Thursday 29 March 2012

The Great Immigration Shuffle

One month before national elections in Greece, immigration has become a hot topic. Minister of Citizens’ Protection Michalis Chrisochoides proceeded today with a large-scale security sweep in Athens today dedicated towards arresting and detaining illegal immigrants. This occurs as part of a new policy initiative designed to construct 30 detention centres hosting at least 1,000 illegal immigrants each by 2013.

No sooner was the detention centre policy announced, that several regional and local authorities announced their intention to refuse construction of detention centres in their neighbourhoods. This political NIMBYism was only exacerbated by New Democracy (Mr. Chrisochoides belongs to PASOK), which announced that the “opinion” of local authorities should be taken into account when deciding where to set up the centres. This is tantamount to refusing the set-up of all such centres.

This new initiative is likely to create a number of problems, and appears to have been launched without even a modicum of planning. I will restrict my argument to simple numbers, rather than to the presumed effectiveness of setting up immigrant concentration camps.

The Law of Prevailing Numbers

Media reports indicate that there are over 1 million illegal immigrants in Greece, that between 300-500 enter Greece every day, and that approximately 60,000 illegal immigrants were detained in 2011. Let’s assume that the 1 million headline number is correct. In this case, building detention centres for 30,000 is hardly going to be enough. It is, in fact, only half the arrests of last year alone, and only 3% of the presumed total.

I hesitate to ask what will happen to the remaining 9,970,000 illegal immigrants in Greece, but chances are they will still be on the streets later this year.

The Law of Operating Expenditure

I also have to ask how much this is going to cost, and where the money for capital and operational expenditure will come from. Let’s model some basic numbers: According to the International Committee of the Red Cross’ invaluable reference work on prisons, the average space per inmate is considered 2 m2. This means that if steelframe barracks are built using bunkbeds, the minimum footprint of each camp building will be 2,000 m2. Together with a triple security fence (mentioned in one news article) and furnishings, the minimum capital expenditure cost per camp will be EUR 2,480,000.

Even if disused barracks are used, there will have to be a minimum investment in renovation and facility preparation: none of the barracks shown on TV are suitable for 1,000 inhabitants. In fact, I consider this number to be on the low side: I image that a proper detention facility will cost at least EUR 10,000,000 per unit. But let’s stick with the low number.

Capital Expenditure
# Units
Total Camps
Security Fence, triple
linear m
Barracks, steelframe
Total Capital Expenditure

Operating Costs
# Units
Total Camps
Guards & Staff
Utilities, Miscellaneous
Per Camp

Annual Operating Cost

Total Costs Year 1

Cumulative Costs Year 2
Cumulative Costs Year 3
Cumulative Costs Year 4
Cumulative Costs Year 5


The greatest cost is operating costs. Kathimerini mentions that each camp will have 1000 support staff. I consider this highly unlikely: that would make a staff:”inmate” ratio of 1:1. Let’s model instead 350 staff at an average monthly gross employer wage of EUR 850 per month, x 14 months. This is EUR 4.165 million in staff costs per camp per year.

The greatest expenses will be food. Assuming a per meal cost of EUR 2.5, and 3 meals per day for 365 days per year for 1,000 inmates, then the cost per prison will be 12.775 million. Add a further miscellaneous expenditure of EUR 1,000,000 per camp per year (utilities, etc.), and the operating costs in year 1 reach about EUR 17.94 million per camp, and EUR 538 million for 30 camps. This is almost certainly on the low end of likely costs. 

And herein lies the problem, of course. Greece does not have EUR 538 million per year to manage such a system for 30,000 illegal refugees. If salaries and costs are held stable (no labour inflation), then the 5-year cumulative cost will be EUR 2.765 billion. 


To make a long story short, I believe the government has made a classic tactical error, born of good intentions and the pre-election rush to create positive impressions. The illegal immigrants being rounded up now have nowhere to be held – none of the barracks are ready, there is no space in existing prisons. There is, quite simply, no where to put them. The costs of building and operating 30 detention centres is far too high for a bankrupt country, and the financing quite simply doesn’t exist. And remember that the capacity of 30,000 is about 3% of the total number of now-acknowledged illegal immigrants in Greece.

I forecast two outcomes to this story:

a.   A few thousand immigrants will be rounded up and press-ganged into incomplete barracks without sanitation, food, electricity or other basic amenities. They will probably sleep in surplus military tents all summer, and by fall a new solution will have to be sought for them.

b.  The manifest ill-treatment of these refugees is being compounded, and will lead to yet further and justified complaints by the European Union and the Red Cross in the future. At the same time, political tensions within Greece will increase, as this becomes yet another political football between two incompetent political parties, and between the population at large and its government.

A Potential Solution

Although I don’t have a solution, I can only make one recommendation to the government: step up voluntary repatriation together with a monthly living stipend until repatriation takes place. A monthly stipend of EUR 100 to each illegal immigrant who registers with the government and agrees to a cost-free repatriation to their home country within 10 months. The point of the stipend is to provide cash for registration and a commitment to repatriate.

The maximum costs of this would be as follows:

Maximum stipend
This would cost about EUR 1 billion for 10 months of operation, assuming 100% take-up:

Flight Costs
15 flights per day @ 200 passengers per flight = 3,000 repatriations per day
Assuming average flight costs per hour of EUR 2,000 and an average 6 hour 1-way flight, the total flight costs for 1 year would be about EUR 120,000,000 for 4,950 flights (this assumes 15 flights per day @ 330 days / year).

Total Cost: About EUR 1.120 billion – perhaps EUR 1.5 billion with cost over-runs. (Not counting some costs of management).

The weak point is of course the take-up: how many refugees actually want to return home? The other weak point will be political resistance to paying for all this. I also doubt this scheme would have more than 200,000 take-up offers, so even it can only be part of a larger solution. But it’s still cheaper than housing 30,000 refugees, 3% of the total, over three years in Greece.

© Philip Ammerman, 2012

Sunday 25 March 2012

Crime and Punishment on March 25th

Kathimerini published a rather shocking article on crime in Greece today. Coming as this does on the March 25th anniversary of the Greek Revolution, it raises fundamental questions about the Greek state and its ability to protect its citizens.

The Kathimerini article starts with a statistical analysis of reported crimes in 2010 and 2011. The following information is provided:

a.     Robberies rose from 6,079 incidents in 2010 to 6,636 incidents in 2011, an increase of 9.1%

b.     Burglaries and home invasions rose from 90,931 incidents in 2010 to 96,925 incidents in 2011, an increase of 6.5%

c.     General burglaries rose from 53,267 in 2010 to 56,852 in 2011, an increase of 6.7%

d.     54,974 illegal immigrants were arrested in 2011, an increase of 17% of 2010, when 47,079 illegal immigrants were arrested.

Besides the increase in crime, which can be attributed to the declining economy and illegal immigration, what is really shocking is the fact that of 15,562 arrests made, the large majority of [alleged] criminals were set free due to legal loopholes and conditions passed by ex-PASOK Minister Haris Kastanides.

The fact that the large majority of criminals are released leads to a “recycling” of crime, in which many of the same criminals return to crime. Some examples of the current procedures include:

·       One week ago, the public prosecutor released members of a gang to whom 30 burglaries were attributed. She gave them one week to post bail. As a result, the gang disappeared, and bail was not posted. The prosecutor then issued an arrest warrant for the same gang members.

·       Two Georgians, ages 21 and 22, were arrested, and it was discovered that they were responsible for 9 burglaries based on evidence recovered from their apartment. They were judged not to be a threat, and were released.

·       Two Albanians, ages 23 and 25, were arrested as part of a gang that conducted 8 robberies of Postal Offices, were released, despite that fact that in one robbery a 55-year old person was injured.

·       There are approximately 7,000 cases of crimes which have not been prosecuted in the Athens area alone.

The cause of this release programme is attributed by police sources to the public prosecutor’s office, and to the effects of the Kastanides law, which attempted to alleviate overcrowded prison conditions by reducing the penalties for robbery and other criminal conduct.

This situation is untenable for a number of reasons:

a.     It is impossible to calculate the damage to the morale of the police force, which has seen their salaries reduced and where young entrants are literally making EUR 700 per month. Why should the police bother to arrest anyone when the large majority of criminals caught are then released?

b.     It is equally impossible to imagine the outrage of the population. Yesterday’s news programme reported that a retired mother was killed in her apartment, one floor below her son, for a EUR 5 robbery. The fact that criminals can simply rob and kill with impunity and then disappear into the general population is unacceptable.

c.     As a result, not only are far-right organisations gaining political ground, but extremism of all forms is flourishing, including on a personal level. I know any number of people who have stated that they would prefer to kill a burglar and dump the body somewhere than turn him over to the police. It is difficult to argue against this.

Unfortunately, none of the political parties has come up with a means-tested plan to build more prisons, expand the prosecution system and police force, and deal with the root causes as well as symptoms of crime. There are many spasmodic efforts, such as building a 12-km fence along the Evros river, or converting disused military bases to reception centres for immigrants. These may help, but what Greece needs is real expenditure to doubling the number of prison cells in the country, recruit more police officers and remunerate them properly and expand the public prosecutors offices to deal with crime. This requires real money, but I can’t help thinking that revenue from illegal activity would cover a good deal of it.

At the same time, the Greek government has been making a grand campaign to imprison people for unpaid debts. It is hard to see why debtors will go to prison (particularly while there is no space), while Georgian and Albanian burglars walk free.

The end result is a state that has failed its citizens in yet another area of public life. Together with public healthcare and public pensions, public security is a foundation of the social contract between the Greek state and its citizens and residents. An abject failure of this kind is intolerable and inexplicable, and unfortunately, has been the modus operandi in Greece for the past 30 years.

© Philip Ammerman, 2012

Saturday 24 March 2012

Letter to a Friend

Part of a letter sent to a college room-mate in the United States. 

You asked about Greece: the situation is infuriating most of the time, surreal at the best of times. The government here, together with the political parties that rule it, has been proven to be a complete and abject failure. Corruption and incompetence are the order of the day. By my count, 30% of the seats in Parliament are inherited from family to family. In the last 30 years, the prime minister’s position has been held by 3 entrenched political families and one professor nicknamed “the Chinaman”.

In the midst of all this, you would think that the voters would eventually say “enough is enough” and get rid of these idiots. Unfortunately, that hasn’t been the case. There has been political fragmentation as the two larger parties lose their dominance, but the irony is that the smaller parties which emerge are led by former members of the larger parties. This is going to create absolute political paralysis in a future government.

In the meantime, the real root causes of the crisis have not been addressed. There has been no real public sector reform, just spasmodic efforts to reduce wages and pensions. Rather than closing useless public sector enterprises and replace citizen-facing functions with online or automated solutions, they have kept nearly all enterprises and transferred all staff to other public sector organisations, keeping them on the payroll. Those staff that have been terminated have been those in temporary contracts, or those who have left for retirement. The number isn’t small—it’s about 100,000 out of pre-crisis employment of about 850,000. The point is that it is neither strategic nor planned. It’s happening by accident, not by design.

You probably don’t know this, but since 1997 my strategy has been to diversify my consulting away from Greece, and to have nothing to do with the Greek public sector. This has been a good decision ethically (though a difficult one financially), and I do not regret it. The result is that today I do real consulting projects, and make an honest living. The large majority of Greek consultancies made a lot of corrupt money during the boom years, and are now thrashing about looking for the next golden opportunity.

So I have as little as possible to do with the Greek state, and in this I consider myself blessed. Unfortunately, the problem of the Greek state and the corrupt political system behind it remains solidly in place. It’s signature achievement has been to portray itself as the “saviour” of Greece against the “voracious” Troika, which wants more heartless “reforms” in exchange for loans. This is a “bait and switch” of epic proportions, and is a perfect illustration of why politics is the dirtiest game in town.

This is not to say that the Troika has been doing such a good job of things (the Troika is short-hand for the European Central Bank, the International Monetary Fund and the Eurozone, which are supposed to be saving Greece). Most days I doubt they understand the difference between their ass and their elbow. Bashing Greece turned into good domestic politics in Germany and some other countries, so we have a situation where the same European politicians who were supposed to convince their parliaments to support the bail-out package did so by spouting nonsense at political rallies. This nonsense, unfortunately, was carried by Bloomberg, Reuters, and everyone else. So they basically have been doing their level best to destroy the very loan agreement they have spent so much energy and political capital to set up.

Add to this the fact that the structure of the bail-out package was a disaster. I’ve been running debt analyses on Greece every quarter: I don’t know what numbers the Troika have been using, but they have been consistently wrong in their modelling and their assumptions. They under-estimated annual interest on public sector debt by EUR 8 billion per year (in a GDP of EUR 310 billion). They phased in the public sector fiscal adjustment over 5 years, which means that they wanted Greece to “return to markets” for borrowing in 2012 when the country was supposed to keep incurring deficits in 2015.

It’s difficult to see how anyone in this story has covered themselves in glory. Greek politicians continue to do what they are best at, which is lie to the public. German politicians resemble Dr. Strangelove more than would seem reasonable in the real world. Eurocrats design plans which are properly left in an ivory tower. The educated people I know here, the professional class, are fed up with political lies, but have no political alternative to vote for. The uneducated people continue to believe in miracle solutions, conspiracy theories and snake oil merchants. The quality of public services, which was never high to begin with, continues to deteriorate. Elections have been called, so politicians are now thumping on soapboxes and promising higher pensions for everybody, when everyone knows that there will be another round of cuts in June-July.

The only encouraging thing I see is that ordinary society continues. Pensioners are begging on streets in the centre of Athens: people help. There has been a huge response to charities feeding and clothing the homeless. In our neighbourhood, there have been no changes – schools are open, people still shop at the baker. A few stores have closed in the centre of our neighbourhood, but somehow people make do.

The other thing than no one has managed to screw up yet is the weather. Sunshine and spring have returned, and with it a bit of optimism. The day the Greek government or the European Union set up a ministry for weather is the day I will seriously start to worry.