This post has been a long time in the making. I started it a full five years ago and never managed to get it to work. Then longtime LOLGreece favourite Frances Coppola hosted an excellent blog by Sigrún Davídsdóttir about the legal drama following the 2009 Greek deficit revision, and soon afterwards ELSTAT announced the resignation of its President Andreas Georgiou. Rather than weigh down the comments section at Frances' blog, I decided to come back to the drafts section and finish this monster. Part II of this post is now available here.
What's happening at ELSTAT?
ELSTAT and its president have spent the last five years fighting a persistent allegation - that they had tampered with the 2009 deficit figures in order to cause, hasten or intensify, the onset of austerity in Greece. This is, coincidentally, almost the entire time ELSTAT has been in existence.
You see, an independent national statistics agency was not on the agenda for Greece prior to October 2009 - Greece's government at the time promised the world such an agency only in the aftermath of the (first) Greek deficit shocker in a vain attempt to rebuild confidence. Much of ELSTAT's eventual form was derived from the recommendations of the Committee for the Reliability of Fiscal Statistics, published in early 2010. The Committee was not billed as fully independent (what ever is, in Greece?); its authors hailed from the BoG, ΚΕΠΕ and ΙΟΒΕ (Greece's most prominent economic think tanks), ΓΣΕΕ (Greece's tertiary trade union), and the Greek banking federation. One, Gikas Hardouvelis, best known for that email, was eventually to become Minister of Finance for the last half-year of the old Coalition government.
The world's statisticians have been pretty much unanimous throughout that the case against ELSTAT is, to quote the International Statistical Institute, 'fanciful.' More than half of all ethics-related interventions by the ISI in recent years have been about Greece (see here, here, and here) and in ELSTAT's favour; and the ISI has had no qualms in publishing its accusers' letters (anonymised) for all to see.
In 2011, Eurostat wrote a public letter in ELSTAT's defence; more tellingly, they haven't questioned our figures for years now. In 2012, the Greek Parliamentary Inquiry into the 2009 deficit found little fault with ELSTAT, noting that it had followed the new European national accounts standard (ESA95) to the letter. A reasonably-independent Good Practices Advisory Committee has twice reviewed the function of ELSTAT in light of these recommendations and general good practice and given it a clean bill of health for 2013 and 2014, in both cases deploring (the previous government's) renewed efforts to tamper with statistics. More recently, between 2014 and 2015, ELSTAT passed a peer review pretty much with flying colours. The European Statistical Governance Advisory Board likewise heaped praise on it earlier this year.
But the 2009 deficit review is not the only matter in which ELSTAT's procedures have been elevated to scandal by conspiracy theorists - not long ago, ELSTAT's own employee Union took issue with a confidentiality attestation that obliged staff to not reveal survey respondents' personal information (clearly and uncontroversially defined in the text) to anyone, including the courts. This was taken out of context and dressed up as a wholesale gagging clause, meant to protect ELSTAT's President from future prosecution. The accusation taken up immediately, not by the usual semi-literate bloggers but, perhaps inevitably, by Greek members of Parliament (G. Dimaras of the Panhellenic Citizens' Chariot and G. Avramidis of the Independent Greeks, the kind of person who feels the need to assure people on Facebook that he has never been a member of a Masonic Lodge). The original culprits, ELSTAT's Union, even took the matter to court , egged on by former Board members involved in championing the deficit tampering myth.
Who buys this stuff?
Sigrún Davídsdóttir asks, in her original post, how come the Greek body politic has bayed for Georgiou's blood when he very likely produced the first accurate deficit figures in decades, yet have never called to account the former ESYE heads who reported artificially low deficits; even though these brought about the threat of legal sanctions and the reality of national humiliation. The reason is that much of the Greek public either believes the inflated deficit myth or desperately wants it to be true; and as ELSTAT is institutionally weak, kicking it is a costless way of earning fetid brownie points with the worst of the Greek electorate.
Barring PASOK, which had no choice in the matter, every major Greek political party has at least hinted that the 2009 deficit was inflated, if not claimed it as fact.
The early Greek Crisis Propaganda War
This explains the how but not the why of the inflated deficit myth. To understand the why, you need to un-learn the Greek crisis consensus that has emerged since 2012, and try to think back to late 2009 and early 2010.
The Greek government of the day, George Papandreou's PASOK, spent most of its time handling the crisis in deep denial. Their narrative, both pre-bailout and post-bailout, was that Greece was under attack from evil speculators making a killing by shorting Greek bonds or CDSs (remember those?), aided by the international financial press and by credit rating agencies. Though in every other way G-Pap's government has since been soundly discredited, this narrative stuck. There was, until mid-2010, very little public discourse on the sustainability of Greek debt and even committed defaultniks were staking their claim for debt relief on the much less promising premise of odiousness - this was Syriza's core debt relief narrative too, until as late as 2014.
By April 2010, the main villain of the Greek anti-austerity camp was neither Angela Merkel nor Wolfgang Schaeuble, but the IMF - of which Georgiou was an ex-staffer. The eventuality of IMF involvement in a Greek bailout had for months been portrayed as a defeat for Europe, both in Greece and abroad. The IMF had form in imposing harsh austerity; its presence was the hallmark of third-world dependency and loss of sovereignty; and as a US-based institution it was distasteful to the left, the populist right and, to some extent, Greek Euro-federalists. So even if the bailout turned to be inevitable, the reasoning went, it was treason to invite the IMF into our homes.
The Greek blogosphere went into overdrive. The IMF's involvement in our bailout was part of an ages-old foreign conspiracy to bring proud Greece to heel. The second deficit revision, to over 15%, was calculated in order to make sure Greece had a bigger deficit than Ireland and thus scapegoat the country and shame us into obedience. One of the most viral Greek blogposts of all time denounced then-PM George Papandreou as the half-Jewish son of a traitor who had been paid $100m by Chase Manhattan to destroy Greece (an obviously forged 'contract' was even attached). The conspiracy theorist blog, Olympia, soon followed up with the Weisbrot hoax, which went unstoppably viral between 2010 and 2011 and warned of the horrors of IMF occupation, calling on the people to rise up in graphic violence and drive out both the IMF and the domestic elite. This despite Mark Weisbrot, the supposed interviewee in that post, denouncing it as a hoax immediately and persistently. As exotic as they sound, news sources like this wielded enourmous influence. One of Olympia's most prolific writers, endorsed wholeheartedly by the blog, is now an Independent Greeks MP famous for his antisemitic remarks. The blog's admin has even landed a plum public sector job.
As for Georgiou, the appointment of a former IMF man to ELSTAT ahead of the deficit revision was proof positive that the new statistics agency was a Troikan Trojan horse.
Courting the populist right
The deficit-denier fantasy was a perfect fit for the psychological needs of all of these populist right-wing groups, who, in the summer of 2010, formed the bulk what came to be known as the 'upper square' contingent of the Greek Indignados (explanation here). These people were shamed by suggestions of Greek insolvency, and they resented the sneering tone of foreign editorials. But most of all they wanted no part of the austerity to come, and none of the blame.
These people's traditional allegiances had been with New Democracy - the party on whose watch the deficit had got out of hand - or the National Orthodox Alert - the only right-wing party to have voted for the first memorandum. An inside job orchestrated by the Americans supposedly in charge of the IMF left New Democracy blameless for the ballooning deficit, restored the defensive narrative of Greek nationalism, and maintained the fiction that Greece could go on as it always had - as soon as the political elite had been taken to the gallows.
But traditional allegiances had counted for little in the years leading up to the crisis. Leaders of the Left noted that many of the populist Right voters had also opportunistically voted for PASOK in 2008 to steer the country away from the mild austerity promised by Karamanlis. With the exception of nationalism, and possibly religion, these people had no ideology and were contestable political ground. It was this opportunism in the Greek populist right that made them so attractive to parties across the political spectrum. Hit the right, shrill, defensive, patriotic notes, and they would swing. These are the people Syriza officials were going for when they choose, back in 2013, to throw in their lot with the Independent Greeks. These are also the people Syriza officials had in mind when warning that a failed negotiation would bring Golden Dawn to power.
There is a pattern here: Greek politicians have always thought it acceptable to weaken important institutions in the pursuit of votes. The problem is that the damage cannot be controlled, much less undone when the political hour of need is over. New Democracy's initial protests of an inflated deficit figure, normally part and parcel of a government handover in Greece, mutated into a full-blown conspiracy theory. No party with an eye on the votes of the populist right had the guts to stand against it. Today, Syriza hopes that Georgiou's departure will lay the matter to rest while allowing the government to honour its obligations to our creditors. It will not. These people do not realise what damage they are doing.
Part 2 of this post is now available here.
What's happening at ELSTAT?
ELSTAT and its president have spent the last five years fighting a persistent allegation - that they had tampered with the 2009 deficit figures in order to cause, hasten or intensify, the onset of austerity in Greece. This is, coincidentally, almost the entire time ELSTAT has been in existence.
You see, an independent national statistics agency was not on the agenda for Greece prior to October 2009 - Greece's government at the time promised the world such an agency only in the aftermath of the (first) Greek deficit shocker in a vain attempt to rebuild confidence. Much of ELSTAT's eventual form was derived from the recommendations of the Committee for the Reliability of Fiscal Statistics, published in early 2010. The Committee was not billed as fully independent (what ever is, in Greece?); its authors hailed from the BoG, ΚΕΠΕ and ΙΟΒΕ (Greece's most prominent economic think tanks), ΓΣΕΕ (Greece's tertiary trade union), and the Greek banking federation. One, Gikas Hardouvelis, best known for that email, was eventually to become Minister of Finance for the last half-year of the old Coalition government.
The world's statisticians have been pretty much unanimous throughout that the case against ELSTAT is, to quote the International Statistical Institute, 'fanciful.' More than half of all ethics-related interventions by the ISI in recent years have been about Greece (see here, here, and here) and in ELSTAT's favour; and the ISI has had no qualms in publishing its accusers' letters (anonymised) for all to see.
In 2011, Eurostat wrote a public letter in ELSTAT's defence; more tellingly, they haven't questioned our figures for years now. In 2012, the Greek Parliamentary Inquiry into the 2009 deficit found little fault with ELSTAT, noting that it had followed the new European national accounts standard (ESA95) to the letter. A reasonably-independent Good Practices Advisory Committee has twice reviewed the function of ELSTAT in light of these recommendations and general good practice and given it a clean bill of health for 2013 and 2014, in both cases deploring (the previous government's) renewed efforts to tamper with statistics. More recently, between 2014 and 2015, ELSTAT passed a peer review pretty much with flying colours. The European Statistical Governance Advisory Board likewise heaped praise on it earlier this year.
But the 2009 deficit review is not the only matter in which ELSTAT's procedures have been elevated to scandal by conspiracy theorists - not long ago, ELSTAT's own employee Union took issue with a confidentiality attestation that obliged staff to not reveal survey respondents' personal information (clearly and uncontroversially defined in the text) to anyone, including the courts. This was taken out of context and dressed up as a wholesale gagging clause, meant to protect ELSTAT's President from future prosecution. The accusation taken up immediately, not by the usual semi-literate bloggers but, perhaps inevitably, by Greek members of Parliament (G. Dimaras of the Panhellenic Citizens' Chariot and G. Avramidis of the Independent Greeks, the kind of person who feels the need to assure people on Facebook that he has never been a member of a Masonic Lodge). The original culprits, ELSTAT's Union, even took the matter to court , egged on by former Board members involved in championing the deficit tampering myth.
Who buys this stuff?
Sigrún Davídsdóttir asks, in her original post, how come the Greek body politic has bayed for Georgiou's blood when he very likely produced the first accurate deficit figures in decades, yet have never called to account the former ESYE heads who reported artificially low deficits; even though these brought about the threat of legal sanctions and the reality of national humiliation. The reason is that much of the Greek public either believes the inflated deficit myth or desperately wants it to be true; and as ELSTAT is institutionally weak, kicking it is a costless way of earning fetid brownie points with the worst of the Greek electorate.
Barring PASOK, which had no choice in the matter, every major Greek political party has at least hinted that the 2009 deficit was inflated, if not claimed it as fact.
- Ex-PM Antonis Samaras made the claim outright in 2010, in the first of his Zappeion speeches (transcript here): the 2009 deficit was inflated in order to justify engaging the IMF in the Greek bailout. And while Samaras dropped this line immediately upon taking power, New Democracy's onetime spokesperson, E. Antonaros, insisted on pushing the inflated deficit myth as late as 2014.
- Syriza's leader, Alexis Tsipras, called the 2009 deficit review a 'premeditated crime,' despite his own party warning about the ballooning deficit as early as Q1 that year. Nor did Syriza repent as it drew closer to power: Tsipras repeated the accusations in 2014 (h/t to reader Y.M.), and as late as January 2015, Syriza MEP Papadimoulis demanded a written answer from the Commission on what he called 'the ELSTAT scandal', heaping scorn on the findings of the Good Practice Advisory Committee without further explanation. The infamous Greek Debt Audit report, that sensational executive summary commissioned from a sympathetic body of experts (and otherwise) by Syriza, repeats the myth with no hint of reservation - and with clearly inadequate documentation.
- The far(cical) right Independent Greeks, rescued from the political scrapheap to buttress a Syriza government, have not only claimed that the 2009 deficit was inflated, but signed the chief 2009 deficit conspiracy theorist up as a party member, gave her a salary courtesy of the taxpayer as part of the utterly un-google-able 'Independent Greeks Institute,' then entered her as an MEP candidate in 2014.
- The Prophet Varouphael, PBUH, has stood out for his unwillingness to blame ELSTAT for inflating the deficit. Although he has taken a marginally less cheap shot at the Greek surplus that gave him the fighting chance at a negotiation that he magisterially wasted earlier this year.
The early Greek Crisis Propaganda War
This explains the how but not the why of the inflated deficit myth. To understand the why, you need to un-learn the Greek crisis consensus that has emerged since 2012, and try to think back to late 2009 and early 2010.
The Greek government of the day, George Papandreou's PASOK, spent most of its time handling the crisis in deep denial. Their narrative, both pre-bailout and post-bailout, was that Greece was under attack from evil speculators making a killing by shorting Greek bonds or CDSs (remember those?), aided by the international financial press and by credit rating agencies. Though in every other way G-Pap's government has since been soundly discredited, this narrative stuck. There was, until mid-2010, very little public discourse on the sustainability of Greek debt and even committed defaultniks were staking their claim for debt relief on the much less promising premise of odiousness - this was Syriza's core debt relief narrative too, until as late as 2014.
By April 2010, the main villain of the Greek anti-austerity camp was neither Angela Merkel nor Wolfgang Schaeuble, but the IMF - of which Georgiou was an ex-staffer. The eventuality of IMF involvement in a Greek bailout had for months been portrayed as a defeat for Europe, both in Greece and abroad. The IMF had form in imposing harsh austerity; its presence was the hallmark of third-world dependency and loss of sovereignty; and as a US-based institution it was distasteful to the left, the populist right and, to some extent, Greek Euro-federalists. So even if the bailout turned to be inevitable, the reasoning went, it was treason to invite the IMF into our homes.
The Greek blogosphere went into overdrive. The IMF's involvement in our bailout was part of an ages-old foreign conspiracy to bring proud Greece to heel. The second deficit revision, to over 15%, was calculated in order to make sure Greece had a bigger deficit than Ireland and thus scapegoat the country and shame us into obedience. One of the most viral Greek blogposts of all time denounced then-PM George Papandreou as the half-Jewish son of a traitor who had been paid $100m by Chase Manhattan to destroy Greece (an obviously forged 'contract' was even attached). The conspiracy theorist blog, Olympia, soon followed up with the Weisbrot hoax, which went unstoppably viral between 2010 and 2011 and warned of the horrors of IMF occupation, calling on the people to rise up in graphic violence and drive out both the IMF and the domestic elite. This despite Mark Weisbrot, the supposed interviewee in that post, denouncing it as a hoax immediately and persistently. As exotic as they sound, news sources like this wielded enourmous influence. One of Olympia's most prolific writers, endorsed wholeheartedly by the blog, is now an Independent Greeks MP famous for his antisemitic remarks. The blog's admin has even landed a plum public sector job.
As for Georgiou, the appointment of a former IMF man to ELSTAT ahead of the deficit revision was proof positive that the new statistics agency was a Troikan Trojan horse.
Courting the populist right
These people's traditional allegiances had been with New Democracy - the party on whose watch the deficit had got out of hand - or the National Orthodox Alert - the only right-wing party to have voted for the first memorandum. An inside job orchestrated by the Americans supposedly in charge of the IMF left New Democracy blameless for the ballooning deficit, restored the defensive narrative of Greek nationalism, and maintained the fiction that Greece could go on as it always had - as soon as the political elite had been taken to the gallows.
But traditional allegiances had counted for little in the years leading up to the crisis. Leaders of the Left noted that many of the populist Right voters had also opportunistically voted for PASOK in 2008 to steer the country away from the mild austerity promised by Karamanlis. With the exception of nationalism, and possibly religion, these people had no ideology and were contestable political ground. It was this opportunism in the Greek populist right that made them so attractive to parties across the political spectrum. Hit the right, shrill, defensive, patriotic notes, and they would swing. These are the people Syriza officials were going for when they choose, back in 2013, to throw in their lot with the Independent Greeks. These are also the people Syriza officials had in mind when warning that a failed negotiation would bring Golden Dawn to power.
There is a pattern here: Greek politicians have always thought it acceptable to weaken important institutions in the pursuit of votes. The problem is that the damage cannot be controlled, much less undone when the political hour of need is over. New Democracy's initial protests of an inflated deficit figure, normally part and parcel of a government handover in Greece, mutated into a full-blown conspiracy theory. No party with an eye on the votes of the populist right had the guts to stand against it. Today, Syriza hopes that Georgiou's departure will lay the matter to rest while allowing the government to honour its obligations to our creditors. It will not. These people do not realise what damage they are doing.
Part 2 of this post is now available here.
Nice reading
ReplyDeleteDidnt know that D. Kammenos was an editor for olympia, any chance you could give me a source for that? i d really apreciate it
Thanks!
Actually, you're making me doubt myself now. I am going by the fact that the blog is cited in his Twitter bio as though he is intimately involved in it. But in reality I may be wrong. I'll check again today and remove the statement if I can't find more evidence. https://mobile.twitter.com/portaporta
DeleteSo on further reflection, D. Kammenos was a very regular columnist on the blog, which endorsed his candidacy. I've amended my text to reflect this.
Deleteyeah i couldnt find any clues either, but Olympia requires no affiliation with him to be considered vile.
Deletethanks for your time
Hi,
ReplyDeleteIt is really a great post by you. I found this so interesting. Keep it up and keep sharing such posts.
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