Eurostat’s failures greatly increase the size of Greece’s debt


An astonishing revelation of unjustly fixed statistics

by Basil A. Coronakis 10/11/2013

The second part HERE

Let us think for a moment what would happen if, all of a sudden, the debt of the French transport system, covering buses, trams, the metro, the RER and OPTILE and the PAM network for disabled people and so on, were all transferred to the government’s accounts. After all, the French transport system is heavily subsidised by the state. Well, the disaster one can only imagine did not happen in France, and rightly so, but it did happen in Greece! Greeks and all other European citizens have the right to know what happened in Greece and why it happened.

All of us in Europe have agreed to comply with certain terms and conditions called European Regulations and the first to do so is, alas, the European Commission. Therefore, if public transport companies provide a service, because of a governmental or European socio-economic policy, then these public companies must be compensated or subsidised for losses incurred as a result of charging prices lower than what they would have otherwise charged. This compensation or subsidy does not entail the transfer of their debt to the country’s public debt. Well, an answer has not yet been provided by the European Commission as to why, after two decades of applying the common rules, Greece was suddenly in 2009-2010 treated differently from France or any other EU member state.

Looking into the complexity of the Eurostat criteria required to be fulfilled in order for a public company to be moved into the public sector, it seems that, in the case of Greece, the job was done with a hasty disregard for normal procedures. There is an apparent breach of European Law in the application of the so called 50% criterion defined as the institutional requirement that the revenue from sales of products or services of the public companies cover at least the 50% of their production cost. By not treating the above compensation as “revenue from sales” and at the same time lumping commercial depreciation of 100 years into the 2009 one-year expenses, Eurostat was able to justify the non-conformity of the public companies with the 50% criterion.

There are additional instances of breach of Law. Until 2009, Greece’s Statistical Authority (ELSTAT), together with Eurostat, had decided that the debt of public enterprises (public utility companies) could not be part of the public debt, because the government’s finance was in the form of shares thus increasing the property rights of the government as a shareholder on these companies. This is the common practice in the rest of the European countries, according to European Regulations agreed by all European partners.

In April 2010, an estimate of the 2009 deficit was published by Eurostat, which guaranteed that Greece’s final public deficit figure was not going to undergo further changes by more than 0.5% of GDP either downwards or upwards. On this basis, in May 2010, the Eurozone countries and the IMF supported Greece with €110bn of financial assistance. Six months later, Eurostat scrapped the 0.5% and raised the final public deficit by 2 percentage points, despite such major revisions being contrary to the commonly accepted Code of Statistical Practice.

Eurostat’s totally unexpected and unexplained action was based on the transfer of 17 public companies from the private to the public sector. The end result was a devastating false augmentation of the country’s public debt and deficit for the year 2009, which since then has been carried on and on forcing the country to stagger under an unjustified extra burden, which is souring its relations with the rest of Europe.

The issues were brought to the European Parliament and the European Commission, which have recently replied in writing by distorting the truth. Without referring to all the reported issues, their answer claims that the Greek law covering passenger transport companies is different from the European Law because the formula to calculate the amount of compensation is not based on the produced output of OASA (a holding company like the French STIF). This is profoundly untrue for three reasons: OASA is a holding company acting as an umbrella of the passenger transport companies in one of Greece’s regions, Attica, and as a consequence OASA does not have transport output of its own, as is the case exactly with STIF. Second, if one reads the Greek law with open, unprejudiced eyes, they will easily learn that the Greek formula is based on “the produced output and the passenger count”, contrary, alas, to what the European Commission reply asserts. Third, if the Greek law covering the public passenger transport companies was not in agreement with the corresponding European Regulations, then the Commission would have acted to secure harmonisation of provisions affecting competition in transport, according to the treaty establishing the European Economic Community. Such actions never occurred.

In its answers, given in fact under pressure from the European Parliament, the European Commission has resorted to other outrageous claims by even providing a small footnote reference reported in the 2013 Eurostat Manual, which, first, did not exist before February 2013, and, second, is misleadingly reported without the actual date. We also note the following fact: in 2010, Eurostat moved a number of public enterprises to the public sector, and, one year later, in 2011, Eurostat moved them again, back into the private sector. Thus, we observe that the Commission has recognised the unjust and felonious augmentation of Greece’s public debt, but they do not want to admit it. This is proved by an impressive sleight of hand: now you see it, now you don’t. The trick: immediately after the public sector was saddled with these companies’ debt, saving this way the German banks from bankruptcy, these same companies were moved again back into the private sector, where they belonged since 1993. Such actions are strictly forbidden by the European Regulations, which require that the initial transfer to the public sector might be justified only if it was judged that it had been in force for several years before and after its initial transfer.

Eurostat’s mistakes towards Greece bring to memory the spontaneity, with which Mr Joaquin Almunia, then Commissioner for Economic and Monetary Affairs (now Commissioner for Competition), reacted on 21 October 2009, when he heard a revised forecast for Greece’s 2009 public deficit. Almunia said: “We want to know what has happened and why it has happened. Serious discrepancies will require an open and deep investigation”. The investigation never took place, but four years later, on October 21, Almunia said: “The EU’s problem is unaccountability”.

Saying he is right is not enough. By their unaccountable attitude toward fiscal statistics, the European Commission and Eurostat have led to the silencing of responsible voices at Greece’s ELSTAT, which is now left without its seven-member board and under one man’s authority – the same man who is under felony charges and who is supposed to manage both the country’s statistical system and its statistical office: a unique phenomenon in Europe. As described above, the 2009 false public deficit and debt have created a horrific whirlpool swallowing European taxpayer’s billions – whose destination is unknown – and a debt death-spiral of a country, which has been among the 10 first EC member states, with a proven hard-working population, who lost 7% of its population in the Second World War and who can hugely contribute to the construction of a more democratic European Union. The question is: How can the EU go on with one of its core members being so unjustly treated? The 2009 statistical events need an in-depth, serious investigation and not interventions to block Greece’s judicial procedures, as Eurostat is doing. Things have to be put right and Greece’s reinstatement must ensue. Public debt is not refused, what is refused is its untrue and felonious part.

http://www.neurope.eu/article/eurostat’s-failures-greatly-increase-size-greece’s-debt

About athenianvoice

Kosmas Loumakis - Sociological consultant, analyst, field operative and tactical field coordinator of national and regional social projects in Sweden. Was contracted for almost two decades by governmental bodies and NGO's, in governmental gang crime and extremism preventive efforts. Have produced a number of socio pedagogic action plans and developed methods, field tactics and strategies for gang crime and extremism preventive projects.

Posted on December 22, 2013, in Articles in English, Hot and tagged , , , , , , , , , , , , , . Bookmark the permalink. Leave a comment.

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