Greek Debt Crisis

Greece: Where’s the money?

Stephen Beard Feb 15, 2012

Kai Ryssdal: We’re not actually gonna wait ’til the numbers to bring you the Greece story. There was supposed to be another meeting today in Brussels, face to face, for the European Union to talk again about the latest Greek bailout package. It got downgraded to a conference call — at which the possibility of waiting ’til April to decide anything was apparently raised.

We’ll have more on what a Greek default on the $450 billion it owes might mean for banks in a couple of minutes, but first, Marketplace’s Stephen Beard from Athens — where a lot of Greeks are wondering, what happened to all the money in the first place?

Stephen Beard: It’s a question you hear often in Athens today.

Liana Kanelli: Where’s the money? Everybody is asking where is the money? Where is this money?

Lawmaker Liana Kanelli is one of the many Greeks who wonder: What happened to the 360 billion euros borrowed by successive Greek governments?

Kanelli: Where the hell is the money?

Well, some of it was spent down here at the Athens Olympic Park, built for the Olympic Games in 2004. Once a sparkling facility, now it’s a symbol of Greece’s economic decline.

Christos Karanatsis: Look at this. This is all fenced off here. And this gate is chained with a rusty chain so that means it has been here for quite a long time. It hasn’t opened.

Christos Karanatsis, a theater director, worked here as a volunteer during the Olympics eight years ago. Like many Greeks, then he was caught up in the pride and exuberance of the occasion. Today, he looks at the dilapidated park in dismay.

Karanatsis: It looks all very deserted. It’s a deserted scene. There’s graffiti on the walls. It is a very different sight from what it was eight years ago when it was clean and full of life and hope.

Christos worked as a guide and played a Greek fisherman in the opening ceremony. At the time he was proud of the panache, extravagance and success of the Athens Olympics. Today he wonders whether the games played a part in Greece’s present misery.

Karanatsis: Possibly they went over the top with it in order to showcase to the rest of the world that we can do it the way you do it. And as a result, now we’re in the debt crisis.

Not so, says Spiros Kapralos, head of the Hellenic Olympics Committee. He says the games cost around 8 billion euros ($10 billion today). And that’s a tiny fraction of the Greek debt load.

Spiros Kapralos: In a country that has a debt of 360 billion, the 8 billion is minimal. One should look how we managed to get the other 352 billion.

So where did the money go? Well, it went into many less glamorous enterprises. Athens Central Station, part of the state-owned Greek railway system. Former finance minister Stefanos Manos says it has been one of Europe’s costliest railways — with more employees than passengers. Staff earn an average salary of $90,000. When he was in office, Manos came to a startling conclusion.

Stefanos Manos: We would spend less if we would send every individual passenger to his destination by taxi.

So where did all the money go? Manos says it was pumped into a bloated bureaucracy, into fat salaries for key public workers, into their early retirement, into an over-staffed and inefficient education system, into a country living beyond its means.

Manos: If you go around Greece, you don’t get the feeling this is a poor country. So the money went all around and circulated, but it was all borrowed money. And that is the problem.

Not everyone in Greece accepts his analysis. But the rest of the European Union and the International Monetary Fund certainly do. That’s why they insist on steep cuts and curbs in public spending before they lend them a single, extra cent.

I’m Stephen Beard for Marketplace.

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