Politico: By convicting an honest statistician, Greece condemns itself
The prosecution of Andreas Georgiou raises questions about the integrity of the country’s institutions.
By MEGAN GREENE
Greek economic data is completely unreliable. That’s what I told Andreas Georgiou— as politely as I could — shortly after he had been put in charge of the Greek statistics agency in 2010.
He must not have been surprised at my answer. After all, that was exactly the problem he had been hired to fix by ensuring that the agency broke free of political influence.
And fix it he did, injecting the agency with a stiff dose of independence and markedly improving the data it produced.
His reward? Prosecution and, ultimately, conviction.
On Tuesday, Georgiou was handed a two-year suspended sentence for “breach of duty” during his stint at the head of the statistics agency, Elstat — a travesty that goes beyond the unfair treatment of one statistician to questions about the progress of Greece’s economic recovery and the sustainability of the eurozone.
Numbers don’t (shouldn’t) lie
As a junior economist covering Greece before Georgiou joined Elstat, I spent hours buried in my forecasting model trying to revise the country’s historical data to more closely resemble reality. And so I was in a perfect position to notice a sharp improvement in the agency’s numbers after Georgiou took charge.
I was not the only one. Eurostat, the European statistics agency, has cited “the very significant progress made in the quality of public finance data transmitted by Greece, as a result of new and strengthened procedures” beginning when Georgiou joined Elstat.
The European Statistical Governance Advisory Board reported that Elstat “has regained the trust of its international partners by notably enhancing the quality of its statistical outputs, in particular its public finance statistics.” The International Statistics Institute declared that Georgiou (and a few of his colleagues) had done their work “with the highest professionalism, integrity and adherence to international standards.”
One would like to think that consistent, positive judgment by statisticians working at respected international agencies would carry some weight when it comes to assessing the quality of Georgiou’s work. Sadly, the cases against Georgiou rumble on regardless.
Georgiou has arguably become a scapegoat for politicians on both the left and the right trying to deflect responsibility for Greece’s fiscal problems. According to one case leveled against Georgiou, his upward revision of the budget deficit in November 2010 was overdone and intended to cause harm to the Greek state — a myth that neither the ruling Syriza party nor the main opposition New Democracy party has been willing to put to rest.
This is a serious problem. If Greece’s political establishment cannot accept that it was their predecessors’ fiscal profligacy, hidden by statistical fudging, that got their country into trouble, then how can they take responsibility for its fate and put it on the path to recovery.
Politicians should not interfere with judicial investigations, but there’s no excuse for pushing a bogus narrative about the reason the country was in such bad fiscal shape.
Georgiou’s prosecution also raises questions about the integrity of Greece’s institutions. Four times in the past four years, public prosecutors have concluded Georgiou is innocent of charges raised against him, and yet these rulings have been discarded and the trials have continued. That suggests the possibility of some degree of political interference in the judicial system — something potential foreign investors will be watching with concern.
Greece’s international creditors have long complained that the cases against Georgiou could call into question the integrity of the Greek statistical agency. Given his plight, one would understand if his successors at Elstat are wary of defending data that could prove politically unpopular — another warning sign for those thinking of investing in the country’s economy.
The charges against Georgiou could even undermine Prime Minister Alexis Tsipras’ bid for debt relief. After all, if Georgiou did unfairly inflate the country’s budget deficit, its current budget deficit and debt burden are probably similarly overblown. In that case, why should its creditors be lenient?
Greece can’t have it both ways. Either its fiscal situation is dire and the country needs debt relief — or the numbers aren’t as bad as reported and Greece shouldn’t be given a break.
The Georgiou cases have serious implications for the entire eurozone as well.
If statisticians in the eurozone cannot do their work or if statistical data in the currency union becomes unreliable, then the bloc’s risk-sharing agreements will break down.
Why should northern countries such as Germany underwrite any other country’s debt borrowing if they can’t trust the country’s economic data? Questions like that would cripple any attempt to establish a fiscal, banking or capital markets union — without which the eurozone will struggle to hang together.
Given the severe repercussions of the cases against Georgiou, Greek politicians must stop winking at conspiracy theories and accept responsibility for the country’s fate — past, present and future.
Greece’s international creditors must continue to put pressure on Greece to strengthen its institutions, and the Greek people must continue to scrutinize these institutions and highlight weaknesses where they persist.
International statistical organizations must continue to hold Greek data to the highest standards and call out the country’s agency when it strays.
And those of us who believe in professional integrity and the European project must raise awareness of these cases and their potential repercussions and make it clear that we are all watching.
*Megan Greene is chief economist at Manulife Asset Management.
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