WHAT PRICE SALVATION?

To celebrate the blog's 6th birthday (and its 500,000th pageview) I proposed to take suggestions for fact-checks from the audience on Twitter and Facebook. This is the second of the two winning fact-checks and it deals with the cost to Greek citizens of the Greek Orthodox Church. 

In the beginning there was the press release...

Perhaps the most surprising element of this fact-check is the extent to which it has been pre-empted by an extremely detailed press release from Greece's far-left Government (as it then was) in March 2015. This explained that, contrary to press reports, the Greek Churches (for there are three - the Church of Greece, the Church of Crete and the Holy Metropolises of the Dodecanese) pay taxes; enjoy no undue tax breaks, and have a solid legal claim to the Greek government's payroll. They also do not directly handle public money. Quoting from the release:

"The payroll of Christian Orthodox Clergy as well as the funding of Christian Orthodox Religious Education is an obligation of the State declared in texts of the National Assemblies of the Peoples’ representatives of the Greek revolutionaries (1822, 1829) in exchange for transferring the assets of the Church to the State. The transfer was implemented gradually [by means of the following:]

• establishment of public organizations for exploiting the assets of the Church and for supporting public Education and improvement of the Clergy’s situation on October 13, 1834; 
• expropriation of monasteries’ property to indemnify farmers and refugees following the destruction of Ionia on November 19, 1909 and on May 10, 1930; 
• Concession for transferring ⅘ of fields and meadows property of monasteries on September 18, 1952; 
• Concession for transferring forest, fields and meadows property of monasteries on May 11, 1988." 

Moreover, it should be made clear that salaries are paid from the State directly to Clergy. Public funds are not transferred by the State via the Holy Metropolises nor are any regular grants included in the annual budget of the State to any of the entities of the Church of Greece, the Church of Crete and the Holy Metropolises of the Dodecanese. Therefore, the Holy Metropolises do not manage public money”. 

The numbers of the Beast

The Syriza presser, apart from being politically shrewd to defend the Church in an almost entirely Orthodox Christian country, is also right. Technically the payment of priests' salaries is a legal obligation; an off-balance-sheet liability, if you will, recorded as a current transfer by the Central Government to bodies outside General Government. It has also been relatively easy to track down from 2013 onwards. You can find it is as follows:

1. Go to the Greek ministry of finance website and select Menu - Financial Data -  Budget Execution Bulletins (Οικονομικά στοιχεία - Δελτία εκτέλεσης προϋπολογισμού).
2. Pick the latest monthly General government bulletin (Δελτίο εκτέλεσης προϋπολογισμού) and look for the attached Central Government time series .xls file. Sometimes the English files will be missing but the Greek ones will be there.
3. Navigate to the tab named 'Non State Central Government' (Κεντρική Κυβέρνηση Πλην Κρατικού [Προϋπολογισμού])
4. Look for two rows called B.516.: Current transfers paid - Current transfers to non-governmental units (Τρέχουσες μεταβιβάσεις καταβληθείσες - Προς μονάδες εκτός της γενικής κυβέρνησης). One records just the monthly payments and the other records the cumulative figure over the year. Use the cumulative version where possible.
5. Always use the latest version as statistics get revised regularly and retrospectively. 

You can find the most recent time series (Nov 2015) at the time of writing in Greek here and in English here. This approach only works because the Church's wage bill is the only current transfer from central government to a non-General-Government body. If this were to change, it would become much harder to isolate it. Before 2013, the pay data was a little harder to find, and information on the actual number of clerics was elusive; in fact, the Greek Church(es) had to refine their own data collection from 2011 onwards in order to feed into the census of state employees.

Clerics' pensions are, like those of civil servants, unfunded and paid directly out of the Central Government budget. As unlikely as it sounds, this makes the associated payments much more transparent than their salaries - as long as you can read Greek you can look them up in any Budget post-mortem (eg see 'Κεντρικές Υπηρεσίες' here). You can also, for now, find recent data on Diavgeia, the embattled transparency website on which most spending decisions must be published.

I summarise how much the Greek government has paid priests over the recent years in the graph below.

This expenditure includes the salaries of ca. 10,000 priests and other Church staff, while the pensions bill includes pensions paid to a projected 5,240 priests and Church employees. It doesn't include spending on the education of priests and subsidies to other church institutions, which, in 2014, came up to roughly EUR2.5m - but that is genuinely negligible in the grand scheme of things. Now, priests have never been a 'exotic' category of civil servants; legally they've always been treated in the same way as the rest, even collecting the same spurious pre-crisis productivity bonuses as their colleagues elsewhere.

It's clear from the graph above that the Church has not been immune to austerity, having taken a nominal cut of ca 35% between 2010 and 2015. But it has, perhaps, been somewhat sheltered, presumably because so much of its spending is direct transfers to individuals. If you rank the Church against other categories of spending where comparable data is available, the church's wage bill was cut at about two-thirds of the pace seen in the core civil service, defence spending, sickness and disability benefits, public transport or hospital budgets; or at the same pace as parliamentary functions and legal spending; and faster than, say, the police, agricultural spending or environmental protection. Moreover, even more so than with other Greeks, in the priestly orders pensioners really have screwed everyone else over. The Church's pensions bill has come out of the crisis almost entirely unscathed even though the number of pensioners hasn't risen tremendously. And it's clear that it's not just press releases the Syriza/Anel government had to offer the Church; it also offered it its first real-terms payrise in five years.

As much as it's enjoyable to point to the Church's sheltered pensions, it's also important to put the Church's payroll and other spending on it in perspective. At a total EUR224m in 2015, the cost of the Church is approximately 0.13% of GDP; that's somewhere between the country's entire public housing budget and the amount the state spends on waste water management.

God's Social Workers

It is not surprising that there have been calls for a substantial rethink of the Church's relationship to the public finances throughout the last few decades, and even less surprising that they have grown stronger in the recent depression. In 2012, an ungoogleable report from Greece's Centre for Planning and Economic Research (the Greek Government's economic think-tank) called for a rethink, offering several scenarios for the rebalancing of church and state relations - including levying a tax on the faithful or tapping the Church's own income to pay for some 50% of the Church's payroll. This was swiftly dismissed by the Government of the time on the grounds that it would jeopardise the Church's social work, which the Government claimed was worth more than the EUR100m KEPE aimed to save.

But how much charitable work does the Church actually do? Apparently, EUR121m worth in 2014, down marginally from EUR122m in 2013, but up from 106m in 2012, EUR100m in 2011; EUR96m in 2010, EUR92m in 2009 and EUR93m in 2008.  In any case, the Church claims to feed half a million Greeks over the year in 280 soup kitchens, and another 76 thousand through 150 food banks; it claims to provide 1,300 scholarships and care-at-home for 3,500 persons. Not to mention some 28 nurseries and 75 charitable cramming schools (remember those?). This activity is partly supported by over 3,000 parish welfare funds.

So let's try the maths again. I'm netting off charitable work against wages only, as a kind of 'operating surplus' of the Church's social work. Clearly, wage restraint has eaten very far into this surplus; the Church's work is countercyclical, while its wage bill has been cut.

The source of all estimates of the Church's humanitarian work is the Church's Synodical Commission for Social Welfare and Well-Being, supported by a Census of Church organisations. However, unlike the Church's finances these figures are unaudited. Scrutiny by ELSTAT, for which the Church is apparently preparing, is unlikley to fill that gap. So for now, it's important to exercise some skepticism in both directions; these amounts include operating costs of the Church's foundations, and there may be some double-counting in the figures, but also under-counting of donations in kind and voluntary work. I would not query the order of magnitude.

So the Church's argument goes that if it had to pick up the tab for priests' salaries and pensions it would be unable to devote the same amount it currently does to humanitarian work. I am not entirely convinced - or rather, I'm sure this is true but I'm sure the relationship between the Church's wage bill and its ability to provide humanitarian assistance is more nuanced - and weaker. It has, after all, proven capable of raising substantial funds in these lean times despite a cut in its wage bill - something it had warned would be impossible back in 2012. One reason, among many I'm sure, is that the Church's humanitarian activity is not driven substantially by the work of priests and others on the State payroll but by volunteers. The European Values Study of 2008 tells me that 2.2% of the Greek adult population (some 180,000 people) worked unpaid for a religious organisation - eighteen times the number of actual priests. Pensioners and the unemployed, especially those with lower levels of education, were most likely to do this work - so the Church's supply of unpaid labour has no doubt grown in the crisis. (Bonus: if it really takes 180,000 people to provide ca 120m worth of assistance, that works out to ca EUR666 per person per year - a hilarious but genuine coincidence.

Supernatural monopoly

These figures point to the core of Greece's Church-state problem. The Church's network and infrastructure are, frankly, extremely convenient for the State; and the Church has a longer history of performing both social and administrative functions than the State. In providing services to Greece's mainstream, indigenous population, the Church can, due to its historical endowment, out-compete any NGO or international organisation, and often the State itself. The Church can raise the EUR120m or so it needs for its operations less invasively and more sensitively than the State - I've never once heard of a protest against it. And the Church can mobilise volunteers. The State would have a protest on its hands in no time.

Put it differently, if the Greek state were to put the social protection and administrative functions of the Church out to tender, as a formal outsourced business, the Church would win almost all of them right back, with a profit margin. Its mas access to free labour would be almost impossible to replicate. If the State were instead to take them all in-house as state functions, it would probably perform them less effectively and efficiently and would struggle to make the case for tax rises to fund them. It would have to scale down massively because it would never be able to find the people to perform them.

Either extreme is less preferable than the status quo. In the good times, of course, the Church might have struggled to reach the niche or socially excluded groups that were most in need of some interventions (say, sex workers, migrants, or refugees). But as the crisis reaches ever more of the core of Greek society this argument has become weaker.

The Church, of course, didn't build this unassailable competitive position on its own; it has relied on seventeen centuries of Government endorsement of its administrative and welfare functions, not to mention a massive subsidy to its indoctrination work through the establishment of a state religion. These advantages persisted even during the centuries of Ottoman rule. Clearly, a hypothetical country designed from scratch wouldn't work like this - but what is the point of such thinking?

The answer to this supernatural monopoly on welfare services does not, to me, appear to be a defunding of the Church in one fell swoop, but rather a combination of gradually reducing pension spending (say, by fixing it forever in nominal terms) and ending the enormous investment of the State in maintaining the State Religion through education and the law itself. Given how the latter is written into the Greek constitution, I don't expect much change is immediately possible, but it's worthwhile.

Enough land for all the flock to roam

A key question posed to me when I began this fact-check related to the wealth of the Church. The Church, the narrative goes, is rich; and because it is rich it must contribute to the public coffers in our time of need. I am not sure how asset-rich the Church is, or how cash-rich it is either.

The Church's key source of wealth is supposedly land and real estate. But how much land does the Church own? The Greek blogosphere offers a million answers but there some figures with at least some legitimacy. An Agricultural Bank of Greece study (inaccessible online but cited eg here) dating back to 1987 estimates the Church's rural holdings at 1,300 square kilometers, about 1% of the country's rural land. Of this less than a tenth was arable, and about a quarter was classified as forest by the authorities and largely banned from development. A whole lot of it was pastures. But even that study seems to have been compiled based on 'expert views' - on which I would not necessarily rely on such a difficult issue.

The Church cites the 1987 study widely, not only because it makes its real estate empire look small but also because it deals exclusively with rural land; clearly in terms of actual wealth it is the urban property of the Church that actually matters, of which we anecdotally know there is a good deal. The Church's detractors cite the same study because it names the Church as Greece's no.2 landlord after the State itself; even though it is a very distant second. Either way, the reality is that the Church's rural real estate is likely worth very little, and trying to get to the bottom of how much is a fool's errand. Quite how people presume to put a price on land that hasn't been involved in a transaction or put to regular productive use for hundreds of years is beyond me, but I'm not dumb enough to try.

Ultimately, the best way to value a piece of Church land is to buy it, or exploit it commercially. There is a catch, though. The Church claims that it would love to make more of its real estate but red tape (eg planning and preservation laws) is getting in the way; in fact, it claims it is probably the only landowner and/or develop with actual respect for planning, zoning and conservation laws, and finds itself stranded in 'forest' plots that haven't seen a green shoot in years, while all around them the state tolerates irregular development. To British readers, this may sound a little like Green Belt lobbying with a twist. Whatever the truth of it, it worked for a while. In April, the Greek government was reportedly close to a deal for a deregulation drive that would enable a 50/50 joint venture between the Church and the Greek State to develop Church lands (H/T @_LaScapigliata). The deal stalled and, as of November, was getting started all over again, with a joint commission set up. Given that the new commission was meant to discuss a much broader set of issues ahead of a Constitutional review, it seems the Government had not got what it wanted back in the first half of the year and was aiming for more.

The development JV, by the way, wasn't Syriza's idea; it has existed since 2013 and has mostly sat on its hands since. What is the chance that it has a board that has been paid without fail ever since?

Cadastral projection

If you are strict about the meaning of the word own, of course, the answer is that we don't and can't know what the Church owns at all, since Greece still has no Land Registry or cadastre; a reform one might have expected to see fast-tracked in the memorandum years but which was in fact left to wither on the vine with EUR100m of EU funding and a billion of the Greek people's own money committed since 1994 and by turns clawed back by Europe, squandered in Greece, or left on the table by both sides. With three quarters of the work still pending and much of it expected to be completed only after 2020, this is a crime and a national disgrace for which neither the troika institutions nor any Greek Government so far has felt the need to seek justice.

The result? The Church has, since 2011, gone on a cadastral safari, in an effort to ensure its claims are as tidy as possible - which is hard to do when one's claim on land is a patchwork of often centuries old squatter's rights, edicts of fallen imperial thrones, bequests and donations. After several rounds of expropriation in the past (see above and below!), it has good cause to worry. But it could help speed up the process even more by putting its moral and legal weight behind getting the Land Registry off the ground faster. It has not.

Pearls before swine

Regarding the Church's total property, there are estimates of 7-15bn which appear to be based on pre-crisis property and share values, and other estimates of ca. 1bn which may be more reasonable now - that would make the Church about as rich in real estate as Greek pension funds.

But claims that the value of church land in Greece runs into the trillions of Euros also abound on the internet. Like much of the Greek blogosphere, they are nonsense, based on a misreading (mishearing even) of the 1994 case of Holy Monasteries v Greece, in which the ECHR awarded ca 8m Drachmas to monasteries in respect of legal fees and expenses following an irregular expropriation of land by the state.

Eight monasteries did, in fact, make a claim for pecuniary damages amounting to an outrageous GDR 7.6 trillion for expropriated land (EUR22.3bn in today's exchange rate, actually more after accounting for inflation between 1994 and 2001). In fact, however, when the monasteries tallied up their property, it came up to a lot less than that: GRD3.1bn for 7 out of the 8 monasteries and another GRD43bn for the eighth, inflated by its ownership of the marble quaries of mt Parnis. So the typical monastery ended up with an estimate closer to EUR2.7m in current Greek prices (adjusting for inflation since 1994); a substantial amount no doubt, especially considering we have a good 2,500 monasteries. Leaving the outlier aside, and assuming the rest are representative, gives us ca. EUR6.6bn in today's money for monasteries alone. Yet these monasteries were far from representative; they were some of the richest, as evidenced by the fact that they were targeted for expropriation and could afford a ridiculously lengthy court case like this.

Remember, these are the monasteries' own estimates of real-estate values, which is to say they are almost certainly inflated. Crucially, the ECHR took no view on the actual value of the property of the monasteries - a point lost on most of the people blogging about the case. Instead it urged the monasteries and the State to come to a settlement; which they finally did, with the State simply acknowledging the monasteries' ownership over the disputed land.

Of course, monasteries aren't the whole of the Church in Greece; and it is doubtful that the Church 'owns' their property to such effect that it could order monasteries to sell it, rent it out or put it to any other use. Hence the value of these estimates is points. Yet since the one thing both the Church's detractors and its defenders alike agree on is that it is (a very distant) second only to the State as an individual owner of land and real estate, then its urban property cannot in any way be worth more than EUR100bn in current values - since that's what the State's buildings are worth.

But most important of all is the question of why the value of Church property matters. The State reassures us that the Church pays the right amount of property tax. If so, then the discussion of Church property is simply a warm-up act for further expropriation, or an attempt to proxy undeclared income. But as the ECHR confirmed back in the 90s, monasteries and indeed the Church can own property just as well as individuals - and no one can help themselves to it without a competing claim or an over-riding social purpose coupled with compensation. That argument is what did for PASOK's expropriation drive in the early 90s, which incidentially is responsible for many of the enduring myths we are still having to discuss today.

TO BE CONTINUED