Tag Archives: Kostas Karamanlis

Pacta sunt servanda

*The agreements must be kept.
Cicero

Breach-of-employment-agreements

So we reached December, almost 6 months into Samaras’ administration. What was his main pre-election promise? Renegotiation. A sweet word which the majority of the people haven’t yet tasted. The recent Eurogroup meeting finished with a lot of criticism on whether this government, like the previous, actually negotiated anything. Yet, no one is complaining because most of the people struggle for the daily life, our daily bread. We’re thankful it’s not worse, says a Greek expression.

Beyond the scandals, one of the main reasons for the depreciation of Greek politicians is their unfulfilled promises. The thousands “I will” of old school politicians that have been quickly forgotten. When I look back the examples are countless. In 2009, Papandreou ran for election with a program for growth while New Democracy (and the Bank of Greece as it was later revealed) was saying that we were running low on cash. “There is money” was Papandreou motto, but we ended up finding out that we were hugely indebted and called the IMF. Before him, Karamanlis (2004-2009) declared the re-organisation and reconstitution of  the State. He wanted to end years of PASOK’s dominance by changing the mentality of the public sector. Instead he filled the public sector with New Democracy voters in an attempt to balance the demographics in Ministries and state enterprises. We now know that this project was financed with loans. Before him, Simitis (1996-2004) main promise was the entry into the eurozone and, as a result, an unprecedented wave of growth. The “creative accounting” as it was called got us into the european currency, the Stock Exchange collapses in a scandalous way and, as we keep finding out until these days, millions of euros went into “personal commissions” for weapons, public tenders won by Siemens, etc. The growth that we saw was just the gift wrap of the same old shit.

For the past 20 years we are living in a fake democracy where we vote for something that is really different with what we end up in our hands. It’s like getting a ticket to Mykonos but the boat strands on some dry rock island in the middle of nowhere. Yet, we disembark without complaint.

In a conversation I had recently with a friend, we were saying that the elections is some kind of contract. One side proposes to do something and the other authorises it to do it, an agreement legitimised by votes instead of signatures. However, no one is accountable for failing to fulfil the contract’s obligations. No one is punished for this systematic fraud, where it is intentional or unintentional. We don’t investigate that either. We just end up with a collective sense of injustice and anger, treating the elections more like a small circus rather than the celebration of democracy as we used to call it. We just get the next luxurious and super-fast boat that will end up at another rock island.

The other day I was surfing on the Internet and I somehow stranded on the personal website of Adonis Georgiades, a former far-right politician turned mainstream after joining New Democracy, less than a year ago. He had a banner at the top of the page which was saying “Pacta sunt servanda”. With this profound latin quote he was trying to calm the few who were actually anxious on whether Europe will keep its promise to give us the next instalment. The “153 brave ones”, as Georgiades likes to call them, of the Greek Parliament have voted the measures the troika asked, so now Europe was expected to do its bit. How would Georgiades feel if the other side of the contract simply breached the agreement? Which is something that they will do because there will be more measures in the future, despite the government’s statement that these will be the last. The announcement of new measures, is an old measure by itself. An old trick.

Hence, my dear Greek politicians of the current and future governments, the unilateral breaching of a contract means the de facto cancellation of the agreement. Therefore, when a government is elected by promising to renegotiate a situation in order to improve it and ends up by voting worse austerity measures than the ones of their predecessors, its moral legitimisation expires.

Politics, media and pimps

Yesterday the socialist party leader and ex-Prime Minister, George Papandreou, made another confusing move. Attending PASOK’s political council, he stated that he will quit politics by not setting himself as a candidate for PM in the next elections and either for the leadership of his party. Paradoxically Papandreou suggested that the Socialists’ internal election to chose their leader should take place after the general elections. Which means that Papandreou will lead the party in the elections but, in case of a victory, he is not going to be the Prime Minister.

Funnily, that wasn’t the most interesting part of his speech. Among other things, he made a short account of his administration and accused the Lambrakis Media Group (DOL) of undermining his government. The reason for DOL’s behaviour, according to Papandreou, was that the former prime minister had advised the National Bank of Greece not to lend the media group 10 million euros. As he said, the issue shouldn’t have reached him in the first place and, after being informed that DOL didn’t satisfy the economic criteria for the loan, he instructed NBG not to proceed in the lending.

DOL’s chairman, Stavros Psycharis, replied immediately to the accusation with this short announcement.  “It’s true that DOL asked for a loan from the National Bank of Greece, of which it is a customer for the past 90 years. The National Bank rejected the request officially. Unofficially they told us that it was not approved by the Prime Minister’s office. It’s obvious that any intervention from banks against newspapers which don’t satisfy government interests, is a fascist mentality. Obviously, when power is lost, memory is lost too, even for very recent events. The PASOK leader-in-retirement is kindly requested to state the circumstances under which we met for the last time at the Prime Minister’s office and the reasons for which we were asked to enter the building through the back door. He should also say who asked what from whom!”

This is the beautiful and prudent world of Greek politics and media, an interwoven set of business and political interests which, for decades, were serving one another forming the so-called establishment. Of course, he was not the first Prime Minister who ever said such a thing publicly. Back in 2004, his predecessor, Kostas Karamanlis, gave his famous speech on Greece’s five “pimps” who were thought to undermine his project. An article of that day describes the event in a very detailed way and I found it twice interesting to read it under today’s circumstances in Greece.

“We will not allow five pimps and five interest groups to push us around… They can easily be dealt with,” Karamanlis told a gathering of about 30 of his party’s members of Parliament in a Monastiraki restaurant best known for its kebab and ebullient owner and namesake, Bairaktaris. The meeting on Wednesday, in which generous portions of food and wine are said to have been consumed, was a private affair. It was, of course, not as private as a chat in his home or office, meaning that what was said could find its way into the public domain. And so the next day Karamanlis’ purported declaration had been leaked to the media. The government commented half-heartedly that the prime minister does not use such language and actually confirmed the gist of what he had said.

In a country where politics never sleep, where words are cheap and where memorable and colorful statements become slogans, Karamanlis’ purported words soon took on a momentum of their own. It was not only as if he had actually used these particular words at the dinner at Bairaktaris but as if he had declared them in full view of the public. He could, of course, always deny paternity but the statement will stick to him and will be part of his legacy. What now remains to be seen is what he meant by this statement. But what is even more significant is whether this signaled the start of a clash of titans or whether it was a verbal flare sent up into the dark sky to illuminate public life for a while before disappearing into the sea of grand, meaningless gestures.

On the surface, the meaning of the declaration is clear. Karamanlis was telling his troops that they should be ready to kick some enemy butt as part of an irresistible force.

Here you can read more about that event. In the meantime, a question instead of an epilogue. If the ruling elite is the pimp, who are the whores?

 

The run-up to the Greek economic crisis (Part 2)

This is the 2nd part of Greek journalist Pavlos Papadopoulos’ article on the run-up to the current Greek economic crisis, published by “To Vima” newspaper (16/10/2011). To read the first part of the article, click here.

“George knew everything” admits to “Sunday’s Vima” newspaper a top government official. “Since February 2009, eight months before the elections, we knew that Greece was technically bankrupt. The actual bankruptcy was a matter of time”. In February 2009, there was a sudden increase in the difference of the interest rate (spread) between the Greek and the German state 10-year bond. That development, which panicked the Karamanlis administration, didn’t go unnoticed by the PASOK leader and his close associates.

After talking with Greek and mostly foreign experts (Economics Nobel Prize recipient Joseph Stiglitz and investor George Soros, to name but a few) Mr. Papandreou is said to have concluded that the dynamics of the public debt was so powerful that a catastrophic bankruptcy was certain. According to the same source, the PASOK chairman then thought the obvious thing: the states which are on the verge of bankruptcy address to the International Monetary Fund (IMF). However he realized that the capital which was necessary for Greece to avoid bankruptcy was five times more than what the IMF could offer. So he concluded that Greece needs an “international solution” and he started examining the initiatives that he could take.

“Our mistake was that we didn’t prepare the people” says the same party member, “and the Party either”. Mr. Papandreou underestimated the “domestic front” even though he knew that Greece was heading towards bankruptcy. He didn’t abandon his vision of “Green Development”, neither did he direct his Financial advisors to more “careful” declarations. In the summer of 2009, the total cost for benefits was 30 bn euros. A lot of the MPs have called 2009 as the “new ‘81”.

Mr Papandreou stubbornly insisted in a vague rhetoric. He reckoned that a combination of green development, institutional reforms and a (completely unspecified) international initiative would solve the debt problem without targeting the people. This is why the warning by George Provopoulos, Governor of the Bank of Greece, that the 2009 deficit would be a double digit figure didn’t mean much for the wannabe Prime Minister. What he actually believed was that Greece would go from over-borrowing to prosperity without walking the distance in between. And some accused him that, had he taken tough measures back then, he could have avoided the worse that followed.

There was no “socialist allergy” at the Finance Ministry when it came to austerity measures. The Minister often called confidential meetings. “Think of shock measures” was his request to his associates . He believed that the austerity measures were necessary to restore the international markets’ trust. One of his most radical and risky ideas that was heard in those meetings was the “10% haircut of the savings” for all the bank accounts which had more than 100.000 euros. They would implement it at the same time with the (French inspired) freezing of any account which would be instructed to send more than 100.000 euros abroad, in order to proceed to a tax details check.

These proposals, as many others, were triumphantly rejected. Mr. Papaconstantinou did not possess the political prowess to enforce a different policy, while he never recovered the control over the tax-collecting mechanisms. He was good enough abroad. Domestically he achieved the minimum while he didn’t avoid deficiencies and the equivocations which increased the insecurity and the uncertainty. The measures that were announced were like aspirins and even them were causing reactions. Like the reaction by Christos Papoutsis when they announced the freezing of salaries in the public sector for those whose paycheck was more than 2.000 euros (which was rejected by the Prime Minister too).

During the early period of his administration Mr. Papandreou visited Moscow and Paris in order to “surround” Berlin, since Angela Merkel didn’t want to accept, especially after her alliance with the Liberals, a “European solution” in co-operation with the IMF. Mr. Papandreou reckoned that, if he could convince Moscow and Paris, he could then take Berlin. Having his mind in an “international solution” he kindly avoided Vladimir Putin’s proposal of geopolitical significance for an interstate loan to Greece.

While waiting for the international solution to mature, it was preferred to flirt with Goldman Sachs and Deutsche Bank. According to banking sector sources, the Greek government appointed these two banks at the same time with the order to investigate the possibility of a 25 bn euros loan (private placement) from the markets. However the international practice necessitates that such orders are given only to financial institutions. At the end of 2009 Gary Cohn, CEO of Goldman Sachs, met Papandreou at the Pentelikon hotel in Kifissia suburb. At the beginning of 2010 the head of Deutsche Bank, Josef Ackermann, visited the Greek Prime Minister’s office. The players who were involved in these initiatives were having preferential access to the core of power. The initiatives failed. The two banks (and their middlemen) lost important commissions. And the markets’ lack of trust against the Greek government increased.

End of Part 2  – To read Part 3 click here.