Open letter to Alexis Tsipras

Robin Fransman addresses a critical open letter to the Greek prime minister. 'Greeks did not lose their dignity because of the Troika. They lost their dignity when they committed fraud.'

Dear Mr Tsipras, I read your letter to German Readers with great interest. It contains some encouraging points, but unfortunately, it is also a gross distortion of history and therefore avoids reflection. So instead of taking responsibility, it puts most of the blame for the Greek predicament on others. The Greek crisis began when it was revealed in 2010 that the Greek authorities had wilfully manipulated national statistics. Both the budget deficit and the debt had been understated for years. And economic growth overstated. All these figures were corrected several times, each time revealing greater debts, higher deficits and lower growth. The fraud in statistics first of all allowed the Greek government to promise pensions and salaries to Greek workers and citizens that could never have been paid, but also, after its revelation, induced an immediate inability to pay its bills, and led to a sudden stop in investment, trade and consumption.
The Greek authorities had wilfully manipulated national statistics
What, I may ask you, should Europe have done under these circumstances? When even the extent of the problem was unknown? What other option was there, than to extend loans while the real statistics were being worked on? An immediate default? Do you honestly think the suffering would have been smaller if Greek banks had been bankrupted and Greek citizens and businesses would have lost all their deposits? Sure, we also saved French and German banks by extending the loans to Greece. We could have saved those directly, but that would not have alleviated the crisis in Greece nor would that have saved Greek banks from going under.

Corruption and clientelism

May I also remind you that Greece prosecuted the new Greek Director of Statistics in 2012 and 2013. The man who had finally made sure that Greek Statistics were trustworthy, was prosecuted for treason. And this was not done on the behest of the oligarchs, the trade unions were actively calling for his removal. That brings me to my second point. Greece’s problems of corruption and clientelism go far beyond the so called Oligarchs. Government workers, pensioners, pharmacists, doctors, truck drivers, lawyers and many other groups enjoy privileges in the form of subsidies, tax exemptions and barriers to competition. Not to mention the fact that too many Greeks dodge paying taxes all together. Of all ages, and all income groups. Greeks did not lose their dignity because of the Troika. They lost their dignity when they committed fraud. When they stopped paying their taxes. When they increased their incomes and pensions using unpayable and hidden debts. When they boosted economic growth by suckling on debt financed government teats.
Sir, you may be just as much in denial as the oligarchs themselves
Sir, you may be just as much in denial as the oligarchs themselves. It’s a slightly different type of denial but you still believe in the magic wand of government spending as a cure for the deep problems of Greek society. Today, even after the economic decline of the last 5 years, Greece’s per capita GDP is far higher that of Poland or Estonia. It’s the same as in Portugal. Do you honestly expect low income Europeans to pay for the well-being of middle- and upper class Greeks? The ones who have 140 billion euro’s in Greek banks and even more on foreign accounts? If you want to alleviate the suffering of poor Greeks, as I think you should, start a decent, affordable, good working wealth redistribution system in Greece. The Troika has implored successive Greek governments to end all uneconomic privileges in Greece. To improve tax collection. To strengthen oversight over government spending. These were delayed, and sabotaged over and over again. The current debt burden of Greece is in line with all other Eurozone member. With an interest bill of roughly 2% of GDP. Sir, end all special privileges in Greece, also those of your own voters, and Greece’s debt burden will become sustainable. Perhaps even because of a then well-deserved write off by your Eurozone friends.   Robin Fransman is the former deputy director of the Holland Financial Centre. He can be reached on Twitter: @RF_HFC Lees meer over Griekenland en de EU in het Griekenland in Europa dossier van Follow The Money