A few years ago, Greece’s slogan for attracting tourists was “Live your myth in Greece.” The onset of the economic crisis seems to have given license to some people to make up their own myths about Greece. At regular intervals since 2009, they have ignored the complexities and various – domestic and international – causes of the Greek crisis to boil it down to a stodge of clichés, stereotypes, falsehoods and misinterpretations (accidental and deliberate).
It was alarming to hear an intelligent man like European Central Bank executive board member Joerg Asmussen apparently became the latest member of this burgeoning group of politicians, policy makers, journalists and experts engaging in mythmaking. “It is difficult to convince people in countries like Estonia and Slovakia, where the average wage is 1,000 euros to lend to a country where the average wage in the public sector is about 3,000 euros,” he is reported to have told an audience at the Economist conference in Athens earlier this week.
It’s not clear where Asmussen got this number from but the facts indicate he plucked it out of thin air. While there are some public sector workers in Greece that earn, or cost the state, 3,000 euros per month or more, they are mostly limited to the Foreign Ministry and public utilities. A study of Greece’s civil service commissioned by the government and carried out last year by independent consultants found that the average monthly salary (annual pay divided by 12) was 2,077 euros before tax.
So, why does it matter that Asmussen made this mistake while speaking to an audience of a few hundred people? As Greece has found out to its cost, negative news spreads very fast. Within minutes of the ECB official speaking, his comments were being widely reported and another Greek-related misnomer had become an accepted part of public debate.
“In Slovakia, people live off a monthly pension of 280 euros and salaries stand at about 400 a month,” Slovakian Prime Minister Robert Fico said during a visit to Berlin a day after Asmussen’s speech. “It is very difficult to explain to those people why Slovakia contributes to assisting countries where wages stand at 3,500 euros.”
And, there you have it: within 24 hours the promulgation of a falsehood created another fissure in the eurozone.
Standing next to Fico when he made his erroneous comment was German Chancellor Angela Merkel, who did not deem it worthwhile to correct the Slovakian premier. Maybe she can be forgiven for not knowing the details, although that didn’t stopped her last year when she has publicly presented incorrect date about Greeks’ retirement ages and vacation time. What’s more worrying than Merkel’s inaction is that several members of the Greek Cabinet spoke after Asmussen at the Economist conference but none of them sought to correct the ECB official.
One of those who spoke at the Athens conference was Administrative Reform Minister Antonis Manitakis. To his credit, Manitakis had sought to put right another gross inaccuracy regarding Greece a few days earlier. An article in the local press, which referred to an unpublished troika report, claimed that the government had broken the rules it agreed with its lenders on public sector hirings. News agencies picked up the story and within hours the world was reading that Athens was flouting the terms of its bailout agreement.
The report was far from the truth and even alarmed International Monetary Fund representatives in Athens. In his statement, Manitakis explained that a change in the hirings rule in 2011 had led to Greece exceeding its recruitment target by just 1,057 civil servants. Troika sources, meanwhile, confirmed that Greece is on course to reduce the number of its civil servants it had in 2009 by more than 100,000 by the end of this year. The target is to have 150,000 fewer than by the end of 2015.
It’s true that PASOK and New Democracy have shown a reluctance to implement an evaluation process in the civil service and root out the bureaucrats who don’t deserve to stay in their jobs. Instead, they’ve sought to slash numbers through an attrition of older public sector workers retiring. It’s cowardly and it’s counterproductive but it’s not evidence of Greece shirking the demands made by the troika on this particular issue.
However, targets being achieved or narrowly missed don’t make as good a story as Greece steadfastly refusing to comply with its loan agreement and continuing to happily pay for a bloated public sector. An article about the woes of the Hellenic Railways Organization (OSE) based on the notorious quote (from the 1990s) that it would be cheaper to send passengers by taxi rather than by train makes entertaining reading. An article which takes into account that the company was restructured in 2011 and that its operational arm, TRAINOSE, turned an operational surplus for the first time last December is more of a challenge to comprehend. Unburdened by a debt of almost 11 billion euros, which passed to the state, and operating an overhauled timetable with staff on reduced wages, TRAINOSE slashed a deficit of 187 million euros in 2010 by 87 percent to just 33 million last year. OSE, which is responsible for infrastructure, turned a profit of 15 million euros last year, according to figures published by the company a few months ago.
OSE, though, is also a good example of why Greece’s lenders have genuine reason to be frustrated. A number of legal complexities, which the government has failed to clear up over the last two years, have prevented the railway company being included in a portfolio of state assets that could be privatized. In fact, almost all efforts to generate revenues from privatizations have stalled so far. The current coalition government has promised to kick start the project. It will have a lot of lost ground to make up and trust to rebuild.
Greece has given the world abundant reasons for criticism both in the run-up to this crisis and in trying to deal with its fallout. It has failed, among other things, to close down superfluous public organizations, slash waste in the state sector, implement the liberalization of closed professions, reduce bureaucracy, speed up its justice system and overhaul its tax code. This, however, does not justify those who regularly give the impression that nothing is being done.
For all these failings, we should not forget that Greece has reduced its deficit in the middle of its worst post-war recession by more than almost any developed country has managed before. That’s not nothing, it’s something. While structural changes have been painfully slow, the OECD ranked Greece top of all its members states for reforms in 2010 & 2011. That’s not nothing, it’s something. Greece has not reined in public spending enough but some 100,000 people will have left the civil service by the end of this year. That’s not nothing, it’s something. Greece hasn’t cracked tax evasion but it’s employing new know-how and more than 500 evaders have been arrested since November. That’s not nothing, it’s something.
If we add up all these somethings, they’re not enough – much more must be done, and done quickly. But we should not lose perspective. At the start of this crisis, Greece started way behind most of its eurozone partners because of years of indifference, corruption and political timidity. Catching up would be a huge task at the best of times. Doing so when it is going through one of the longest recessions in modern international history, while dealing with the effects of political and social upheaval and constant speculation about the country’s future, makes it a painstaking process.
That’s why it’s so worrying that officials of the calibre of Asmussen – who spent part of his Economist speech praising Greece’s fiscal adjustment – should indulge in inaccuracies and perpetuate common misconceptions about the Greek problem. This constant repetition of clichés gives the impression of an international community that is happy for Greece’s situation to be reduced to a simplistic broth of character flaws and national backwardness, making it a so-called “unique” case. This provides the eurozone, ECB, IMF and banks a screen behind which they can hide their own responsibilities. Why speak about the flawed architecture of the euro, undercapitalized and overexposed banks and misguided austerity policies when you can focus exclusively on Greek weaknesses.
It’s not as if this tactic has not been used before. Greece’s case is often likened to the collapse of the Argentinean economy more than a decade ago. So, it’s interesting to go back to read the words of Paul Blustein, who wrote the seminal study of Argentina’s crisis “And the Money Kept Rolling In (and out)”. While accepting the tax evasion and corruption that many focussed on as factors in bringing about Argentina’s problems, he added: “But as reprehensible as these problems may be, they were peripheral contributors to the problem that was brewing… Just as Argentines will be better off accepting their own heavy responsibility, the international community will be better off confronting the facts of its role in the story.”
It seems this lesson has not been learned. This should be of urgent concern to Greek policymakers and those within Europe that realize a recovering Greece within the eurozone is in everybody’s interests. If Greece appears not to want to be saved, it is much easier to justify casting it aside. It will give those who want to cover up their own failings a scapegoat. Greece’s political elite will blame unyielding European and international forces, while those outside the country will point a finger at a nation beyond salvation. Those who want the best for Greece should be alarmed about the sarcastic comments made this week by IMF managing director Christine Lagarde – who recently had to clarify her controversial comments regarding tax evasion in Greece. She spoke of not being in the “mood” for negotiations with Greece, when the bailout program allows modifications following each quarterly review, and about the “excellent” numbers she expects the Greek side to present, when she knows that a deepening recession and the politically instability of the last two months will ensure the numbers are terrible.
At this delicate and crucial stage of the crisis, Greece and its genuine partners must wrestle back initiative. It is incumbent on the country’s decision makers to prove they are making the necessary changes to justify the continuation of assistance from others. They have to show to the world they’re willing to reflect the overwhelming public support for progress and are not content to just pander to the special-interest groups they’ve exchanged favors with for the last few decades. But they’ll need the support and understanding of those within Europe who appreciate the complexities of Greece’s problems and the challenges it faces in addressing them. In short, it is time for the problem solvers to put the myth-makers in their place.