Euro debt crisis needs spotlight of truth in Greece
Greece ignited the euro debt crisis with a big lie about its deficit, and now the man hired to clean up its statistics faces charges of national betrayal. Keeping euro nations honest is a key to Europe's economic recovery.
The ancient Greek philosopher Diogenes used to walk the streets of Athens “looking for an honest man.” Today’s Greeks are still looking.
It was Greece that sparked Europe’s financial crisis back in 2009 after being caught in a huge lie about the size of its official deficit – claiming it was 3.7 percent of gross domestic product when it was really 15.8 percent.
That was a fourfold fib. Now, even though Europe’s crisis remains the key risk to the global economy, some Greeks have yet to fully embrace honesty as a virtue necessary for economic stability.
The man hired last year to ensure Greece didn’t again cook its books, Andreas Georgiou, is himself under attack.
A few prominent nationalists, disgruntled over the austerity forced on Greeks, have arranged for this respected statistician to face a judge in December for allegedly “betraying the national interest” – simply because he told the truth about the amount of Greece’s red ink. If convicted, he could get a life sentence.
Such a dubious move could threaten the next bailout money for Greece. It also has the potential to disrupt Europe’s attempt to save the euro and jeopardize the continent’s experiment at unity.
This week, France and Germany plan to propose a fix to the 17-nation euro pact with a penalty on any nation that violates the rules on fiscal discipline. The current rule calls for a country’s deficit to stay below 3 percent of GDP. But as Greece and a few other of the 17 euro nations have shown, the rule has been easily ignored.
The French-German proposal could be endorsed at a Dec. 9 summit of European Union leaders. If it is approved, the European Central Bank might then be confident in buying up debt of troubled governments like those in Greece and Italy.
“We must together set up institutions that secure trust in the euro,” says German Finance Minister Wolfgang Schäuble. Or as French Budget Minister Valérie Pécresse says, Europe needs better regulatory mechanisms that are “virtuous, that don’t allow a cheater, so that there is no one who can exempt themselves from the rules that are set.”
Greeks are already notorious for evading taxes. And over the past year, in an attempt to tax the wealthy, the government used helicopters to spot undeclared swimming pools in the walled backyards of Athenian suburbs. Instead of finding the officially reported 324 pools, it found 16,974.
When Mr. Georgiou became head of Greece’s new statistics authority last year, he declared he wanted to create a “culture of excellence” in official accounting. He arrived with a PhD in economics from the University of Michigan and 20 years as a top statistician at the International Monetary Fund.
Charging him for telling the truth about Greece’s accounting would only further anger other Europeans. If anyone in Athens can be Diogenes’ honest man, it is this longtime civil servant.