Last Thursday I woke in a Qatari hotel room to one of the most humiliating moments in my life: the dawn press conference in Brussels that announced the Troika’s “bailout” of Greece.
The participants left no doubt about the contempt in which the international financial community holds the Greek political leadership. To be fair, the Troika had just finished an all-night 14-hour negotiating session that finally forced Greek politicians to sign on to a deal that threatened their political survival. So, Claude Juncker, the prime minister of Luxembourg and chairman of the Eurozone finance ministers group, opened a press conference that dripped with ridicule and insult towards the “Greek authorities.” Juncker announced that Greece would accept Europe’s demands to pass a law within two months giving absolute priority of debt service payments over any other expenditure and later pass a constitutional amendment confirming that.
In other words, Greek politicians agreed to amend their country’s constitution giving the European Union and the International Monetary Fund virtual oversight of its finances. Driving home the point about distrust, Juncker also announced that Europe will not allow Greek politicians to even touch the bailout money; instead, it will be deposited in a special segregated account that will go directly to debt payment. The Europeans made it clear that they would for all practical purposes pay the bills directly because they did not trust the sticky fingers of Greece’s rulers.
Just in case Messrs. Venizelos, Samaras, Paparyzas, etc., did not get the message, the Europeans stated that the money would be doled out in several packets, dependent on the politicians keeping their promises. The Greeks agreed to accept a permanent EU monitoring committee to poke into every aspect of the Greek administration to ensure that no one tries to pull a fast one.
European Central Bank President Mario Draghi, International Monetary Fund Managing Director, Christine Legarde, and European Union Economic and Monetary Affairs Commissioner, Olli Rehn, each followed Juncker with statements that hammered home the same message: they do not trust Greek politicians to carry out their promises to pay the bills, remove legal and structural obstacles to business in Greece, slash a bloated public sector, and collect taxes.
Frankly, good for the Europeans. The Greek political system lacks the internal checks and balances to keep it honest. Now the Europeans will provide the oversight. Over the last three decades, Greek politicians, in alliance with about a dozen oligarchs and a dozen so-called “trade unions,” turned the country into their own personal piggy bank. Perhaps humiliating the politicians will finally open the Greek public’s eyes to the fact that they voted for these clowns in return for crumbs from the public table. Most of the structural changes imposed by the Europeans are also good for the Greek economy in the long term.
Of course, it is not clear if Greeks will survive the short-term large-scale unemployment, the probable failure of the Greek banking system, real poverty, homelessness and even some starvation. Even the €100 billion write down of Greek government debt to private bondholders may harm recovery. Unfortunately, otherwise conservative Greek banks hold a disproportionate percentage of those bonds and could go under.
No European has addressed the issue of corruption, however.
Greece’s unsustainable debt burden had several causes: a bloated, inefficient and harmful public sector, restrictions on private sector activity favoring certain interest groups, a conscious failure to collect taxes and – most importantly – large-scale corruption. Conspicuously, the Europeans avoided addressing corruption.
Last year at a lecture in Washington, Monetary Affairs Commissioner Ollie Rehn also sidestepped my question on how the Europeans planned to deal with corruption in Greece. There is no evidence the Europeans want to engage on the principal cause of the crisis: corruption. Could it be that Europe has so benefitted from the Greek politicians’ corruption that its leaders dare not raise the issue?
The Europeans claim that Greece bamboozled them to get into the Eurozone. Let us not forget that in 2001 Germany and France both officially proclaimed that Greece did not meet the criteria for entry into the Eurozone. Two months later, Greek Prime Minister Simitis visited Berlin and Paris and announced that the Hellenic Air Force would purchase 120 Eurofighters, produced collectively by France, Germany, and the UK, at a cost of almost five billion euro. Surprise, surprise. France and Germany immediately thereafter announced that they had reviewed the Greek file and pronounced Greece eligible to join the club!
The German justice system has documented that Siemens paid several hundred million dollars in bribes to Greek politicians. Now the German prosecutors have announced that they will not pursue the bribery case because it occurred in Greece, while the Greek Parliament passed a special law setting the statute of limitations on economic crime committed by members of Parliament at a ridiculous two years. (Berlusconi did the same in Italy.)
Greece paid top euro for German tanks, German submarines, and French fighter planes and missiles, perhaps ten or twenty percent above what others paid. Furthermore, successive Greek governments virtually stopped procuring military equipment from Greek companies. Perhaps Greek companies could not compete with the bribes offered by the Europeans?
Popular demand for the punishment of Greek politicians for corruption has been ignored, most Greeks believe, because they are protecting each other. Perhaps the Europeans do not want to pursue the issue of corruption in Greece because their own governments and politicians willingly participated in it!
The Hon. Ambassador Theros is president of the U.S.-Qatar Business Council. He served in the U.S. Foreign Service for 36 years, mostly in the Middle East, and was American Ambassador to Qatar from 1995 to 1998. He also directed the State Department’s Counter-Terrorism Office, and holds numerous U.S. Government decorations.