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When silence is the best policy

By Nick Malkoutzis

Despite receiving a bullet in the post and having an MP from the Independent Greeks suggesting it won't be long before someone shoots him, Finance Minister Yannis Stournaras is more likely to be concerned by this week's "friendly fire" rather than any other kind.

Unhinged Cretans and boorish opposition MPs are hardly the worst that Stournaras is going to face during his time in the scorching hotseat at the Greek Finance Ministry. Attacks from within are a different matter, though.

A number of New Democracy lawmakers lined up to take pot shots at him over the past few days for a number of reasons, top of which was his decision in recent interviews to discuss the fiscal derailment that took place between 2004 and 2009, when Greece was led by Costas Karamanlis and his conservative government. In doing so, Stournaras has broached a somewhat taboo subject.

"I will show you a chart with annual public spending as a percentage of GDP," he told Sunday's Kathimerini in an interview. "From the early 1990s until 2006, when it reached 45.2 percent, there were few fluctuations. Immediately afterwards, in 2007 it rose to 47.6 percent, in 2008 to 50.6 percent and in 2009, it skyrockets to 53.8 percent. The only way I can describe what happened after 2006 is an economic derailment."

In the whirlwind of events that followed PASOK's return to power in October 2009, the Karamanlis government's role in pushing Greece towards economic disaster and into the arms of its lenders has often been overlooked. A shell-shocked public had little appetite for detailed macroeconomic analysis and vented anger at the political system as whole, while hapless George Papandreou and his woefully ill-equipped government provided an easy target for opposition parties, which accused the Socialists of everything from incompetence to conspiracy as Greece slipped into the austerity straightjacket provided by its lenders.

Among those levelling the criticism at the PASOK’s lost boys were New Democracy and its new leader Antonis Samaras. Taking over a beaten, directionless and disunited party, Samaras could not afford to lose the Karamanlis-supporting wing of the party, which had become dominant from the time the latter took over as party leader in 1997 to when he became Greece's youngest prime minister in 2004. An attack on Karamanlis's record in office, even an attempt at coming clean about ND’s disastrous attempt to keep Greece away from the rocks as the financial storm from the USA engulfed Europe, was off the agenda.

All this conspired to ensure that the public debate in Greece rarely focused on the specifics of the past and was limited to generalizations. Voters, media and parties flitted between vague and pointless attacks on corrupt politicians, self-seeking unionists, indolent civil servants and greedy businessmen.

Stournaras's comments have included criticism of Costas Simitis and his PASOK administration, which laid some of the timebombs (such as a reforms standstill, rising borrowing and an escalating debt) that exploded in Karamanlis's hands when he took over from the Socialists. The finance minister has also been critical of Karamanlis's successor, Papandreou, arguing that if he had taken fiscal consolidation measures as soon as he took office, Greece might have avoided some of the more onerous terms in its bailout agreement.

In his Kathimerini interview, Stournaras also recounts a meeting with Papandreou and would be-Finance Minister Giorgos Papaconstantinou in August 2009, two months before national elections, when he advised them that regardless of what the New Democracy government said, the public deficit would exceed 9 percent and that there would be no scope for fulfilling Papandreou’s wish of spending more money on welfare policies.

However, PASOK has not reacted in the same way as New Democracy to this criticism. Admittedly, Stournaras was an adviser to Simitis between 1994 and 2000. But this is not the reason for the Socialists being more sanguine about the minister's remarks. Circumstances mean that PASOK has had to come to terms with its past in a much more abrupt manner than New Democracy. From the stateism of Andreas Papandreou in the 1980s to the state of disarray under George Papandreou in the last few years, the Socialists have not been able to hide their part in Greece's downfall.

Comments by New Democracy MPs, including former ministers Prokopis Pavlopoulos and Manolis Kefaloyiannis, labelling Stournaras "arrogant" suggest that the conservatives are going to try and live in denial for as long as possible.

"During a period when Greece had to behave responsibly, it took on an extra 100,000 civil servants and increased the average pension by 80 percent," Stournaras told Kathimerini, building the case against the Karamanlis government.

In fact, there is an abundant amount of damning evidence:

- welfare spending stood at 28.8 billion euros in 2004 but had shot up to 48.9 billion by the end of 2009

- the public wage bill increased from 21.3 billion in 2004 to 31 billion five years later

- primary expenditure skyrocketed from 40.7 percent of GDP in 2004 to 48.8 percent in 2009

- whereas revenue had been growing steadily throughout the decade, in 2009 it contracted by more than 6 billion euros, or 6.7 percent of GDP

- public debt rose from 183.1 billion euros, or 98.9 percent of GDP in 2004, to 299.6 billion euros, or 129.7 percent in 2009.

Karamanlis's tenure began with some hope: a young premier who vowed to fight corruption and overhaul the public sector with the wind from a successful Olympic Games in his sails. In the end, he did neither. Instead, he presided over a momentous fiscal derailment. Given their party’s negligence, it is both puzzling and vexing that some New Democracy MPs should not only fail to acknowledge its role in Greece's slide but also have the temerity to publicly attack those who point out the truth.

There is still a section of the party that believes history will be airbrushed and that New Democracy will not be front and center when blame is apportioned. There are still MPs that cultivate conspiracy theories and create diversionary tactics in the hope that the buck can be passed. For instance, ND lawmaker Sofia Voultepsi's testimony is reportedly a key part of the case file that financial prosecutors put together to bring charges against Greece's statistics chief Andreas Georgiou over the 2009 deficit. How convenient it would be for those in New Democracy who still hold on to the idea of their blue winning out over PASOK's green if their rivals take the fall. They shouldn’t hold their breaths though. Even if the figures from 2009 are ignored, the trend of the previous years already shows fiscal control had been lost.

But all this belongs to a bipartisan past that has become detached from reality. Politicians who want to live in this fantasy world have no place dealing with today's real problems, ones which have been created partly because of their recent failures. While some appear desperate to keep a grip on the myth of a blemish-free ND government wronged by its critics, Karamanlis himself seems to have abandoned such illusions. While some try to speak in his administration's defense, Karamanlis refuses to comment in public, opting instead for silence. This time, he seems to have chosen the correct policy.

[Kathimerini English Edition]

ekathimerini.com , Wednesday February 6, 2013 (18:40)  
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