Monday, 19 December 2011

Portrait of a philhellene

The following interview with Christopher Hitchens is being republished on the occasion of his death on December 15. It was originally published in the Athens News in May 2009, when Hitchens was in Athens to visit the grave of his mother, Yvonne Jean, who is buried in the first cemetery. 

Christopher Hitchens was in Athens earlier this month to celebrate a death. 

A long-time supporter of the British Committee for the Reunification of the Parthenon Marbles, he believes that the group has now obliterated the British Museum’s arguments for holding onto them. 

 “The last argument the British Museum had was that ‘The Greeks have nowhere to put it’,” he said on the eve of a visit to the new Acropolis Museum.  “I’ve come here to celebrate the death of the last argument.” His celebration is due to appear in Vanity Fair.

The Parthenon Marbles - or Elgin Marbles - have been controversial since the 7th Earl of Elgin stretched the terms of an 1802 firman from the sultan and removed to his native Scotland dozens of panels of frieze and metope. He sold them to the British state in 1816 and they became part of the British Museum collection in 1817.

The British Museum has resisted returning the sculptures on the grounds that Greece could, on the strength of that victory, ask for the return of other things. The frieze from the temple of Apollo at Bassai also sits in Bloomsbury. So does a number of exquisitely painted vases. Why shouldn’t the Greeks ask for everything back?

Wednesday, 16 November 2011

Papademos Receives Vote of Confidence But Disagreements Fester Inside Frail Coalition

The government of Loukas Papademos received a vote of confidence in parliament today. 255 MPs voted in favour, 38 against. Three deputies from the coalition broke with party discipline to vote against. Conservative Panos Kammenos was expelled from New Deomcracy, making him the second MP to suffer that fate in two days after Sotiris Hatzigakis. Pasok did not move to discipline Panayotis Kourouplis and Christos Katsouras.

Papademos already faces problems in releasing the 8bn euro instalment of the bailout. He asked the leaders of the three parties in his coalition to sign a letter saying they stand by the terms of the IMF and eurozone-sponsored bailout.

But the leader of the conservative New Democracy party – Antonis Samaras - is refusing to sign. Samaras’ signature is important for 2 reasons: Greece’s European creditors want his signature, because he has was in opposition to many of the country's austerity measures, saying they have made Greece’s recession worse and put people out of work. And Polls suggest he is set to become the next prime minister after elections that could take place as early as February.

Tuesday, 15 November 2011

The Conservative Conundrum

Conservative New Democracy leader Antonis Samaras insists that he won't sign a letter binding him to the terms of an October 26 bailout agreed in Brussels. Without that letter, says Commissioner Olli Rehn, Greece's next instalment of 8bn euro will not be released; and without that, Greece will have difficulty meeting payroll beyond December 15. So is Samaras going to be responsible for Greece going into disorderly default?

Newly installed Prime Minister Loukas Papademos put the ball very much in Samaras' court during his first parliamentary address yesterday, when he declared that Greece's written consent was the last remaining obstacle to receiving the money.

Samaras' position is understandable from a certain point of view. He expects to be elected to lead the country in February or March, or at least to the position of top party in parliament by number of seats. A recent poll by Public Issue published in Sunday's Kathimerini gives him anything between 121 and 132 seats - not enough to form a government on his own, but far above the maximum of 61seats it gives Pasok. When the next coalition talks happen, it will be Samaras and not Papandreou who will be in the driver's seat.

Samaras knows that he cannot hope for voter approval if he is the cause of a default. It is to be expected, therefore, that some kind of compromise will be reached. Samaras will have to agree to sign some bit of paper, and will publicly fuss over its precise wording. New Democracy must not appear to block the 6th instalment, nor to compromise its room for manoeuvre before it is elected.

Thursday, 10 November 2011

The Bill for Incompetence Has Arrived

Having lost financial credibility and then political credibility to pull itself out of its sovereign debt mess, Greece has now lost credibility even in the media. No one seems to be sure if or when a new government will be announced.

Prime Minister George Papandreou has brought this upon himself and the country. New Democracy committed itself to talks resulting in a national unity government last Sunday. Papandreou has the parliamentary majority and constitutional prerogative of naming the next premier. Instead of leading talks, he allowed himself to be dragged through four days of postponements. He has now bid farewell three times: in a speech to parliament last Friday, in a cabinet speech last Tuesday, and in a national address last night. Such prolonged death scenes do occur in the opera, but without the notes they lower the dignity of the reluctantly departed.

The plot of this particular musical theatre suits it more to the genre of operatic farce, with suitors and jealous ministers hiding in closets and passing notes. The media, like the public, have been played like a sounding board, broadcasting the names of jumped-up hopefuls or of personalities who had no idea they were up for the job. Finance Minister Evangelos Venizelos circulated his name, and is said to have secretly approached opposition parties in a parallel negotiation to the prime minister's. Someone at Pasok party headquarters told Reuters it would be Vasilis Skouris, the Greek head of the European Court of Justice. Apparently he never received a phone call. Greek media outlets aligned with New Democracy claimed with certainty that it would be former Euro-MP Ioannis Koukiadis, a friend of conservative leader Antonis Samaras.

Wednesday, 9 November 2011

Greece Still Without Interim Government After Papandreou Farewell

The naming of an interim Greek government was postponed for a fourth time on Wednesday night, as Prime Minister George Papandreou and conservative opposition leader Antonis Samaras left the presidential office without an announcement. Greek media were reporting on Wednesday evening that Parliament Speaker Philippos Petsalnikos had been named to lead Greece's interim government, causing uproar in the socialist party. Talks had been ongoing throughout the day for a fourth day between the two parties.

Earlier the embattled Papandreou stepped down after leading his country through the crisis for two difficult years. The interim government that is to ratify a second bailout the country badly needs and then take the country to an election next year was supposed to be announced an hour later.

George Papandreou bid Greeks an emotional farewell after four days of gruelling negotiations with opposition conservatives on the makeup of the interim government that will succeed his. He called the new government an end to the acrimony of the past months, and said it would represent Greek solidarity to the outside world. Its aims are clear, Papandreou said – to unblock the next instalment of an existing bailout package and ratify a second, 100bn euro bailout. Without the money Greece will default in a matter of weeks. He also called on the new administration to continue structural reforms to turn the economy from austerity to development, and reverse four years of recession.
At 6pm local time, Papandreou delievered the following address:
"Today we are doing what is nationally necessary and understood. The political forces are putting their support behind the country’s next political steps. This is necessary for the country to emerge from a crisis born of the mistakes of the past and an international crisis.

Tuesday, 8 November 2011

Loukas Papademos Candidacy On The Ascendant

Former Bank of Greece Governor Loukas Papademos is again today considered the favourite for prime minister in discussions among Greece's political leaders. His candidacy was said eysterday to have waned in favour of Nikiforos Diamantouros, the highly regarded head of Greece's Ombudsman for a decade.

A banking source told The New Athenian that Papdemos had raised the bar on negotiations between Prime Minister George Papandreou and opposition leader Antonis Samaras by placing strict conditions on the table. Among them is a stipulation to hold elections no sooner than May, allowing the interim government time to ratify the October 27 bailout offer from Brussels, implement reforms and cement a new relationship with the Eurogroup and financial system. The banking source also said Papademos was keen on appointing Vasilis Rapanos, head of the National Bank of Greece, as finance minister in place of Evangelos Venizelos.

The coalition is designed to unite ruling socialists and opposition conservatives, whose bickering over the past months has brought the government to its knees. Conservative leader Antonis Samaras has completely abandoned his anti-austerity stance and adopted the government position that ratification of the latest bailout deal from Europe is “inevitable”. 

Earlier today the prime minister thanked the cabinet for what he called historic reforms decades overdue, and collected their resignations. 

Sunday, 6 November 2011

Pasok, New Democracy To Announce Interim Government

Greece was poised on Tuesday to announce an interim government and end a crisis of confidence that threatens to derail a 100bn euro bailout agreement crucial to the eurozone's survival. The country's political leaders had said they would make the announcement on Monday, but talks dragged into a third day amid disagreements over who would lead the government.

Socialist prime minister George Papandreou and conservative opposition leader Antonis Samaras met for almost 90 minutes under the auspices of the country's president. A commuinique issued after they broke off negotiations for the night said they would name the caretaker prime minister and cabinet the following day. The new government's agenda would be the ratification of a 100bn euro bailout for Greece which the eurozone approved last week, and the implementation of an austerity programme attached to that bailout. It would then take the country "immediately" to a new general election, the communique said.

Friday, 4 November 2011

Papandreou Looks for Scarce Friends After Vote of Confidence

Greek Prime Minister George Papandreou was scheduled to see the country's president today, to discuss the formation of a coalition government that would ratify the Greece's second bailout package.

The coalition talks were the promise Papandreou gave MPs in asking parliament on Friday night for a vote of confidence, saying that he would be willing to lay down his premiership if that brought closer the prospect of a coalition government the following day.He received 153 votes, all from socialist MPs.

Papandreou expressed all other political initiatives - approving the second bailout; unblocking the sixth instalment from the first bailout; forming a coalition government with conservative New Democracy; and holding a general election - as dependent on his government's survival.

Thursday, 3 November 2011

Challenge from Finance Minister Could Topple Greek Government Tomorrow

Greek Prime Minister George Papandreou is fighting for his political life after his finance minister and two other ministers withdrew their support for a referendum on the latest European bailout plan announced on October 26. Papandreou has lost a critical mass of support from his parliamentary bloc that make a vote of confidence tomorrow tantamount to suicide. His preference for a referendum also seems doomed because ministers and MPs have distanced themselves from the proposal as too risky.

The demise began late last night when Deputy Prime Minister and Finance Minister Evangelos Venizelos openly challenged the prime minister’s insistence on a referendum, which would let the people decide whether Greece should accept Europe’s latest bailout plan for Greece. This just hours after Prime Minister George Papandreou met with the French and German leaders in Cannes, and secured their reluctant agreement to the referendum. But the eurozone’s leaders suspended Greece's sixth instalment of 8bn euro under the existing bailout, and said, the referendum has to be on whether Greece wants to remain within the euro. That is exactly what Greece's opposition parties and many ruling party MPs don't want to risk, because it could signal a Greek return to the drachma. In a gruelling cabinet meeting that started on Tuesday and ended on Wednesday, Papandreou had been convinced not to frame the referendum as a question of remaining within the euro.

Venizelos said Greece’s membership of the euro should not be risked on the outcome of a referendum. That makes him the only cabinet member to disagree with the initiative, which ends the consensus reached in the small hours of Wednesday after a gruelling cabinet meeting, and could split the party ahead of tomorrow's vote of confidence. It also makes him the fourth socialist member of parliament to dispute the referendum, putting the party's mathematical majority in the red by two votes.

Venizelos is thus setting the stage for a succession, either immediately or after the vote of confidence if it fails. If he feels he has the support of the party's 151 remaining MPs (after two declarations of independence since Tuesday) and a handful of independents, he could oust Papandreou through a parliamentary procedure similar to that seen in January 1996, which replaced the ailing Andreas Papandreou, George's father. Otherwise Pasok could go to a messier vote among its party base, like the vote that allowed George Papandreou to prevail over Venizelos in November 2007.

There were unconfirmed reports earlier today that Papandreou was on his way to ask the president, Karolos Papoulias, to help form a government of national unity that would include the ruling socialists. An emergency cabinet meeting was ongoing on Thursday in parliament.

In Cannes Papandreou was prevailed upon to move up the date of the referendum to December 4. Originally it had been scheduled for January. "I believed it important that the Greek people have the chance to declare themselves on the [European] Council's decisions of October 26. It is their democratic right. And I believe the Greek people to be mature and wise... It isn't just about a progrmame. It's about whether or not we want to remain within the eurozone," he told reporters. Asked what he would do if the government lost the referendum, he said "The answer will be yes."

The language among the eurozone's leaders is reflecting the growing realisation that Greece could default and exit the euro, whereas the topic was taboo only a week ago. “We would like Greece to remain a member but we’re not saying Greece has to stay a member at all costs,” Eurogroup President Jean-Claude Juncker told Bloomberg. "The referendum will revolve around nothing less than the question: does Greece want to stay in the euro, yes or no?" asked German Chancellor Angela Merkel after meeting Papandreou in Cannes yesterday.

Full text of Finance Minister Evangelos Venizelos' statement:

"Greece's place within the euro is a historic achievement that cannot be put in doubt. This conquest of the Greek people cannot depend on the outcome of a referendum.

"The country has to feel safe and stable, and that is the first prerequisite for it to be safe and stable. Greek banks are entirely guaranteed as an integral part of the European banking system. That much was clear last night in Cannes.

"What is foremost is the disbursement of the sixth instalment [of the first bailout loan] as agreed by the Eurogroup on October 26, after a ten hour battle.

"The next step is the activation before the end of the month of the new support programme [bailout], which gives Greece another 130 billion euro and leads to a reduction of our public debt by about 100 billion euro. The completion of these procedures is a national imperative.

"I left hospital and went to Cannes because I consider that it was a matter of duty to the country. With the first hand view of the situation in Europe and internationally, I am obliged to tell the Greek people the full and simple truth: If we want to protect the country, we must, under conditions of national unity and political sobriety and consensus implement without delay the decision of the 26th of October. Now, as quickly as possible.

"Towards this end, the government's initiatives and the initiatives of the [socialist party's] parliamentary bloc of deputies are insufficient. Everything that is being said and done on a Europen and international level is equally pertinent to the opposition, particularly the main [conservative] opposition, which is the recipient of the message from Cannes. Its stance, were it a positive one, would act as a guarantee for the country's international credibility, but being negative hurts that credibility at an enormous cost to the Greek citizen.

"What is at stake is not the political dynamics at home or the future of particular individuals or parties, but the salvation and resitution of the country through the only feasible process, which is enshrined in the October 26 decision."

Other Developments

Socialist MP Eva Kaili, who asked Papandreou to form a government of national unity earlier this week announced today that she is not going to support the government in a vote of confidence tomorrow nor resign her seat, and effectively declared herself independent.

Wednesday, 2 November 2011

The Greek Political Crisis on PBS

On Tuesday, The New Athenian talked with PBS's Jeffrey Brown about the reasons behind Prime Minister George Papandreou's declaration of a referendum.


JEFFREY BROWN: A short time ago, I spoke with John Psaropoulos in Athens. He's a freelance reporter and writes the blog called The New Athenian.
John, welcome.

We said this was a surprise. Apparently it was even a surprise to people in the prime minister's cabinet and party. So what's known about why he suddenly decided to call for a referendum on the plan?
JOHN PSAROPOULOS, freelance reporter: At the moment, the prime minister hasn't explained his thinking, other than what he said in Parliament to his M.P.s yesterday, which was that the country had to move for on a democratic basis, it had to have hope for a better day after the austerity period was done, and that in order to achieve this he wanted his government to have the authority of a popular vote of approval for what was going to be the last phase, I presume, of the austerity measures that have been so painful up until this point.

Tuesday, 1 November 2011

Greek Government Tottering

Greek Prime Minister George Papandreou's days and even hours appeared to be numbered after a mutiny within his bloc of parliamentary deputies.

The ruling socialists were left with a majority of 2 MPs after the resignation on Tuesday of Milena Apostolaki from Pasok, calling the prime minister's idea of holding a referendum on a new, 100bn euro bailout package approved in Brussels last week "deeply divisive". She is holding onto her seat as an independent. Another two socialist MPs, Vaso Papandreou and Eva Kaili, have asked for a national unity government.

Eva Kaili also asked the PM to step down. Vaso Papandreou declared that "the country is threatened with imminent bankruptcy. I call upon the President of the Republic to call a meeting of party leaders with the object of forming a government of national salvation that would secure the aid package agreed on October 27, and then immediately take the government to national elections."

Thursday, 20 October 2011

PBS Interview

PBS's Judy Woodruff chatted with The New Athenian about yesterday's protests in Athens and the controversial bill that carries into law thousands of public sector layoffs and wage cuts.

JUDY WOODRUFF: For a closer look at the situation in Greece, we check in again with John Psaropoulos, a freelance reporter based in Athens.
John, obviously, there have been demonstrations before. What was different about what happened today?

JOHN PSAROPOULOS, freelance reporter: Well, today, you had a very, very large number of people. Definitely, the crowd was in the tens of thousands.
You also had some very young people there, people in the high school ages, because schools were on strike. But you also had, of course, mature workers, from people in their 20s all the way up to people close to retirement. It's a very broad, representative swathe of society.
What perhaps made it qualitatively different is that, now that the country is in such desperate shape for its sixth installment of this bailout plan, people really feel that it's a make-or-break moment for Greece. And with every new austerity bill, this dance of demonstrations, sometimes violent demonstrations, timed to coincide with parliamentary debates has happened, but now people feel that everything really is at stake.
And that's reflective in the debate inside Parliament as well.

Friday, 14 October 2011

New Weapons Against Tax Evaders

Finance Minister Evangelos Venizelos today told parliament that tax evasion is a national crime now amounting to 42 billion euros in lost income to the state. He has in the past admitted that the figure contains a great deal of uncollectable debt from defunct firms.

Venizelos also revealed that the government has assembled a new task force to audit the thousand biggest companies by turnover, and is retaining private sector services to help it track down large individual tax evaders. While he appealed to the patriotism of the Greeks in honestly declaring their income, Venizelos also made clear that the government is bringing to bear new weapons to home in on large tax evaders. It recently declassified banking transactions, and the minister today revealed some of the findings of that declassification for 2009 income.

Roughly 180,000 people remitted 5.4 billion euro overseas, Venizelos said. Of those, 8,667 individuals were responsible for remitting 4.9 billion. From among these, 3,718 declared an income of less than 20,000 euro for the year.  He said the government would have remittances data from 2010 and 2011 within days.

The details were revealed during an exchange with Fotis Kouvelis, leader of the Democratic Left Party, who called on the government to crack down on nearly 10 billion euros in corporate tax evasion. Kouvelis implied that the government is reluctant to undertake the political cost of allowing its Financial Crimes Unit do its job of auditing individuals and companies.

Monday, 10 October 2011

The public payroll figures

The Lancet published a report today detailing a sharp rise in suicides, HIV infections and drug abuse as a result of the economic crisis in Greece. The report cites unofficial data indicating a 25 percent rise in suicides in 2010 over the previous year, and a 40 percent rise in the first half of 2011. It also estimates that HIV infections will rise by 50 percent this year.

The report prompted concern about whether Greece's truly universal healthcare system can cope with the rise in poor psychological and physical health. Doctors have reported that outpatient clinics are receiving more visitors as people try to avoid private consultations, which typically cost 40-80 euro. And  anecdotal evidence suggests that clinics are losing some of their more highly specialised doctors who are mobile enough to find more lucrative employment overseas; even public hospital doctors rely on their private practice to supplement income.

The nursing staff union says it has shed about 6,500 people in 2010 and thus far in 2011, representing about 10 percent of nursing staff. As difficult as this is for the public healthcare system to absorb, where there is always high demand for nursing services, the cuts are proportionally lower than they are in the rest of the public sector.

Wednesday, 28 September 2011

Greek polls punish both Pasok and ND

Finance Minister Evangelos Venizelos assured the Greek and international media yesterday that Greece's bailout and agreed programme of reforms would proceed according to schedule. “If we fail,” Venizelos said, “the country will suffer a setback equivalent to a great military defeat. It will take us back decades.”

Later the same day parliament voted through a new property tax that will add hundreds of euros to household power bills this year, and attempt to raise 1.7bn euro. In imposing wave upon wave of severe austerity measures for the past 18 months, the government is partly playing on Greek fears. In a Public Issue poll published last Sunday by Kathimerini, two thirds of Greeks were against returning to the drachma and 60 percent feared that default is possible.

But that is where the good news ends for the ruling socialists. The polls are generally not favourable to the government or the political elite in general. The same survey found that Prime Minister George Papandreou enjoys a 17 percent approval rating, and his opponent, conservative New Democracy chief Antonis Samaras, a mere 26 percent. Papandreou is shouldering unpopular reforms; but why have Samaras' figures been stubbornly stuck in the low 20s since he came to his party's leadership in December 2009? His unaffordable economic programme, his divisive stance over the midterm reform programme last June and his insistence earlier this month on protracted elections until he wins an outright parliamentary majority ought to be prime suspects.

It gets worse for the PM in a Rass poll for Proto Thema, also published last Sunday, where 29 percent of Pasok voters would back his finance minister for party leader, versus 12 percent still in favour of him. It is a shameful showing for Papandreou, who four years ago trounced Venizelos for the party leadership, claiming 56 percent of the party base versus Venizelos' 38 percent.

As they now stand, voter intentions would neither return Pasok nor install New Democracy in autonomous parliamentary power. An ALCO poll published in Proto Thema and a Pulse poll for Eleftheros Typos both gave Pasok 15 percent and New Democracy 21 percent. A GPO poll aired on Mega channel the next day gave similar results. It is a far cry from their election performances of 43.92 percent and 33.48 percent respectively in October 2009. Of course between 20 percent and 30 percent of the vote remains undecided in those polls, but it should come as a concern that the as yet unelected Greens, and the newly formed Democratic Left and Democratic Alliance, all appear close to entering parliament. That would suggest a chamber possibly fragmented between eight factions. Since polls show the smaller parties currently in parliament (Communist Party, Left Coalition and Laos) clinging to their present majorities, new entrants would eat into the roughly 80 percent piece of the electoral pie usually contested by socialists and conservatives.

But a coalition government is not the worst case scenario for Greece. The mere declaration of elections could be ruinous. The prospect of a caretaker government for the mandatory month-long campaign period, followed by a minimum of one month for the new government to begin legislating, would probably be enough for the markets to declare Greece bankrupt.

That is why Deputy Prime Minister Theodore Pangalos appeared on television this morning to massage public opinion in the wake of the passage of the property tax. He declared that "We have surpassed, for some time now, the ability of the taxpayer to bear new burdens. And I think the emphasis now should be on cost cuts." Pangalos declared that he himself now owes over 17,000 euros in property tax, and will have to sell a property in order to meet the obligation. "What if you can't sell one in this market?" the presenters asked. "Then Mr. Venizelos will have to throw me in jail," came the reply. The presenters laughed, but Pangalos wasn't smiling.

Tuesday, 27 September 2011

Interview with PBS

The New Athenian was on PBS yesterday, discussing the reality as hitherto announced austerity measures begin to take effect and people continue to fear default. Parliament is due to vote today on the property tax announced on September 11. The government also faces a series of privatisations in coming weeks including lucrative state monopolies and prime real estate.

Thursday, 22 September 2011

The Stubborn Greek Leviathan

Greek Prime Minister George Papandreou has faced a dilemma these past two years - whether to squeeze more money out of the pockets of the struggling middle class, or alienate political allies by cutting state sector jobs. Over the last ten days he has done both under pressure from creditors, in a bid to raise or save a total of 8bn euros this year (See sidebar at the end of this post). The fact that the projected revenue shortfall for 2011 is a quarter of that sum shows how little credibility we enjoy.

Greece's creditors may demand cost cuts in government rather than squeezing more from taxpayers, but those trigger sedition in the ruling Pasok party's union power base. That is the reason successive governments have not pruned but fertilised the state payroll, which stood at over a million of Greece's 4.5 million-strong workforce when Pasok came to power in 2009. (Cabinet member Ilias Mosialos recently told a Sunday newspaper that 200,000 have since gone off payroll but cited no source for the figure).

The bankruptcy scenario thus still hangs over Greece. Fitch's said today that it expects a Greek default within the euro. It was the latest in a crescendo of voices from economists and financiers calling what they see as the inevitable. Some also see it as the beginning of the end of the euro.

Monday, 19 September 2011

Crisis Chronology


June 15: The government nearly falls after protests in Syntagma square and a tumultuous debate in Greek parliament, a mid-term package of austerity measures and reforms worth 28bn over five years. George Papandreou speaks to Antonis Samaras over the phone (!) but they fail to agree on a grand coalition. Papandreou reputedly offers to quite the premiership but recalls the offer after outrage from his senior party officials.

June 16: Two Pasok deputies resign, temporarily reducing the socialist majority in parliament to 154.

June 17: After a reshuffle Finance Minister George Papakonstantinou is replaced by Evangelos Venizelos.

Monday, 22 August 2011

Greek banks face new challenge

The Financial Times explains why even as they face a potentially ruinous liquidity shortage, Greek banks have pooled 50 million euro to save Proton Bank from collapse. Proton faces imminent danger following the revelation that its main shareholder, pharmaceutical operator Lavrentis Lavrentiadis, is under investigation for using it as a slush fund. The last thing honestly run Greek banks need is a public perception that, in addition to their overexposure to Greek debt, they are run nepotistically. According to the FT, as much as a third of Proton's 850 million euro loan portfolio was given to Lavrentiadis' subsidiaries.

Greek daily To Vima broke the story of the investigation by the Greek prosecutor and money laundering authority on August 7.

Friday, 1 July 2011

Back to the Stockades

The debate in Greek parliament this week on a 78bn euro austerity and privatisation package marked a return to the stockades parties dug themselves into a week ago, when the ruling socialists asked for a vote of confidence. Gone was the consensual rhetoric from Prime Minister George Papandreou, who made a highly partisan, almost pre-electoral speech on the evening of June 27. He squarely accused the opposition conservatives of lacking the responsibility and patriotism to back the government's plan. Conservative Leader Antonis Samaras responded by accusing the government of asking him to make up for its pusillanimous performance in negotiating with Greece's creditors.

Even as the parties hardened their positions and abandoned the more genuine exchange of views we had seen ahead of the confidence vote on June 21, they lost control over two of their MPs. Socialist Pasok's Yiorgos Kouroumplis defected to vote against the austerity plan, and conservative New Democracy's Elsa Papadimitriou defected to vote yes. Kouroumplis was stricken from party rosters, while Papadimitriou is now an independent. In the event the plan passed with 155 in favour, 138 against and 5 abstentions. The framework implementation law passed with a similar majority the following day.

Perhaps the partisanship that has helped preserve the appearance of democracy has now become as unpopular in the legislature as it has long been on the street. Traditionally it helps define party ideology, but Greece is now beyond the traditional ideological alternatives that define right from left. It faces existential decisions.

The browbeating Samaras received from European Popular Party leaders last week and the confidence and unity of the socialist pro-memorandum position seem to have had an effect. Samaras conceded that his party was not in principle against the cost-cutting and privatisation measures of the austerity plan, but only against the new taxes. And here is the nub of controversy. The plan dictates 4bn in cost cuts this year and 3bn in revenues from new taxes. Most publicised among them are a "solidarity levy" (read income tax hike) of up to three percentage points for five years; a new tax on the self-employed, who are notorious tax evaders; and a lowering of untaxable income from 12,000 euro to 8,000 euro.

Finance Minister Evangelos Venizelos warned his parliamentary peers not to read too much into these. "Only 43 percent of tax declarations are taxed," he explained. He justified the hikes as a means to get more Greeks to contribute meaningfully. "Two million families aren't affected by the change in taxable income threshold... while the solidarity levy won't affect three million families," out of the 5.46 million families that declare taxes, Venizelos said. "It is vitally necessary for us to become re-acquainted and reorganised as a society, as a state and as a nation through the National Tax System."

Much more biting to taxpayers, however, will be the consumer taxes that are inescapable to rich and poor alike, such as a VAT hike from 13% to 23% on retaurants; and a new rise in petrol and road tax. New Democracy's argument that such revenue measures are squeezing the pips out of a dying economy are not unfounded. Greece's GDP shrank by 4.5% last year, 4% the year before and is expected to shrink by at least 3.8% in 2011. Falling revenues are to be expected, and the more the state taxes people the faster it deepens the recession. It is for this reason that markets don't think Greece's debt is serviceable even if the country reaches primary surplus, meaning that default is only a matter of time.

The only significant argument against default is a 50bn euro privatisation plan. In theory, Greece would pay down a significant chunk of its roughly 370bn debt, lowering interest payments and lightening its load. According to a Financial Times report, however, only 13bn assets are sale-ready, while some selloffs are going to be held up by unions and disagreement within the ranks of the socialist party. In a recent interview, Yannis Stournaras, head of the Institute for Economic and Industrial Research, suggested that the national holding company of saleable property might, in addition to selling, act as collateral for borrowing. Greece might then successfully enter the markets.

Economists have previously proposed solutions like a eurobond (Yannis Varoufakis) or a haircut to creditors that amounts to the discount markets already charge on the face value of Greek bonds. But France and Germany staunchly refused Europeanising the EU periphery's debt when George Papandreou proposed it earlier this year; and markets have told the European Central Bank that any haircut will be deemed a default, and the Greek bond would instantly tumble. The ECB has warned Greece that if it proceeds to any unilateral default of this type, it will cease to accept Greek bonds as collateral. Since the ECB is currently the only provider of liquidity to Greek banks, they would collapse.

So default now seems like a question of how and when, rather than if. The greater problem is that in addition to its economic instability, Greece is now politically volatile as well. For the past decade, the average lifespan of governments has fallen from the standard 48 months to under 20. The premature elections and reshuffles that have marked this period have come mostly as a result of failed attempts at reform.

Still, Greece's fault is not in its numbers but its leadership. Almost none of the country's political leaders have had a career in the private sector, and one suspects that they have no idea what it is capable of. Thus the battle between a statist ideology among politicians and a struggling private sector. Thus, also, the earmarking of the bulk of the 24bn euros in European Union subsidies Greece won in the 2007-23 period for public enterprises and the government. Notwithstanding adverse demographics, which mean a workforce of just 4.5 million people in a total population of 11 million, Greece could, given the unshackling effect of political courage and vision, achieve a revolution in competitiveness. It is precisely that political courage and vision, more than money, that have been missing over the past two decades.

Wednesday, 22 June 2011

The Day Greece Stood Still

Standing up is a gesture of pride, of hope and of defiance. The popular movement that stood outside parliament last Wednesday, June 15, defying the government to put away its 28bn euro austerity package, stirred a number of ruling party MPs to stand up to their government and refuse to vote the package into law. The result was that that government momentarily faltered, and nearly toppled. Prime Minister George Papandreou offered his resignation to conservative opposition leader Antonis Samaras in return for a grand coalition, only to retract it, we are told by Samaras, following outrage from his party seniors.

There followed the thriller of the reshuffle the following day, disappointing in its failure to include not only the conservative opposition, but also independent politicians with broad authority such as Dora Bakoyannis and Fotis Kouvelis. Even though this reshuffle was largely a game of musical chairs, keeping power strictly within Pasok, it did bring two important changes. In came Evangelos Venizelos, a politician with the broad appeal in the party base that Yiorgos Papakonstantinou lacked, and out went ministers who were quietly (Tina Birbili-Environment and energy) or vocally (Louka Katseli-Employment and Social Security) resisting public sector reform.

The vote of confidence in the small hours of June 22 represented a psychological turnaround for the government. Until now it had been isolated as the only party supporting the terms of the May 2010 memorandum with Greece's troika of creditors, the ECB, EU and IMF. After a highly polarised parliamentary debate that stretched the limits of polite confrontation, it is the opposition that has begun to appear isolated in its refusal to join the government in a national coalition. Papandreou cunningly left the invitation open, forcing Samaras to shut the door on him again and again. Each time he did it he sounded less reasonable than before, because his mantra, "Consent to what? The mistake of the memorandum?", increasingly came off as partisan.

Samaras' strident anti-memorandum position is a result of European politics, not Greek. The government began to unravel as its reform programme faltered on internal party opposition in January. That brought it into open conflict with the troika the following month, whose officials held a press conference in Athens to announce a 50bn euro programme of privatisations the government had agreed to but was wary of announcing. Yiorgos Papakonstantinou furiously declared that the troika would not be allowed to hold a press conference in Greece again, but the damage was done. For weeks Greek media debated on whether it was possible to sell so many state assets in such a short period without heavily discounting them. Unsurprisingly, unionists rallied to preserve the public nature of their enterprises; more alarmingly, Greeks began to turn against the memorandum that is keeping Greece solvent as a tool of neo-colonialism and a Trojan horse for ruthless investors holding out for bargain-basement prices.

It was at this point that Samaras' anti-memorandum platform really fired up. Samaras saw an opportunity to present a unilateralist alternative of hope, and said he would renegotiate the memorandum. His strategy is high-risk one. It banks on the assumption that the eurozone is more desperate to save Greece than Greece is to save itself, because default will bring down banks in France and Germany, not to mention the ECB, which holds about 45bn euros in Greek debt. But as Papandreou pointed out in parliament, Greece's mammoth nuisance value would hurt both Greece and the eurozone. Indeed it did. As the debate became more polarised in recent months and Samaras saw the potential for party gains, Greeks withdrew their euros from banks with increasing speed, forcing them to recapitalise. The euro fell to new lows against the dollar in May. A creeping panic sparked conversations and newspaper columns about a Greek default and departure from the euro. The more it was denied, the more it was discussed.

But in the parliamentary debate leading up to the vote of confidence, George Papandreou at last began to act like the leader of his own parliamentary majority and the country. He remembered that it was part of his job description to give people hope as well as instructions. He shamed Samaras even while inviting him to joint government: “In a time of crisis you made a choice that forces you into the same camp as those who are betting on Greece’s failure,”  he told him.

Papandreou also addressed directly the alternative economic plan Samaras has put forward. It suggests that new growth can be self-financed through liberalisation, striking where the government's plan is weakest. Unfortunately, it goes too far in a populist direction, opining that Greece can develop its way out of the crisis without continuing down the road of cost cutting as well. And it betrays itself by targeting large voting blocs. It promises owners of illegal homes that 70 percent of them will be legalised; it promises low-earning retirees that cuts to their pensions will be restored; it promises civil servants that none of them will be fired, only shed through attrition, a proven loophole historically; it promises businesses a flat tax of 15%, down from 25% today; and it promises small and medium-sized enterprises, the backbone of the economy, that the state will pay off its debts to them overnight with a 5bn euro bond issue.

"No one agrees with your economic plan," Papandreou told Samaras, "because it blows sky high our main goal of reaching primary surplus in 2012. All our partners in the EU have rejected it... not because it’s you saying it, but simply because it leads all too quickly to bankruptcy."
Also nailing the coffin of the alternative plan was new Finance Minister Evangelos Venizelos. "I wonder," he said, "whether the opposition would have voted against the memorandum a year ago if the government had then asked for bipartisan support. Would New Democracy then have let the country go bakrupt?" Venizelos had cleverly supported at the time that the government should have sought the support of the opposition in a two-thirds majority. Such a move would have pre-empted much of the populism of Samaras that followed.
Also making the opposition look bad was the stalking out of most conservative deputies, after Deputy Prime Minister Theodore Pangalos suggested their party was a lesser force for democracy than the socialist Pasok. That smacked of cheap theatre and opportunism. Samaras had already warned in his closing remarks that New Democracy would not be supporting the government in the vote of confidence. This was icing on the cake. It was also shambolic. Samaras and his clique stayed in their seats, suggesting that the walkout was breaking party discipline. Papandreou and Venizelos seized the opportunity to ask New Democracy to respect democratic procedures and return to the chamber, even if their vote was a foregone conclusion. It was a moment in which they could underline their claim to be the adults in the political process.

The question now is whether, and how, Samaras will consider climbing down from his maximalist position. His polarising politics have not won him much support. His party polled a meagre 21% in a nationwide GPO poll for Mega channel carried out during the two days of debate, to Pasok's 20.1 percent. Papandreou still holds a five-point lead in personal ratings. And 55 percent of voters support the government's decision not to hold early elections and its decision to seek a coalition. It is too early to write off Samaras or his policies, but the feeling is irresistible that his sense of self-preservation will force some changes upon him.

Monday, 18 April 2011

Back Door Reform: Why Greece's Approach to Non-state University Education is Folly

Even before Greece fell into recession, the reform of its education system was an intellectually urgent issue. Now that Greece’s lack of competitiveness presents itself with existential urgency, education reform can no longer be ignored as a major lever of social re-engineering and national development. The question is, will the socialist government of Yiorgos Papandreou clasp that lever and pull hard? The answer seems to be that it lacks the courage and commitment to do so.

The platform of promises that carried Papandreou to power a year ago overbrims with progressive, reformist intentions. Practically every sector of the economy would be remade. Politics would become transparent, governance efficient and accountable. These policy goals were ambitious and hit the mark. On education reform alone, Pasok’s programme was unprescriptive. Was it possible that Papandreou would reform every major policy area except education? 

The reason for silence was that Papandreou had felt his hand forced in strangling worthwhile education reforms as opposition leader. Those had begun promisingly enough in 2005, when conservative education minister Marietta Yannakou created the National Council for Education, a think tank to advise the government, and put Thanos Veremis at its head. As a Greek political historian with international credentials, sound judgment and impeccable friends, Veremis and his committee delivered many of the reform proposals Greece needed. On the basis of these Yannakou set about a three-pronged reform. In that year, with bipartisan support, she passed into law the process of external assessment of Greek universities. They had hitherto assessed themselves, but would not qualify for European Union funding without the additional step.  

Yannakou still had two major reforms to pass. One was a bill to de-politicise university campuses. Students who failed to graduate would not be allowed to remain enrolled in perpetuity, providing political parties with the footsoldiers to conscript freshmen into their respective student organisations. Most importantly, the bill would change the way university presidents were elected. Since 1982, Greek students, faculty and staff have cast votes for party electors, who would then make the final selection according to party orders and in proportion to the popular vote. This has given parties effective control over nominations and campaigns. Yannakou’s bill would do away with electors and allow voters to support an independent, or a candidate sponsored by a party other than their own.

Yannakou’s last remaining reform was the liberalisation of higher education, a European Union requirement. The Greek the state constitutionally guarantees free higher education, but also requires that it is provided exclusively by Greek public law bodies. That renders private colleges in Greece mere centres for post-secondary education, providing no recognised undergraduate degree programme even if they are accredited by European universities or US accreditation colleges.

Unfortunately for these two reforms, bipartisanship came crashing down on top of them with a nudge from Synaspismos, or Left Coalition - an aggregation of former communists in search of a new ideology. Under Alekos Alavanos, Synaspismos had fallen close to its threshold for entry into parliament of three percent of the popular vote. Desperate for an issue with which to increase its relevance, Synaspismos gunned for Yannakou’s proposals, arguing that they were paving the way for privatisation of the state university system.  Majorities of Greeks were polled as opposing the reforms. Papandreou, who originally backed the reforms, faced an internal opposition in former culture minister Evangelos Venizelos. He was vulnerable, having lost the 2004 general election and Europarliament election, followed by the 2005 local elections.

His support of the reforms wavered through white-hot opposition from Synaspismos in 2006. Synaspismos managed to stage massive street rallies with the help of the secondary teachers’ union, which rightly feared that should universities become more accountable, the appetite for change would push its members towards greater accountability too. The party’s approval ratings soared to 17 percent. In January 2007 Pasok officially reversed its bipartisan position on a pretext – New Democracy foolishly offended Pasok MPs over a constitutional amendment on the environment - and announced that it would fight all constitutional reform, including that on education.

Yannakou’s liberalisation hopes were dead, but she bravely passed her law to depoliticise campuses, albeit a year late. Such was the headwind of public opinion Pasok and Synaspismos had by now whipped up, though, that she lost her seat and cabinet post in that year’s general election.

Since then Papandreou has suppressed any grand pronouncements on education, but his education minister, Anna Diamantopoulou, seems to want to do the right thing, albeit through the back door. In May 2010 she passed a presidential decree recognising the professional qualifications of those with EU educations as long as they were recognised by their professional guild. Although this reform came three years late, in theory it made graduates of private colleges offering EU degrees on Greek soil eligible for public sector positions, a long-standing demand. Nonetheless, problems have remained in implementation. A private college graduate cannot, as a rule, gain acceptance into the technical chamber of commerce, and applications are now being routed through the ministry itself.

Although reform seems to be creeping along, it is far from complete. The European Commission sent Diamantopoulou a Reasoned Opinion on January 28, threatening Greece with a European Court indictment for dragging its feet. Not only is Greece, a European Commission debtor, long overdue to recognise its 26 EU partners’ degrees; it is also shooting itself in the foot by delaying reform. The back door method of recognition also means that most Greeks will continue to ignore non-state higher education as a potential growth sector and export industry for Greece. That is sheer folly in an economy that shrank by four percent for each of the last two years, and is expected to shrink by another 2.5 percent in 2011.

The number of students enrolled in universities outside their country of origin is rising at an accelerating pace. After the OECD started measuring this market in 1980, it took 20 years to double to two million and another seven years to triple to three million. America still holds the largest piece of that pie at 20%, but other countries now understand the economic and intellectual benefits of universities with regional or global reach. Greece could sow and harvest a fallow field in the Balkans and the Middle East with English-language degree programmes that Greeks could also attend; but it cannot do so as a country that has a political issue with higher education that doesn’t come from an overbearing and defunct state.

Monday, 28 March 2011

Honesty is More Important Than Cash (or, Value is More Important Than Liquidity)

Never in over a generation has a Greek government asked its voters to accept pay cuts from the public sector. Now local government has faced the harsh reality of not renewing contract hires, amounting to 25,000 layoffs. (Municipal workers occupied city hall, seen in this photo on March 30, blaring music from the windows and being as ostentatiously idle as possible). The question of layoffs is now sneaking closer to loss-making state enterprises, which are no longer to live off the state bounty. All this is being done under the dictates of our new troika of creditors, the European Central Bank, the International Monetary Fund and the European Commission. Perhaps the terms seem colonial, but Greece is only being asked to do what it has avoided doing for over a decade, against its better judgment.

If the woes of the present seem insurmountable, we need only look at the difficulties from which Greece has extricated itself in the past. Greece is recorded as having bankrupted itself no fewer than eight times in its nearly 200 years of independence; but it has never been more precariously perched than it was during its struggle for that independence. The process of raising two revolutionary loans for the fight against the Ottoman Empire is instructive. Greece’s present indebtedness to banks and stockholders around the world began with its very inception and was due to poor money management and a weak political centre.

As William St. Clair tells us in his classic story of the Philhellenes’ part in the revolution, That Greece Might Still Be Free (1972), the first revolutionary loan was floated in London in 1824 and was nominally valued at 800,000 pounds sterling. But its shares were issued at a 41 percent discount, so an investor only needed to pay 59 pounds to secure a 100 pound share. Greece was under further obligation to pay the shareholders a five percent annual interest rate, the first two years’ worth of which was withheld at source. To cap it all, the loan’s brokers, Messrs. Loughnam, Son, and O’Brien, extracted 38,000 pounds in “commissions and expenses”. Thus, out of an 800,000 pound loan, only 300,000 were available to the Greek cause – and that only on paper as investors were only asked to pay 10 pounds of the 59 in advance, the rest being payable in instalments. In the event, 80,000 pounds were dispatched to Greece.

On the back of the bonds was written, “To the payment of the annuities are appropriated all the revenues of Greece. The whole of the national property of Greece is hereby pledged to the holders of all obligations granted in virtue of this loan...”.

If the terms of this first loan seem colonial, the second, floated exactly a year later, was additonally marked by rampant corruption. It was valued at 980,000 pounds, but St. Clair tells us that 113,000 were spent boosting the value of the previous loan, whose trading value had fallen from 59 to 54 pounds, “in other words playing the market in order to keep the price up, an activity affording innumerable opportunities for the exchanging of favours and the lining of pockets.” Hundreds of thousands of pounds were spent on an abortive scheme to build a Greek fleet; and the London Greek Committee’s British and Greek directors simply embezzled large sums. “For example,” says St. Clair, “a sum of 2,695 pounds was charged as lost owing to the failure of a Greek merchant in London: the merchant’s books showed only 500 pounds. The sum of 1,200 pounds was credited as received from Calcutta from a subscription there, but the Calcutta accounts showed that 2,200 pounds was sent.”

Once the money did become available to Alexandros Mavrokordatos, the nominal head of the Greek civilian government, he was forced to spend it on the personal militias built up by the captains who effectively comprised the revolutionary fighting force and could blackmail the weak central government. Rather than entering the market and creating an economy, the money was stashed away in a relatively small number of households.

It is highly doubtful, in sum, that Greece’s first borrowings had any beneficial effect on its development. Quite the opposite, in fact, is likely. The bondholders of the two Greek loans, whose value collapsed as Greece never made a single interest payment, made sure that the newly independent country was barred from ever gaining credit in Europe’s stock markets until 1878. Greece’s debt on 1.78 million pounds’ worth of capital had by then accrued to more than 10 million pounds. As the country was running an irreducible deficit it became apparent that it would never schedule repayments, and the bondholders compromised on a write-down for all interest payments hitherto due in return for the issuing of 1.2 million pounds’ worth of new bonds at five percent. It was a severe haircut for Greece’s creditors on loans that had done Greece little good.

Greece had, in 1824 and 1825, benefited from a speculative wave in the fortunes of far-flung states. That wave was not born of a sudden altruism on the behalf of struggling peoples. It came about because the Bank of England reduced the interest paid on its bonds from five percent to 3.5 percent, leaving speculators looking for higher returns but ignoring the higher risk. The speculative bubble collapsed with the Bank of England bailing out investors and banks. Both in the 19th century and recently, therefore, Greece has simply been the victim of the combined venality and greed of its own politicians and that of the banking system.

Nor would this be the last such collapse in creditworthiness. As Professor Thanos Veremis recently wrote, Greece’s nation building prime minister, Harilaos Trikoupis, would avail himself of loans at the end of the 19th century, a time when Western banks were looking for new business on the periphery of Europe to counter a recession at home. Once again he would lead Greece to overborrowing and bankruptcy; but Trikoupis managed the loans in such a way as to leave Greece with its first serious infrastructure in road, rail and harbours, in an effort to render Greece’s agricultural produce exportable.

Trikoupis’ bankruptcy may have led to years of stagnation, but it also generated economic growth. The lesson seems clear: Economic cycles and speculation may cause periodic collapses in growth and credit, but they will be most strongly positioned to weather such collapses who have quietly spent the good times building real value into their economies. Money, equities and bonds rise and fall; productivity and competitiveness cannot be argued with.

Wednesday, 16 March 2011

As good as our bond (and other thoughts)

The stipulations of the May 2010 memorandum between Greece and the troika overseeing its 110 billion euro bailout are patently useful and necessary. Completing a limping privatization programme, reducing the state’s million-strong workforce and improving public transparency in major areas of expenditure such as healthcare are long overdue. So are a slew of development measures such as the opening of closed professions and markets and the parting of a Red Sea of bureaucracy.

But more than the obvious is needed. One of Greece’s greatest assets is its intellectual potential coupled with a national obsession with education. Drawing ideas from as many people as possible, something the government has tried to do by airing bills on, is a potential source of strength and innovation.

The country now needs the most imaginative, forward-looking and prescriptive ideas for policies it can generate, which could be implemented over the remaining two and a half years of the government's term and could boost competitiveness at relatively low cost. Here are a few to start with.

Bonds for taxes: The government wants to secure a level of funding from its shrinking tax base that will persuade the troika to release vital loan instalments. But its tax measures are becoming increasingly shrill and desperate. While it has refrained from raising income tax, its capitulation to higher consumer taxes (VAT has gone from 19 percent to 23 percent) penalises the poor.

The government will be under increasing pressure to be strict about tax collection. Already it has sent audit papers to thousands of businesses and self-employed professionals, reassessing their obligations as far back as ten years. Putting the squeeze on a shrinking tax base will only encourage flight and discourage business. The government, which no longer returns VAT as it is obliged to do, will only appear unpopular and unfair if it persists in being strict on tax collection and lax in cost-cutting and meeting its own obligations.

This is being done to create a steady income on the basis of which the government can borrow. It could instead tie a carrot to the stick of tax collection by allowing taxpayers to divert a proportion of their tax obligations, say 15 percent to begin with, to government bonds. This would turn taxpayers into investors, giving them a return on their money, and could encourage many people to declare their full earnings. In this way the government could actually increase government revenue, while offering the benefit of interest payments to its own subjects rather than foreign bankers. By entering the Greek economy, those interest payments would then boost Greek banks’ liquidity and help loosen up credit. The plan would also send a signal to money markets that the Greek people are backing up their faith in their future, encouraging others to do the same. In short, by selling more of its debt to its tax base, Greece could better control its credit history, repatriate capital and boost national solidarity, a vital component of credibility. Financial health begins at home.

A further annex to this plan could be to emulate Ireland’s recent pension reform and make third pillar retirement insurance mandatory. Greece’s 13 major funds are either tottering or in danger of doing so. It is inevitable that they will at some point shift from defined benefits to defined contributions schemes, meaning that benefits will vary according to funds’ abilities to pay. People under 50 will have to boost their retirement with a private plan in which the government will have no guarantor role. Making such a plan mandatory – to the tune of, say, two percent of salary earnings - would effectively introduce a limited 401K plan to every company Greece and create new growth in the banking and insurance industries.

Charter schools: Secondary education in Greece is, by the common consent of both parents and academics, where the system founders. Outdated textbooks, lack of critical thought, poorly funded computer and science laboratories, serial strikes and student sit-ins are the major problems plaguing public education. The private sector has flourished, to some extent, but it is still beholden to a poorly designed national curriculum, and also creates a divide between those who can afford good schooling and those who can’t.

One answer would be to allow charter schools, a regime unknown in Greece. These would be recognised by the education ministry and offer national diplomas, but would have a degree of freedom to hire and fire their teachers according to ability. They would also be able to veer away from state textbooks and towards better courses produced by independent publishers, and mould their curriculum outside a core of mandatory courses.

The benefits of such a system would be manifold. A well-governed school could become a paradigm of meritocracy, teaching students by example; legitimising non-state textbooks would galvanise nonfiction publishers and authors, an area where Greece has tremendous intellectual resources; and better educated graduates would be an enormous boon to the economy.

It is an alomst unnecessary addendum to say that the liberalisation of higher education would give the tertiary sector in Greece wings with which to turn education into an export industry.

Give the church a stronger social role: The Church of Greece has vast, unused real estate holdings dating back to revolutionary times. Many of these go undeclared by the 100 metropolitanates that make up the church’s constituency. A proper auditing of church property would strengthen the hand of the Holy Synod, and enable it to begin to put this property to good use.

Under Archbishop Christodoulos the church applied for a license to build a hotel on some of its land. But merely commercial use of church land lacks imagination and moral depth. Unlike the Catholic church, the Orthodox church has not, in recent history, made a name for itself in secondary or tertiary education. Church-sponsored schools in Greece are held in very low esteem for their tendency to indoctrinate rather than teach. The church could very well work with the state in co-financing a small number of secular, high-quality charter schools that could charge modest fees and command tax-deductible, corporate social responsibility contributions. These could in turn become feeder schools for a church-owned but secular campus university. Should the church enter the fray of Greek secondary and tertiary education, it could strengthen the role of other non-state schools in trying to break a culture of mediocrity that condemns generations of students to uncompetitive and uncreative ways of thinking.

Liberalise energy: The other great potential export industry is energy, but not on the model of centralised, large generating plants. In order to have the green energy revolution the Pasok government claims to want, Greece needs to go into micro-generation. A revolution in solar water heaters popularised green energy in the 1970s. The same can happen today with solar panels on roofs, but only if the finance ministry offers tax incentives.

Power is worth 10 percent of Greek GDP today. With the right incentives and, above all, liberalisation, it can become an export industry worth much more. There is also a security reason for micro-generation. With generating capacity spread over roofs across the country, it is much more difficult for power supplies to be knocked out by earthquakes, floods or bombs.

Give parliament’s audit committee the power to check political parties: A 2001 constitutional revision introduced representatives of the country’s three top courts – the Supreme Court, the Council of State and the Court of Audit – in a parliamentary Audit Committee that checks the annual financial declarations of parties and their deputies (previously it was peopled exclusively by party appointees).

A law the following year obliged “political parties and coalitions in receipt of state funding [to] publish annual balance sheets showing income and expenditure.” These balance sheets, published in summary form in the first two months of each year, are subject to review by parliament’s Audit Committee, which employs the services of chartered accountants.

Yet the system remains vulnerable to massive fraud. The Audit Committee may only work on the basis of documents submitted by the parties and MPs; lacking prosecutorial powers to raid offices and open bank accounts, it can only check the internal consistency of what it is given. A second weakness of the Committee is that it may not prosecute legally.

George Papandreou came to power on a commitment to unprecedented transparency in government. He should now prove his commitment by giving the Audit Committee the legal teeth to act independently of political power, and act as a check. The committee should be given power to initiate raids and investigations, solicit documents and follow money trails. Merely the provision that the auditor’s report, and possibly its minutes, should become a matter of public record would provide a powerful bulwark against mollification.

The parties that have molded the political scene since democracy was restored in 1974 are increasingly seen as the architects of Greece’s crisis through their nonchalance and corruption. Casting out of those who are demonstrably corrupt is now necessary to their survival. Failure to shore up principle and build institutional depth will have greater costs for the socialists and conservatives than all the upheaval of change. If the inducements of high office are irresistible, they are also self-destructive.

Monday, 21 February 2011

Spinning myth back into history

David Brewer ends his narrative of the Ottoman occupation of Greece with a word of warning against over-sanitising history: “If all Greek nationalist bias against Turks is to be removed, Turks cannot be blamed for anything, even if they are clearly responsible for it. History with false judgments is replaced with history containing no judgments at all.”

Brewer hits upon the central dilemma of historiography. If we don’t have an opinion about past events, knowing them is pointless; but we cannot come to know them until we put our opinions aside.

The question of how history should be taught arises particularly in the long and violent relationship between Greeks and Turks. Brewer’s warning is a reaction to a recent attempt by the Greek curriculum to over-purge a sixth form textbook of gory detail. But such political correctness runs a risk of doing exactly what it is trying to overcome – the mythologizing of history through the purging of facts.

In Greece, The Hidden Centuries, Brewer exemplifies how history should be taught. He neither sanitises nor takes an overall standpoint on what he knows well to be a highly controversial era. The almost four century-long tourkokratia, or Turkish domination, is the darkest period in Greek history, because the loss of Constantinople and its possessions in 1453 definitively ended the Greek-dominated Eastern Roman Empire, or Byzantium, which had stood for over a millennium. In retrospect, it also ended a 2,000-year period in which Greeks wrote many of history’s headlines, and ushered in an era of stagnation and decline from which they are, in many ways, still trying to recover.

Brewer’s concise, sane and independent assessment is an achievement on its own, but a further contribution is to connect Greek events to the wider political, economic and ideological shifts that swept the European scene. The book really comes to life in the telling of events that took place on Greek soil with international importance.

I owe a word of disclosure. As Editor-in-chief of the Athens News, Greece’s English-language newspaper, in 2004 I published a series of essays by Brewer entitled The Tourkokratia – Was it Really That Bad?, which formed the original attempt at this book. Brewer’s thesis was that if one viewed Greek tribulations against a European backdrop, they were on balance neither greater nor lesser. Yes, Greeks went from holders of the Byzantine Empire to tributary subjects; yes, they had to give up young boys to the janissary corps; but they were spared the denominational Christian hatreds that tore through the continent as well as the Napoleonic wars, and they enjoyed complete freedom of worship. Those judgments are largely effaced in the final product, which sticks to a journalistic concept of the facts with little overt editorialising.
The bulk of The Hidden Centuries follows the period from May 1453, when the Ottoman conqueror Mehmed Ali II took Constantinople, to March 1821, when the Greek War of Independence broke out in the Peloponnese, devoting two final chapters to the war itself.

Constantinople’s great opponent was initially Venice, which held Cyprus, Crete and the central cluster of Aegean islands, the Cyclades. These were the remnants of a Venetian conquest of Constantinople 250 years before that of the Turks, followed by a brief resurgence of Byzantium. Brewer describes in detail how Venice and Ottoman Constantinople faced each other across the Aegean. The dilemma facing ordinary Greeks was whether they wanted to be ruled by Catholics or Muslims.

The distance of Venice from its possessions and its inability to face the Ottomans alone ultimately led to the loss of its possessions. The Turks took the Cyclades in 1538, Cyprus in 1571 and Crete a century later. Venice was ejected from its fortresses in the Peloponnese, but as Brewer notes, it was not the only loser. Genoa lost Chios to the sultan in the 16th century. The Order of the Knights of St. John lost Rhodes and moved to Malta.

The Venetians did score one remarkable naval victory, to which Brewer devotes a chapter. The Battle of Lepanto three weeks after the fall of Cyprus did not change the broader course of history, but it did wipe out the Turkish fleet – 200 out of 251 Turkish ships were captured or destroyed – and although the grand vizier ensured that they were rebuilt within a mere seven months, the entire Turkish fleet never put out to sea again.

The Venetians had one last hurrah. In 1683 they mounted an alliance with Austria and the Papal States to take back the Peloponnese. Though initially successful, they were repulsed definitively by 1715 and never followed up on their Greek ambitions again. For two generations, the Ottoman Empire would enjoy unrivalled control over Greece.

The Turks’ next serious challenger would be Russia under Catherine the Great, who authorised the Orlov brothers, Alexis and Theodore, to lead a revolt in Greece. Russia was already at war with Turkey in Romania and the Crimea. Brewer’s broad historical perspective makes evident that Catherine seems to have thought that a Greek front might divide Turkish forces. It was an unlikely method of securing access to the Mediterranean, and she seems to have treated it as such. The 19 ships she sent in the first wave of the expedition were so shoddy that only nine arrived, while the second and third waves left too late to do any good. Catherine thus fielded only 600 men, and dampened Greek enthusiasm by demanding an oath of allegiance to Russia.

The Orlov rebellion ended in disaster, with Russia leaving thousands of followers to their fate in Turkish hands. Brewer describes in details how the sultan authorised Albanian brigands to mete out punishment on recalcitrant areas. They exacted a revenge of plunder and murder for fully nine years before Turkish troops were sent in to eliminate them. The relief of the Greeks is amply illustrated by the fact that “at the eastern gate of Tripolis, a pyramid of Albanian heads was set up, held together by mortar.”

Since Greece was mired in poverty, fear, maladministration and lack of education, it is perhaps hardly surprising that the money and planning necessary for a successful revolution eventually came from Diaspora Greeks. The Philike Etaireia, or Association of Friends, was founded in Odessa by three penniless young professionals, who sought out the revolution’s leaders in Alexandros Ypsilantis, an officer in the Russian artillery, and Alexandros Mavrokordatos, a westernising Greek.
Brewer does not dwell on the cynicism with which the viability of the new Greek state was undermined because that is the scope of an earlier book, The Flame of Freedom. But he does devote a dense chapter to how, after three years of military success, traditional Greek vices caught up with the revolution. Two loans raised in London (in 1824-5) were largely squandered on parasites and hangers on Factionalism turned to civil war between the naval forces under the Hydriot captains and land forces under the legendary Theodoros Kolokotronis, who briefly established separate national governments. In the end the Greeks were only saved by foreign intervention. The combined naval forces of Britain, France and Russia defeated the Turkish fleet at the Battle of Navarino in 1827, only a few miles north of the battle of Lepanto 250 years earlier.

Although Brewer does not draw parallels with the present, how much of modern Greece is recognisable in his narrative of Ottoman Greece is mind-boggling and forms a large part of the value of his book to the student of Greek society. That Greece’s present indebtedness to banks and stockholders around the world began with its very inception and was due to poor money management and a weak political centre is only the most obvious of these. Greek society’s tendency to brittleness is another. A century after independence the nation would again be split between rival governments, this time a Royalist one versus a reformist one under the great Liberal statesman Eleftherios Venizelos, and a second civil war between national forces and communists would ensue in 1946-49. This lack of national tensile strength goes back to the weakness of early central authority. So do Greece’s faith in organic authority as opposed to statutory office and euergetism as opposed to redistributed wealth. The favour-seeking the Greek economy is now famous for follows inevitably in a society that did not fully establish the authority of its elected or appointed officials.

Diplomats, clerics, antiquarians and naturalists who witnessed the country in its darkest hour came away with disheartening accounts of the contrast between the greatness of its past and its degenerate state under the Ottomans. These accounts, accompanied by two centuries of classical scholarship that saw Greece from a northern European point of view, have contributed to the modern Greek inferiority complex. The Greeks’ determination to win and successfully host the 2004 Olympics stemmed from nothing more than a desire to provide evidence of their patrilineage.

Under the last four decades of Ottoman rule Greeks re-discovered their propensity for shipping and ship-building, when Russia’s growing power enabled them to fly the Russian flag and trade freely across the Mediterranean and the Black Sea. The Napoleonic Wars added to profit margins as the Greeks ran British blockades with great success. The next great explosion in Greek shipping would not occur until the United States sold its mass-produced Liberty Ships for the price of scrap metal after World War Two.

The saddest revelations, however, come in connection with the state of education and intellectual development. The Greeks never adopted the value system of inalienable individual freedoms that accompanied the Enlightenment in Western Europe, partly because they were shut out of it and partly because their outlook was determined by their purist Orthodox faith. That faith was governed by a church that had come to abhor scientific or literary education and whose stewards, as travellers to Greece witness, were rarely literate.

“All the Greeks... are in such an amazing state of ignorance that there is not a single city in the entire country that has a university and not a trace of pleasure in learning the arts and sciences,” wrote the French naturalist Pierre Belon in 1553. His trip to Mount Athos, then home to some 6,000 monks, left him with the impression that “one can scarcely find in each monastery two or three who know how to read and write.”

The church has since changed little. Notwithstanding an educated and capable minority, it is often used as a repository for those family members who are less competitive in the labour market. Now as then, its monasteries are often dens of embezzlement and intrigue, as revealed most recently in the Vatopaidi scandal, still under investigation in the Greek parliament. Now, as then, the Greek Orthodox Church spends but a fraction of its resources on community work and none on higher education, continuing to believe in faith without works.

Greece cannot easily extricate its sense of nationhood from religion. The Church of Greece is an autocephalous national church, stemming from its disobedience to patriarchal policy against the revolution of 1821; hence the religious designation Greek Orthodox as opposed to just Orthodox. Union of church and state continues to be enshrined in the first three articles of the Greek constitution in defiance of European Union rules and Enlightenment values. Nor can many individual Greeks easily accept a secular identity. The socialist government caused clerical and congregational uproar in 2001, when it removed religious affiliation from identity cards.

The Diaspora was key in sparking, organising and maintaining the revolution, yet Greeks of the time refused to recognise it. A similar distrust continues between Greece and its far-flung communities to this day. In its efforts to attract Diaspora investment, the Greek government must overcome a mountain of bureaucracy designed to fleece outsiders. Now, as in 1821, a critical mass of new blood, badly needed to bring about rapid as opposed to generational change, still seems to frighten as much as inspire Greeks. Progressive politicians have periodically floated the idea of an overseas postal ballot (most recently in 2007), but parliament’s nerve ultimately fails it because most deputies are insecure about their ability to appeal to a bilingual audience.

Brewer does not fall into the trap of blaming the Greeks for their own troubles. He casts light on the Ottoman government’s inability to train a civil service, meaning that policies which looked perfectly good on paper were poorly delivered, or not at all. An aspect of this institutional ineptitude was the encroaching inability to collect taxes, resulting in a privatisation of the practice to unscrupulous local masters. And the practice of forcible conscription of Greek boys was so unpopular that even the Turks abandoned it.

While Brewer’s narrative pegs itself on events of international importance it remains strong, but is intermittently weakened by thematic chapters on farming, island life, piracy and administrative structures, which are of mixed success. To make interesting reading out of everyday life a historian depends entirely on good sources, and Brewer does not have the knowledge of Arabic-scripted Turkish to delve into the Ottoman archive, the supreme source for the Mediaeval Greek economy, that is only now opening up to researchers. Another criticism of The Hidden Centuries is that more detail on military tactics and technology between the great powers would have been appreciated, because it was largely the neglect of technology that undermined Ottoman hegemony. For instance, the Venetians introduced a massive, new kind of warship at the Battle of Lepanto, the Galleasses, which was a key to success. It would be interesting to know why size was effective against the Turks whereas it had been a liability for the Spanish Armada only a few decades earlier. The Orlov brothers failed to take the Turkish citadel of Koroni, because “bombardment from the ships was ineffective” and mines were met with counter-mines. The details of these tactics and devices would have added spice. The publishers have also failed to edit out small errors in numbers. The ascent of Suleyman the Magnificent is at one point dated at 1520, and later at 1522. Cypriot independence is dated both to 1959 and 1960.
But the book scores high marks for its scope, its international frame of reference and its objectivity. In Greece, The Hidden Centuries, Brewer has demonstrated that he is not simply a Philhellene; he is the best sort of Philhellene, seeing the Greeks exactly for what they are and not despising or condescending to them, but regarding them as the product of their circumstances. In this he stands firmly in the tradition of Byron, whose knowledge of Greece and Albania from an extended stay in 1809 immunised him against the crushing disillusionment suffered by continental Philhellenes in the first year of the revolution.

The clash of European and Greek cultures that emasculated the Philhellenic movement as an effective military force, and Byron’s attempts to redeem it, form the core of William St Clair’s classic account of the Greek War of Independence, That Greece Might Still Be Free, recently reissued by OpenBooks, which usefully also provides a searchable online text of its publications. The 1972 accountsees the revolution in terms of the dichotomy between Europeanised Greeks and Philhellenes, who sought the regeneration of Classical Greece, and the newly liberated Greeks, who were unconscious of cultural continuity and served feudal captains intent on carving Greece up into autonomous fiefdoms. The priority of these captains was to plunder Turkish forts, expand the payroll of their private armies and consolidate their political base. They tolerated a purely symbolic national government created by the Diaspora Greeks in hopes that it would raise European money and arms, and actively discouraged the national regiment which, starved of any of the spoils of war, never exceeded a couple of hundred men.

The captains did not seem to realise that central political and military authority would be needed quickly to repulse the inevitable Turkish counter-attack. Initial successes against two Turkish armies sent to crush the rebellion in the Peloponnese in 1822 seemed to confirm the captains’ view. By 1824, however, the revolution would be in serious trouble.
St Clair minces no words in his description of the atrocities committed by both sides. The Greeks were bent on revenge and spared no civilians, as was the case in Navarino, which surrendered in August 1821 on assurances of safe passage: “When the gates were opened the Greeks rushed in and the whole population of between 2,000 and 3,000 were killed with the exception of about 160 who managed to escape. Some of the Turks were left to starve on an uninhabited island in the harbour. A Greek priest who was a witness described the scene as the Turkish women were stripped and searched to see if they were concealing any valuables. Naked women plunged into the sea and were shot in the water. Children of three and four were thrown in to drown, and babies were taken from their mothers and beaten against the rocks.”

The Turks reciprocated in kind. Greek populations in Constantinople and Ottoman domains were arrested in their houses, mutilated and executed in their hundreds. Their women and children were sold as slaves. The entire Greek mercantile quarter of Constantinople was left to the mercy of a killing and burning mob. The suppression of the revolution on Chios in 1822 was particularly violent. Thousands of Turkish irregulars were imported from the mainland to exact a revenge the imperial army evidently did not want to record. Almost overnight, Chios was unpeopled. The men were put to death. Of a total peacetime population of just over 100,000, 41,000 mainly women and boys were exported for sale as sex slaves. “The recalcitrant and the inconsolable were killed off as being of no commercial value and their bodies left to rot in the streets or by the water’s edge in the usual Turkish way with their severed heads between their legs, to be devoured in time by scavenging dogs.”

Unlike Brewer, who fosters objectivity by keeping his readers’ minds largely free of passion, St Clair induces agnosticism through a form of tragic catharsis. European illusions, Turkish barbarity and Greek vainglory and short-sightedness all created a catastrophe for civilian populations across the Ottoman Empire. The dilemma of how such singularly violent history should be taught to the young and impressionable mind remains. Brewer and St Clair teach faith in facts. In this war of independence of the heart and mind, Greek and Turkish textbooks should follow the Philhellenes.

This article appears edited in the current edition of the Times Literary Supplement.