Eurozone debt crisis – putting the poacher in charge of the pheasants

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Greece was admitted to the eurozone back in 2000 even though EU officials and national politicians must have been fully aware that Greece’s statistics indicating it had met entry criteria for the single currency were highly suspect. Now individual and corporate taxpayers from around the world are having to pay for its EUR 240bn bailout package. But is anyone taking the blame? The Federation of European Employers (FedEE) reports.

Jacques Santer – who ironically heads up the Special Purpose Investment Vehicle - formed by the EU’s European Financial Stability Facility to fund the future bailouts of ailing eurozone countries.

Sitting on the dusty shelves of the Eurostat library in Luxembourg is an almost forgotten EU report* published in November 2004. This report charts the frustrated efforts of EU statisticians over an eight-year period to pursuade the Greek government to provide honest and accurate statistics

The first time that the European Union’s statistical authorities raised questions about Greece’s debt assumptions was during meetings on February 8th and 9th 1996. After these meetings the Director-General of Eurostat wrote to his counterpart in Greece’s National Statistical Service to point out “inconsistencies in the interpretation of capital transfers as a counterpart to various items of debt assumptions” and stating that “Eurostat could not agree with the exclusion of the counterpart transaction from the net borrowing requirement of the General Government Sector”.

At this point a pattern emerged - with the Greek statistical service appearing to agree to comply with EU requirements, but subsequently distorting its figures. This led in 1997 to an EU instruction that “these corrections should be done immediately”. After which the EU officials noted that “In spite of this conclusion, Greece did not revise its figures and did not transmit a revised notification”.

By November 2000, when Greece’s entry to the eurozone was to be considered against the entry criteria, it would have been well known by EU officials and national politicians that its statistics – particularly on government debt - could not be trusted. Later it was found by Eurostat that the deficits for 2000 to 2003 all had to be substantially revised upwards.

So what steps are now being taken to investigate this catalogue of errors and past economic mismanagement? Unfortunately, according to the Secretary-General of the Federation of European Employers (FedEE), Robin Chater “ Although politicians are quick to point the finger at corporate misdoings they are strangely silent when it is politician themselves - and their officials - that are in error. With the Greek economy in tatters and with EUR 240bn already committed to its bailout programme why is no-one being held to account for Greece’s admission to the eurozone in the first place?”

“With 13 of the eurozone’s 17 countries expected by the EU to miss their deficit target next year perhaps the wisdom of the entire single currency experiment must be put into question and for that there are two people clearly most accountable - Jacques Delors, who in 1988 chaired a committee which proposed a plan to reach full economic and monetary union. and his subsequently disgraced successor Jacques Santer – who ironically heads up the Special Purpose Investment Vehicle - formed by the EU’s European Financial Stability Facility to fund the future bailouts of ailing eurozone countries. Another case of putting the poacher in charge of the pheasants”

  • Report by Eurostat on the revision of the Greek government deficit and debt figures. 22 November 2004. 69pp

What is FedEE?

The Federation of European Employers (FedEE) is the leading HR think tank for multinational companies operating in Europe. It was founded in 1989 with assistance from the European Commission.

For further information and comment contact the FedEE Press Office on (UK 0044) (0)207 520 9264 or by email on secretariat(at)fedee(dot)com

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