As Greece turns leftward, tycoons stay in background
Monday, 28 May 2012 | 00:00
While money pours out of Greek banks and Europe debates whether or not Greece deserves its next handout, the people potentially in the best position to help shore up the nation’s finances are mainly keeping their heads down.
They are among the wealthiest Greeks whether shipping magnates, whose tax-free status is enshrined in the constitution, or the so-called oligarchs who have accumulated vast wealth via their dominance in core areas of the economy like oil, gas, media, banking and even cement.
Astute investors, they have been reluctant to lend a hand to the Greek treasury through the risky proposition of buying government bonds. But they have also been slow to dispense funds to philanthropies trying to combat the mounting social ills that their nation’s economic collapse has wrought drawing a sharp rebuke from the head of a foundation created from Greek shipping wealth that has become Greece’s largest charitable donor in recent years.
Mainly, though, they have done what Greeks from the richest to those of modest means have traditionally done: pay as little as they can in the way of taxes.
Many economists say the oligarchs are a big part of Greece’s economic problem, because they have capitalized on the insular, quasi-monopolistic approach to business that is one reason their nation has long lagged the far more competitive economies of many other eurozone nations.
The moneyed elite in Greece have always been secretive in nature, especially when it comes to their fortunes. Assessing the ultimate value of Greek private sector wealth is a nearly impossible task, because much of the money exists offshore, secreted away in Swiss bank accounts or invested in real estate in London and Monaco. And now, with the country’s top vote-getter, the leftist firebrand Alexis Tsipras, talking more and more about nationalizing companies and industries and, in the words of his top economic adviser, “taxing the rich,” there is even more incentive to lie low.
Of course, the left is not alone in this view.
“Let’s be frank the well-off need to pay their fair share of taxes,” Bob Traa, the International Monetary Fund’s representative in Greece, said in a speech last year in Athens.
Last year alone, an estimated 8 billion euros ($10.2 billion) in collectible taxes were in arrears nearly half of the country’s budget deficit.
The nation’s tycoons have every incentive to keep their country in the euro currency union. The question is, are they willing to bear the cost of doing so?
“The oligarchs want to keep the euro largely because of the banks which are so deeply integrated in the euro system,” said Costas Lapavitsas, an economist at the University of London. “But they are keeping quiet about it.”
But as children go hungry in Greek schools because their parents have no money with which to feed them, and the streets of Athens become home to growing numbers of desperate, jobless people, pressure is mounting on the country’s rich to do what the state can no longer effectively do: write checks.
After all, philanthropy is a Greek word. But with many wealthy Greeks still fearful of showing their financial hand, private giving to date has been relatively meager.
Doing their part
“I get the sense that almost nothing is being done,” said Andreas Dracopoulos, co-president of the Stavros Niarchos Foundation, which was set up in the 1990s to put to charitable use the winnings of its shipping tycoon founder. “Everyone is saying let someone else do it, and so far I am seeing little action.”
This January, the Niarchos foundation, which describes itself as an international charity with offices in Athens, New York and Monaco, said it would donate 100 million euros to a series of projects aimed at helping Greeks cope with the economic crisis. Plans include food vouchers to help destitute parents feed their children and programs to attack the growing epidemic of homelessness in big cities like Athens and Piraeus.
Thanassis Martinos, a second-generation shipping heir, said his company, Eastern Mediterranean, was having one of its worst years on record and was likely to lose money in 2012.
Still, he and some other shipping billionaires say they are doing their part. In addition to philanthropic giving, Martinos said it was important that wealthier Greeks contribute by providing jobs for the country’s increasingly rootless youth, among whom employment is above 50 percent. That is why, despite the slump in his business, he said he had refrained from laying off workers.
“The biggest problem is not feeding young people,” he said. “It is giving them jobs.”
Another rich shipper, who insisted on not being identified because he did not want to draw attention to himself, said that he was providing thousands of free meals to families in and around his ancestral village.
Several shippers said they had also donated to a nascent campaign being organized by the trade group that represents Greek shipowners in Athens although its president, Theodoros Veniamis, declined to say how much money they hoped to raise.
What the shipping magnates are not doing, though, is paying taxes. Martinos’ company, for example, bases its fleet of tankers offshore as do all shipping companies here although the administrative offices are in Athens.
Greece’s income tax revenue is 7.3 percent of gross domestic product, well below the 11 percent average for eurozone countries, according to Eurostat. Even so, there has been little talk by recent governments or even by Greece’s financial backers about imposing taxes on shippers a move, it is assumed, that would prompt them to take their business elsewhere.
That is a blow Greece would have trouble absorbing. The shipping industry employs about 200,000 people. And it brought in 13 billion euros in foreign exchange in 2010, making it the country’s top single foreign-exchange earner.
Would shipping’s special tax exclusion change under a left-wing government? It is hard to say. Euclid Tsakalotos, a top economic adviser to Tsipras, said in an interview last week that the first thing Tsipras would do was to “tax the people that past governments have been afraid of taxing.”
Martinos says such an outcome is unlikely, given shipping’s vital role in the economy. Greek shippers are also some of the country’s largest investors, owning large tracts of real estate and interests in tourism, banking and media.
“I don’t think the policy will change,” he said. “Shipping is a net profit for Greece.”
Many shipowners and other wealthy Greeks are said to be taking the long view, arguing that Greeks will come to their senses in the next election and not vote in large numbers for Tsipras if they become convinced that it means a forced march out of the eurozone.
But privately, they cannot ignore the increasingly grim economic and social environment which is why some have bolstered their already tight security forces by hiring more bodyguards.
Source: New York Times