On the Political Meaning of “Cooperation”

On Tuesday, May 17th, European Commissioner Olli Rehn asked for cooperation between political parties for the targets and policies of the Memorandum, i.e. the loan conditionality which had been agreed between Greece and the Troika as a condition of the disbursement of EUR 110 billion in emergency loans to Greece.

This touched off a political firestorm. Deputy Prime Minister Theodoros Pangalos spoke of unwarranted political interference in domestic affairs. Leader of the Opposition Antonis Samaras, in a heated speech at the Zappeio, spoke of a policy which was doomed to fail, and has lost no opportunity in criticizing the government and the Memorandum, even when these contain policy measures which his party has supported in the past.

This widespread and cross-party reaction, magnified in the cynical echo chamber of the mainstream media in Greece, is unfortunately yet another indicator of the moral sickness and bankruptcy of the current political system.

Our creditors—the IMF, Eurozone and European Central Bank--have lent us EUR 110 bln based on certain conditionalities, many of which are eminently rational and should have been implemented long ago. These conditionalities include:

• The collection of tax arrears and the fight against tax evasion;
• Reduction in government expenditure, including the reduction of the public sector workforce through replacing every 5 retirees with 1 new recruit;
• A liberalisation of closed sectors such as pharmacies and road transport;
• The increase of indirect taxes, including VAT and special taxes on fuel, alcohol and tobacco;
• An increase in the retirement age and an end to the favourable early retirement system enjoyed primarily by the public sector;
• Additional fiscal consolidation and structural reforms.

None of these conditions can possibly be objectionable on the grounds of either fairness or evidence-based policies. They were arrived at after a consultation between the government and the Troika. They were all recommendations which the country should have been doing of its own initiative, and did not.

These conditionalities were accepted by the Hellenic Parliament in a fair and democratic vote, to which one other party—LAOS—and several independent or right-wing deputies voted in favour. They are now part of the law of Greece.

In certain areas, the government has decided to cut spending at its own initiative. For instance, the initiative to cut salaries and pensions above a certain level was a decision made by the government to reduce costs, not the Troika. There is no specific clause in the Memorandum which specifies this.

Let us not forget that the money offered to Greece—EUR 110 billion—is financed in the majority by the taxpayers of the Eurozone. This includes countries such as Cyprus, Slovenia, the Czech Republic, which are close allies of Greece or which have lived under Communism. It also includes countries such as Belgium, Italy, Ireland, Portugal and Spain, who are facing major economic challenges of their own.

Let us also not forget that the money is being lent to Greece for the simple reason that Greece is bankrupt. Why is this money needed? Not just to roll over existing debt, but to pay salaries in the public sector, to pay for pensions and hospitals, to pay for the aviation fuel which keeps Greece’s airforce in the air protecting our borders.

Why can’t Greece pay for its own financial commitments? Because for generations it has made outrageous commitments to the public sector workforce in exchange for votes. It has allowed its tax collection system to become a byword for corruption and incompetence. And it has colluded with the private sector in Greece and abroad to extract massive bribes and implement white elephant projects.

This situation is entirely of our own making. Starting with the first government of Andreas Papandreou, which led to massive spending and high inflation, and extending to the disastrous six years of Konstantinos Karamanlis, which increased public sector debt by EUR 150 billion, the Greek political system, with the apparent agreement of the majority of its citizen voters, has corrupted and bankrupted the country and the society.

Every single administration since 1981 has left the country in a worse financial situation than the previous one. Public debt has risen nearly every year since then in hard currency terms. Even Kostas Simitis, revered as a reformer and “technocrat”, was revealed to have “cooked the books” that permitted Greece entry into the Eurozone. “Greek statistics” has rightfully been denigrated the world over.

In the face of this stunning corruption and incompetence, which has for years included the deliberate flouting of European law in multiple sectors from education to the environment, our European partners have decided to give Greece one more chance to save itself from bankruptcy. Part of this is due to ulterior motives: saving the European banks which have extended some EUR 340 bln in loans to Greece as of the end of 2010.

But make no mistake: passing the Greek bail-out package of EUR 110 bln through the national parliaments of fourteen Eurozone parliaments during a global economic crisis require real political courage, and real sacrifice. In many of these parliaments, the vote was passed with cross-party support. What we call, in other words, “cooperation.”

Yet here in Greece, our media and political elite, to say nothing of the average citizen, appears ignorant of these facts. Instead of a sincere, truly national effort to correct the situation and implement the loan terms, our political elite finds every opportunity to score points against their domestic opponents, and against the Troika, which represents other countries who’s citizens who have had the good decency to lend Greece money when no one else would.

This “resistance” often reaches the point of pure irrationality—insanity, if you will. In what other country would people protest the privatisation of a shabby national railways system which has for years incurred losses of over EUR 500 million per year and has a debt of over EUR 10 billion, making it the most-indebted public enterprise in Europe?

Olie Rehn, Jean-Claude Juncker, Dominique Strauss-Kahn, Jean-Claude Trichet: no matter that their individual backgrounds or faults, these people have been overwhelming in their support of Greece. Any Google search done shows the support they have given in articles in the Wall Street Journal, the Financial Times, Bloomberg, Reuters, and others.

They are also charged with making sure that Greece follows the letter of the contract it agreed to. Here, it is clear that although Greece has made very courageous political choices, it has not stuck to the plan, and has not met its targets. Do not search outside Greece for a conspiracy or a culprit: this negative result is solely and unequivocally the fault of our government apparatus and our taxpayers.

Additional measures are clearly needed. Political and indeed national cooperation is clearly needed. Instead of castigating or vilifying our European partners, we would be far better off understanding the magnitude of the problem facing the country, and doing everything we can to ameliorate the situation. This would be first and foremost a reflection the “European” value we all aspire to.

© Philip Ammerman, 2011

The complete text of the Memorandum agreed by the Government of Greece and the Troika can be found on the website of the Hellenic Ministry of Finance:

http://www.minfin.gr/portal/el/resource/contentObject/contentTypes/genericContentResourceObject,fileResourceObject,arrayOfFileResourceTypeObject/topicNames/economicPolicyProgram/resourceRepresentationTemplate/contentObjectListAlternativeTemplate#fragment-4

European Commission Report
http://www.minfin.gr/content-api/f/binaryChannel/minfin/datastore/89/49/3b/89493befbcb6dbc90db37dd461f6d52650962caa/application/pdf/ocp61_el.pdf

IMF Standby Agreement
http://www.minfin.gr/content-api/f/binaryChannel/minfin/datastore/56/70/2f/56702f8f1a696d95bf5cda5c05dee48c82379d0b/application/pdf/imfarxeio20100516.pdf