Saturday, 6 March 2010

Who's Lost Their Marbles?

Yesterday saw rioting on the streets of Athens, violent protests against the stinging economic and structural reforms being introduced by the Greek government in an attempt to avert a fiscal catastrophe. The Greek deficit is due to reach an eye-watering twelve percent of gross domestic product this year, stratospherically above the EU's three percent limit. Pay freezes, increased retail taxes and uplift of the current retirement age are all on the cards.

Greece managed to join the Eurozone because the European Union's convergency rules were bent to allow it do so. Since then, successive Greek governments have hoodwinked the EU over the size of the country’s budget deficit and its public debt, by blaming their predecessors and then promising to do better. Now, the current government is finally being forced to take the sort of budgetary action that was imposed upon Britain by the IMF in the late 1970s, but with one crucial difference. Greece can't devalue.

At a recent EU summit, Greek Prime Minister George Papandreou shocked his colleagues by admitting Greece is riddled with corruption, which he claimed is the main reason for its economic woes. Remarkably, he's also blamed Greece's debt problems on the 1940s German occupation, saying, 'They took away the gold that was in the Bank of Greece, and they never gave it back.'

I have wide experience of trying to do business in Greece. No matter when I arrived in Athens for meetings, I found I was always a week early. Appointments were arranged, postponed, cancelled, rearranged. If any agreements with the other side of the table were ever reached they were liable, later, to be overlooked or denied. The bureaucracy I encountered while dealing with government departments, with manufacturing industry and with banks was drawn-out beyond sane description.

The blame for the current situation lies squarely on dishonesty, sleaze and fraud, practised widely by successive Greek governments and their public servants, as well as industry . Add to this bone-idleness, a retirement age of sixty-one, and a trundling administrative inefficiency that wouldn't disgrace the old Soviet Union at its craziest.

But how has it taken years of Greek profligacy for all this to come to a head? Brussels knew only too well what was happening, but chose to say and do nothing. Shame on both parties.

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