Why is the 2009 Greek government deficit probed by the courts, again?

29/01/2013 by

Greek judges are, again, moving against Mr Georgiou, the Head of ELSTAT (the revamped Greek national statistics bureau). Why is this happening? And what does it signify?

It was the end of 2011 when the Head of the revamped Greek national statistics bureau was summoned to answer allegations of having inflated the 2009 budget deficit, at the behest of the Papandreou-Papakonstadinou government, allegedly in order to justify a further tightening of the austerity measures that went hand in hand with Greece’s ‘Bailout’ Mk1 and the Memorandum of Understanding with the troika that accompanied it.

Back then I recall being interviewed on the matter by BBC Radio 4’s More or Less program. Was the deficit inflated? And if so, was it done on purpose?

My answer was that, in truth, I am not sure. My hunch is that, after ‘Greek statistics’ had become the world’s laughing stock, it was natural, and indeed, prudent, to err on the side of caution and pessimism. That the new revamped authority, ELSTAT, had good cause to fear one thing above all else: that it would be painted with the same brush as its predecessor; that its estimates of the Greek budget deficit would, once again, prove in the months that follow an ‘under-estimate’.

 In this sense, I sympathised with Mr Georgiou and I too, if I had the ill fortune on being in his shoes, would be more worried about under-estimating the size of the budget deficit than about over-estimating it. The reason is simple: When the whole world assumes that Greek statistics is always going to under-estimate the budget deficit, changing this reputation, and impressing the world that things have changed, meant one thing: getting it right or, since statistics can never be precisely right, issuing predictions that err on the side of over-estimation. Thus, if the actual budget deficit comes in at a lower level than predicted, ELSTAT’s reputation for ‘bending the rules’ would improve, rather than remain in the pits.

Some say that ELSTAT issued these over-estimates of the 2009 budget deficit in cahoots with Mr Papakonstadinou, the then finance minister, in order to arm him with arguments in favour of not negotiating a better deal with the troika. While I hold Mr Papakonstadinou in considerable contempt, and would not put anything past his penchant for signing up to the worst loan agreement in the history of humanity, such an allegation must be proved beyond reasonable doubt. Put bluntly, I have seen no evidence that does this. Until and unless I do, I am prepared to accept the simpler explanation above; that is, that ELSTAT was reasonably erring on the side of over-estimation.

But then a more pertinent question presents itself: Since the end of 2011, the matter had blown over. Why is it now back on the agenda? Why is Mr Georgiou being chased up by the Greek judicial system? That this issue in now back is due to the new government’s desperate attempt to present itself as somehow different to the previous Papandreou regime. And for those who think that, due to the official separation of judicial from executive power, the judges’ decision to go after Mr Georgiou must have nothing to do with the government, I say: Think again! Tragically, many of our judges, though of course not by any means all, are very close to the government of the time. It is undoubtedly the case that the case against Mr Georgiou is being pursued by a group of judges uncomfortably close to today’s conservative-led government.

So, the question becomes: Why does the new three-party government want to persecute Mr Georgiou again? The answer can be gleaned by taking stock of two contradictory facts: On the one hand, the new government is scrupulously implementing the Papandreou-Papakonstantinou government’s agenda (even though Mr Samaras, our PM, had spent two years lambasting Papandreou while in opposition). On the other hand, the new government wants to present itself as a different kind of government and to impress upon the public this ‘difference’ by hounding selected members of the Papandreou regime whose policies it is copying. However, there are limits in how much of that hounding they can do since one of the three parties on which the government depends is the socialist PASOK party that was once led by Papandreou. this context, Mr Samaras and his New Democracy strategists are targeting soft targets. Georgiou is one such. Thus my understanding is that his prosecution has been revived as part of a general strategy (involving other soft targets too) to pacify the government’s supporters’ anger (with the unfolding austerity-driven Depression) while staying the course with the same austerian policies that the Papandreou government first implemented three years ago, which are responsible for the socio-economic implosion causing the asaid nger amongst the government supporters.

If it all sounds quite Byzantine it is because it is… Byzantine!

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