicted mess to be electorally unpopular in her own country. Only fear of the crisis spreading to Portugal, Ireland, Spain and Italy moved German Chancellor Merkel reluctantly to agree to a rescue package. In a national humiliation, Greece was offered massive loans from the Eurogroup countries and the IMF in return for drastic economies ands structural reforms.
The Battle for Recovery
The government was forced to pick its way between social unrest and national bankruptcy. Successive waves of austerity measures vastly reduced the wages and seasonal bonuses of civil servants and pensioners, and raised the retirement age and consumer taxes. There was a ban on hiring for the civil service, with thousands of temporary appointments made by the previous government before the election, to buy the loyalty, or to reward the loyalty, of its supporters were laid off. The government also promised to liberalise the transport and energy markets and to simplify the bureaucratic procedures necessary for setting up a business.
There was a general feeling that companies should also be made to pay, since many evaded taxes and social security payments. It was felt that the people who put Greece in deficit should be punished. The trouble was that so many groups were involved, from the corrupt politicians and their contractor friends; the corrupt tax officials and other civil servants, surgeons, etc. who demanded bribes; the professionals (doctors, lawyers, etc.) and artisans (plumbers, electricians, etc.) who avoided taxes by failing to give receipts, and groups such as taxi drivers who enjoyed irrationally advantageous tax terms.
A general strike was called for 5th May. Two women and a man were killed in the Marfin Bank on Stadiou after rioters deliberately set their building alight. These innocent deaths of employees in a vulnerable branch refused permission to leave during the demonstration, shocked the nation.
In 2011 the crisis returned, since Greece had proved unable to reduce its debt and needed more support. As required by the IMF and ECB, the government had sought to raise money to reduce the debt, but had done so by raising taxes on wage earners and pensioners and lowering public sector wages. This dramatically depressed the economy and lowered the government's income from taxes, making the situation worse. The very wealthy moved their fortunes into foreign banks, and the government entirely failed either to tax those who had systematically evaded tax, or to tackle corruption. Nor had they begun the process of making necessary structural changes, since these run against the interests of the powerful and privileged public sector unions on whose support PASOK's support was built. Meanwhile the main opposition party, true to form, merely sought to gain electoral advantage out of the mess it had played such a large part in creating.
The government's response to increased pressure was more of the same: by raising taxes on wage earners and pensioners and lowering public sector wages. Promises of systemic reform, such as cutting through the bureaucracy which stifled small businesses, and tackling corruption, remained promises. Although details of large-scale corruption by leading politicians and big businessmen were common knowledge, none had gone to prison, or even to court. While the bloated, inefficient and corrupt public sector required immediate action, this repeated attempt to make wage earners and pensioners pay for the corruption of the political and big business classes provoked a reaction in the form of huge, leaderless, peaceful demonstrations of the "Indignant" on the Spanish model chanting "Thieves" outside Parliament, and popular fury against individual politicians appearing in public places.
© John L. Tomkinson