Cash in hand

Dealing with Baroque business practices in Europe

By Ivan Briscoe

For the Herald

Easter comes and goes, but the homespun morality tales that make up the bulk of European politics in these times of crisis know no off-season. Across the north of the continent, acreages of regurgitated newsprint, blogs, radio shock jocks, tittle tattle on the public transport and caustic asides from political leaders inform us that the gentle folk of the Mediterranean basin, above all the Greeks, are insatiable scroungers, whose only known jolts of speed occur when they move to a table in an outdoor café or take early retirement.

A slight interruption to this flow of impeccable good sense was posed by the retired pharmacist Dimitris Christoulas last Wednesday, as he made his way to Syntagma square in central Athens, found himself a grassy spot near the Parliament building, and shot himself dead just before the stroke of 9am. His suicide note expressed disgust over his parlous economic state: basic pensions have been cut 15 percent since the crisis began, and a further 400 million euros were shaved from the pension pot in February’s budget cuts.

“I see no other solution than this dignified end to my life, so I don’t find myself fishing through garbage cans for my sustenance,” wrote Christoulas, with a fear that is understandable in a city where around a tenth of the population now attends soup kitchens. He went on to suggest his compatriots should resort to armed resistance, prompting a bit later in the day fresh hurlings of stone, volleys of tear gas, and panic in the Greek government that the country had found an elderly equivalent to Tunisia’s self-immolating fruit-seller, Mohamed Bouazizi.

Northern Europe, however, pulled through the incident unharmed and unperturbed. German Finance Minister Wolfgang Schäuble, speaking on a US news channel, let it be known how upset he was with Greece blaming his own country rather than facing up to its own myriad manifest failings. Greeks, he said, has been “living beyond their means, and now they have to apply some austerity, they have to make cuts.” It is all so very obvious that the golden rule of housekeeping has been turned into a fiscal compact for every player in the eurozone: no more budget deficits above three percent except in the most extraordinary circumstances. For good measure, the sole country to have ratified the measure so far is Greece.

It hardly bears saying that levels of sympathy for the Greeks are crawling in the basement. Even within Greece, with Christoulas merely the most visible of an official 40 percent increase in suicides since the start of the crisis which is probably an under-estimate, since the Orthodox Church does not formally permit suicide victims a Christian burial — opinion formers and political leaders queue up to berate their national traditions. Reflecting on the suicide, one columnist in the conservative daily Kathimerini listed these faults as “cartels, middlemen, high prices, poor service, corruption, tax evasion, impunity.”

All of which makes it surprising, to say the least, that other companies with homes in upright northern Europe have until recently taken full advantage of these baroque business practices. No area of Greek public spending is more inviting in this respect than the military budget. A curious aspect of the latest round of Greek cuts is that exactly the same amount was shaved from the military budget as from pensions, even though, at 2.8 percent of GDP, the country’s expenditure in this area is the highest in the EU.

Whenever this anomaly is pointed out, nationalist Greeks scramble to point to their menacing neighbourhood, and primarily to a belligerent Turkey, which grabbed a share of Cyprus in 1974 and regularly pokes into Greek airspace. A passionate and polarized argument could then ensue as to whether a country consigning its youth and its elderly to destitution should also be worrying about the sanctity of its border. Clearly, mass poverty and massive armies are strange but not uncommon bedfellows: just look at North Korea.

What is more certain is that European military manufacturers, with German and French firms top of the list, did their best throughout the euro’s prolonged honeymoon to shift fighter jets, frigates and submarines into Greek hands. It now appears that, between 2005 and 2010, and hot on the heels of the Olympic Games in Athens, Greece was the top buyer of German military hardware in the world, and the third top in purchases from France. The rumour mill is now full of claims that the terms of the 130 billion euro bailout granted to Athens are full of unspoken obligations to pay for the arms contracted in better times.

And those times were clearly such as to convince the best of German and French industry to indulge in some eye-winking cash-in-hand. Prosecutors in Germany have been peering into the books of several firms that sold rail networks and vehicles to the Greek, but it is in the military field that evidence has become incontrovertible. At Ferrostaal AG, guilt in the sale of various submarines to Greece and Portugal is fact. “We expressly distance ourselves from the practices followed at the time of the previous company management when it was tolerated that sums of money paid to intermediaries were to be used to bribe public officials,” reads an affidavit submitted in December to a court in Munich by the company’s CEO, and available on the company’s website

The firm offered to pay 140 million euros for its crime, and the judge concurred. Similar acts of contrition, however, do not seem to have reached the upper ranks of Berlin and Brussels, for whom guilt only seems to exist when it pertains to the health of the budget balance.