For some reason, weddings seemed to be on people’s minds over the past few weeks. Along with tying the knot, anniversaries were also a popular subject. While Britain revelled in Will and Kate’s moment in the sun, Greeks had a less pleasant moment of their own to share: a few days before the royal wedding, Greece marked a year since it made an official appeal to the European Union and the International Monetary Fund for an emergency loan package.
Understandably, there was no flag waving or street parties to accompany the one-year anniversary of Greece admitting its political and economic failure. There was no puffing out of chests or swelling of pride to mark the 12 months since Prime Minister George Papandreou accepted that the party was over for Greece and it needed help to pay a bill that would have made even the Windsor’s wince.
Amid the introspection and the regret, the anniversary of Greece’s plea for help was marked in the most ironic of ways. US financial giant Goldman Sachs issued a statement saying that a restructuring of Greek debt would not pose a threat to Europe’s biggest banks. “By extending 91 billion euros of refinancing facilities to Greek banks, the European Central Bank has effectively disintermediated the ‘core’ banks from the periphery,” the Goldman analysts said. “As a consequence, the knock-on effects of a restructuring would be milder for European banks today than, say, just last year.”
On the face of it, there was nothing remarkable about Goldman’s statement. Given all the chattering about possible Greek restructuring, it was no surprise that a Wall Street giant should want to give its two cents worth. However, a closer look at recent Greek history proves what a moment of sweet irony it was that a bank which helped the country mask its deficit when it joined the eurozone, thereby contributing to the process that brought both Greece and the euro to the edge of catastrophe, should now comment on what does or does not constitute a threat.
As revealed last year by German magazine Der Spiegel and then confirmed by several international media, the deal between Goldman Sachs and Greece in 2002 involved cross-currency swaps in which government debt issued in dollars and yen was swapped for euro debt for a certain period and would be exchanged back into the original currencies at a later date. The investment bankers came up with a special product for Greece that involved fictional exchange rates, which allowed Athens to receive credit that did not show up in its statistics. Although not strictly a contravention of eurozone rules, it was certainly against the spirit of the single currency and the interests of the country.
The fact that the US bank should return nine years later to pass judgement when Greece is paying a terrible price for its past sins adds insult to injury. It is also a reminder that although Greece is relying on loans from its partners in Europe and beyond to stay afloat, many of its supposed friends around the world helped plunge it into debt in the first place. Even a cursory glance at the last few years underlines that if Greece was hell-bent on throwing itself off the cliff into economic ruin, there were always others happy to help her do it and make a profit in the process.
In 2004, for instance, the Greek government was encouraged to rack up a 1-billion-euro bill for the Games’ security package. About a third of the money went to a US-led consortium that provided the contentious C4I surveillance system that was not fully delivered until some time after the Olympics had finished. While the 1 billion spent in 2004 is a tiny part of the 350 billion euros that Greece owes now it was a moment that said much about the modern Greek state. It was indicative of a ruling class that played fast and loose with insufficient public funds since it could always borrow more in the name of the Greek people. But it was also symptomatic of the sometimes malign influence of outsiders.
The German electronics and engineering giant Siemens was part of the consortium involved in the C4I package. Since then, the firm’s murky dealings in Greece have become public knowledge. Millions were paid in bribes to Greek politicians and state officials to secure lucrative contracts. But Siemens was not alone – Greece’s recent history is peppered with foreign companies from supposedly morally upstanding countries that have made graft a fine art.
There was a telling moment last month, just days before Greece’s bailout anniversary, when – on the same day – two former managers at German firm Ferrostaal were charged with more than 62 million euros in bribes to win a 1.2-billion-euro submarine order in Greece and US company Johnson & Johnson agreed to pay 70 million dollars to settle charges that it paid kickbacks to win business in Greece and other countries.
Towards the end of last month, Greek Parliament voted to investigate Akis Tsochatzopoulos, the man who presided over the submarine deal as defence minister. This will almost certainly lead to a period of much public hand wringing, political bickering and moral posturing that will produce few tangible results. It is likely to be a reflection of everything that is wrong with Greece but while this charade plays out, it might be worth contemplating the part that foreign banks, investors and companies have played in Greece’s current unhappiness. They presented themselves as perfect suitors but in many cases it was just a marriage of convenience for them.
This commentary was published in the May issue of Insider magazine.