Wheel of recurrence in Athens echoes Irish banking fiasco

Greece Letter: Country’s fifth largest bank is in copycat exercise of Anglo Irish debacle

A branch of Attica Bank in Athens: the effect on Greek self-confidence of the ongoing Attica saga is far-reaching. Photograph: Melanie Stetson Freeman/The Christian Science Monitor via Getty Images

A branch of Attica Bank in Athens: the effect on Greek self-confidence of the ongoing Attica saga is far-reaching. Photograph: Melanie Stetson Freeman/The Christian Science Monitor via Getty Images

 

If history did not continually repeat itself, we would be unable to learn its lessons. Consider this: “There is nothing that can be done about Greece. We are too poor. We have only a lot of rocks to offer for sale. We can only exist on skilful borrowing.”

Sounds familiar? One of Greece’s more recent finance ministers? Selling “a lot of rocks” – its islands – is precisely one of the asset-stripping activities Greece is obliged to undertake by the terms of its bailouts. And, unless it returns to the drachma, borrowing is Greece’s only way forward.

No, it’s not a present-day politician, but a character in a novel by Lawrence Durrell from the 1960s, in which selling the Parthenon to a multinational corporation becomes a crucial test of self-determination. Was Durrell foreseeing the time in 2011 when the German tabloid Bild would make exactly such a demand ? What goes around, comes around.

In the 19th century the West was apprehensive about Russian interest in the Mediterranean and Central Asia. Today, we can add Chinese expansion to the same fears, as Russia and China are competitively buying into Greece and Cyprus.

In 2014 the then Greek prime minister, Antonis Samaras, declared that “Greece can become the main European entry point for China thanks to our strategic location”. The Chinese company Cosco, which owns Piraeus (the busiest port in the Mediterranean), recently announced plans to increase cruise ship traffic by 50 per cent immediately and 300 per cent in the long term, while also aiming to buy the Greek national electricity grid.

But the economy is not the only geopolitical signpost: Samaras, in asserting “Greece is the friendliest and most reliable country in Europe for China”, also indicated that joint naval exercises between the Greek and Chinese navies were part of the bilateral agreement to include a naval base for China in Crete. A Chinese naval base in the Mediterranean? How bizarre is that?

Wheel of recurrence

Attica BankAnglo Irish Bank

Crisis management led to the dismissal of senior management and board members in July, but unsecured and unauthorised lending continued, and further inspection revealed that non-performing loans worth €2.2 billion amounted to 60 per cent of the bank’s portfolio, while deposits had shrunk over the past 18 months by €1.2 billion – 32 per cent of its assets.

The Greeks have a word for it: thalassodaneia – literally, a loan thrown in the sea.

Most of these unauthorised loans went to companies in the business sector which were on the brink of collapse. This, too, sounds horribly familiar. One of the borrowers was a construction company owned by Christos Kalogritsas, a developer with links to socialist parties whose tax affairs have been under scrutiny.

At a time when it was instructed to lend no more than €100,000 to any single borrower, Attica raised his credit limit from €10 million to €100 million, despite the fact that his personal credit rating had slumped.

His son, Yiannis Kalogritsas, made a tax settlement of several million euro in order to legitimise his successful bid for one of four broadcasting licences recently up for auction. But, perhaps because, as a result, he no longer held the €18 million deposit for the licence, young Kalogritsas had to relinquish it in favour of the under-bidder, Ivan Savvidis, a Russian-born Greek who is a Russian MP, a close associate of Vladimir Putin and one of Russia’s richest men.

And this, in turn, has caused concern about the entry of Russian interests into the lucrative and powerful Greek media industry. Both these stories will run and run.

Self-confidence

The similarity between the two scenarios, in what amounts to illegal lending of a highly irresponsible nature, is stunning. Readers of this column can say “I told you so”. That’s what history helps you to do.

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