The Full Catastrophe

by James Angelos

  The submarines came to symbolize both Greek government fecklessness and German hegemony. I once ran into a distant uncle of mine, a farmer, selling fruit at an outdoor market in Athens. He had with him a small machine for printing receipts—an unusual sight at a farmers’ market, but financial-crime investigators had recently visited to see if the vendors were documenting their sales. I watched him print out a receipt for a lady who bought two lemons for a couple of dozen cents, and I thought it was a pretty absurd sight. My uncle told me he viewed the situation like this: billions for undelivered subs, and receipts for lemons. My uncle, a cigarette-rolling former hippie with a gray beard, was normally a very calm guy, but the submarines issue made him angry, not only with his own government, but the German one too: “They’re stomping us with their boot!” Greeks felt still worse about the subs after a German court at the end of 2011 convicted two Ferrostaal managers of bribing Greek officials in order to secure the initial submarine deals. This, it turned out, would be one of several bribery investigations involving European—often German—armaments makers and Greek defense officials. In this case, Ferrostaal was fined 140 million euros.

  This time, the alleged bribe recipient was eventually held accountable. Tsochatzopoulos was arrested in 2012 at his home across from the Acropolis. The house proved to be the key that allowed prosecutors to trace the trail of kickbacks in connection with the German subs. A maze of bank account transfers led to Torcaso, the offshore company that had years earlier bought the home. Tsochatzopoulos was first convicted of failing to properly declare his assets and was sentenced to eight years in prison. He was later convicted of laundering tens of millions of dollars worth of kickbacks not only related to the German subs programs but also connected to the deal for Russian surface-to-air missiles that had come under scrutiny years earlier. He was sentenced to twenty years in prison. The penalty was technically for money laundering and not for accepting bribes, prosecutors told me, because as an ex-minister, Tsochatzopoulos was immune from prosecution for the latter crime. More than a dozen other people were convicted of crimes in connection with the case, including Tsochatzopoulos’s wife, his daughter, his ex-wife, his cousin, his accountant, and his right-hand man at the defense ministry.

  The Tsochatzopoulos case opened up a lot of additional leads for investigators to follow, and, as some of Greece’s top prosecutors told me, even though they had caught the former minister, they had barely scratched the surface of the bribery and money laundering associated with armaments spending. The defense ministry had been functioning like a shadowy organized crime network. There was no independent audit agency with the power to review the contracts, and one defense ministry official who resigned in 2010 announced on Greek television that every armaments contract since 1996 was flawed. Prosecutors told me they estimated that Greece had spent some 10 to 15 billion euros on armaments from 1998 to 2002, and that between 7 and 10 percent of the value of the contracts—up to 1.5 billion euros—consisted of illegal payments.

  Following Tsochatzopoulos’s conviction, one Greek defense ministry official of not particularly high rank testified that he had expressed reservations about a proposal to buy a large number of tanks from the German company Krauss-Maffei Wegmann. Then, he said, a Greek representative of the German company left a bag filled with 600,000 euros cash in his office. “I indeed ceased objecting to that procurement,” testified the official, who said he accrued many millions of dollars in bribes related to various arms deals over five years on the job. Greece—this was in the post-Tsochatzopoulos era—ended up buying 170 German Leopard 2 tanks for 1.7 billion euros. Both Krauss-Maffei Wegmann’s German headquarters and their Greek representative—a celebrity in the armaments field whom people speaking with me referred to as “the king” and “the emperor”—denied giving bribes. As of the end of 2014, no charges had been filed, though an investigation into the tank deal was ongoing. Many defense experts questioned the wisdom of the purchase, arguing the tanks would be useful only in case of a protracted land war, which seemed an unlikely prospect. More questions about the tanks’ usefulness were raised when the Greek press reported that they did not come with ammunition, leading many to ask what good ultramodern tanks were if they had nothing to fire.

  Though Tsochatzopoulos became an object of near-universal scorn, and his fellow politicians joined in deriding him, it is exceedingly difficult to believe that no one outside Tsochatzopoulos’s immediate circle knew something was very much amiss in the defense ministry. I tried talking to several high-ranking politicians and defense ministry officials about this, and almost no one was willing to discuss the issue with me. The few officials who initially agreed to speak with me either didn’t show up for scheduled interviews or, in one case, contacted me afterward to demand I speak not a word of our meeting. During the prolonged, nerve-racking, and utterly futile effort, I began to feel like I was going around asking master chefs to reveal to me their secret recipes. I wasn’t going to get very far.

  As he sat in prison, Tsochatzopoulos continued to deny all charges against him and said he was being singled out by “centers of power” for “political and moral annihilation.” It’s not hard to understand why he may have felt that way. The political system that had nurtured him was now allowing him to become the mascot of its worst ills. Throughout his money-laundering trial, Tsochatzopoulos repeatedly emphasized that a government council consisting of various other ministers and the prime minister had also signed on to the weapons program. For the whole truth to come out, he said, the others, too, must appear in court. That never happened, though Tsochatzopoulos kept pleading for it. “In the climate of the times, everything is in the light,” he once told television cameras before his conviction, speaking slowly and deliberately, pausing to look up into the empty space around him as if finding the words there. “All the truth to the people, as they say.”

  —

  Just as Greece went on the post-Imia weapons-spending splurge, it also launched an effort to enter the eurozone. In order to gain membership, Greece, like all the other members, had to cut its annual deficit to below 3 percent of gross domestic product. Greece was able to meet this requirement—an impressive accomplishment for a country that in 1995, before the Imia episode, was running a deficit of over 9 percent of GDP. Based on its apparent budget discipline, Greece was welcomed into the currency union on New Year’s Day 2001. The nation’s deficit, as initially reported, stayed well below the 3 percent limit through the first years of its membership. Greece was therefore able to drastically boost armaments spending while maintaining strict budget discipline. How was it able to do this?

  Not everyone believed the numbers Greece was reporting. Some investment bankers in London had taken to calling the head of Greek statistics “the magician” for his ability to make deficits disappear. The deficits, however, reappeared later, when Greek authorities, under the supervision of Eurostat, the European Union statistical office, revised the country’s 1997 through 2003 numbers. In reality, it turned out, Greece’s deficit had never fallen below 3 percent of GDP, though it came close in 1999—the year its fiscal performance was assessed for eurozone membership. In other words, the Greek government, while having done a lot to improve its finances in the years leading up to its euro entry, had never quite met the criteria. Greece’s accounting of military expenditures—or rather, lack thereof—provided a central reason for the big revisions, Eurostat reported in 2004. The data on weapons spending were apparently inconsistent and contradictory going back as far as 1994, or even earlier, according to the agency. Greece at one point told Eurostat that it recorded armaments expenditures when the arms were delivered. At another point, it said such military information was considered confidential, and therefore the people doing the statistics never received information on deliveries. Most weapons expenditures covered by borrowing from 1997 through 2003 were therefore not recorded. The armaments deals were, in short, off-the-books transactions.

  On a summer day in Athens in 2014, I
visited Yannos Papantoniou, the PASOK politician who was finance minister in the years leading up to Greece’s eurozone entry, and who considered Greece’s currency-union admission a crowning achievement of his political career. As such, he did not agree with the conclusion that it was accomplished on false grounds. I met Papantoniou at his office at the Center for Progressive Policy Research, a think tank of which he was president. The morning of my visit, not much seemed to be going on at the center. There was no one there but his assistant and a thin old man who had arrived at the same time as I did. The old man wanted to know why his latest retirement check had come in a few euros under the previous one. The assistant tried to be polite, but suggested the appropriate government office where he could find an answer. After the old man left, Papantoniou came out of his office and shook my hand. He had gone to college at the University of Wisconsin in Madison, earned a PhD in economics at Cambridge, and later became part of PASOK’s “modernizing” wing. Following his time as head of the finance ministry, he became defense minister, taking over in the place of Tsochatzopoulos.

  Papantoniou wore a suit jacket and khaki pants and flashed his broad, well-practiced smile, though it seemed rather forced. He did not appear to be in a particularly good mood, and this was perhaps understandable. He was coming under a lot of scrutiny at the time for some tax-related matters. His wife’s name was on the Lagarde List, and financial investigators, it seemed, were finally making some progress probing it. Some months after I met him, Papantoniou and his wife were convicted of failing to declare assets in 2009, and each was sentenced to a four-year suspended prison term. The couple faced additional charges for the same offense in 2008. Papantoniou was also coming under scrutiny for his tenure at the ministry of defense. Around the time we met, prosecutors were making progress on their investigation of the very large Leopard 2 tank deal, which was completed under Papantoniou’s reign. Also, the president of the parliamentary committee that had a decade earlier investigated Tsochatzopoulos was quoted in a Greek newspaper as saying the findings back then had shown that Papantoniou too had partaken in the “party” of kickbacks at the defense ministry. Papantoniou, in response, said there was no evidence he was involved in that party, calling allegations that he had engaged in wrongdoing slander.

  When I met him, Papantoniou did not want to talk about the accusations involving the Swiss account—though he had declared his innocence when talking to the Greek press—and he did not want to speak about his time at the defense ministry. “You know, because defense has been blurred with all these accusations.” He laughed uncomfortably and added, “I don’t want to have my name linked in any way to that story, which is not a very nice one.” This seemed to me an untenable position for someone who had served as defense minister, particularly following Tsochatzopoulos. After a few efforts to get him to discuss what he had found at the ministry when he arrived on the job, he said he had contributed to “rationalizing structures and policies.”

  During our talk, Papantoniou rejected the notion that Greece had cooked its books to get into the eurozone. The 2004 deficit revision was a political maneuver by New Democracy to change the accounting methods on defense spending, he told me, in order to make the previous PASOK government look bad and to make itself look more fiscally disciplined. The revision, he said, had unjustly “maligned the reputation of Greece as a country that is cheating and so on.” Papantoniou then ruminated on the debt crisis for a while. Despite the difficulties Greece was facing, he said, euro membership remained the country’s best hope for progress. “The argument for a country like Greece to join the EMU”—the European Monetary Union—“to us sort of modernizers in Greek politics was that by forcing this country into a system of rules, it would help the country to improve itself and behave better,” he said. “And this remains the hope.”

  3

  The Resistance

  With my rifle on my shoulder

  In cities, plains and villages

  I open the road for freedom

  I lay palms for her and she passes

  —From the anthem of ELAS

  (the Greek People’s Liberation Army)

  In early March 2014, German president Joachim Gauck, a former Lutheran pastor with an oratorical flair that suited his ceremonial position, flew to Athens for a state visit. At seventy-four years of age, it was his first time in Athens, and on the evening of his arrival, he and his partner, Daniela Schadt, went for a stroll on the Acropolis. This was, Gauck said, a special moment for him. Growing up in East Germany, he had taken Ancient Greek in school and imagined what it would be like to behold this citadel of Western civilization. He paused with his partner for a photo in front of the Parthenon. He put his hands on a stone parapet and looked out over the Acropolis’s south slope, gazing beyond the Theater of Dionysus Eleuthereus and toward the Temple of Olympian Zeus. “It’s now so that the old man sees with his eyes what he before as a young man had dreamed about with spiritual eyes,” Gauck told reporters. It was a pleasant evening, but the trip would get far more difficult after that.

  The following day, Gauck met with the Greek president and various Greek politicians, including the ninety-one-year-old Manolis Glezos, a member of the far-left Syriza. Glezos was a hero of the Greek World War II resistance, and famous in particular for a spectacular feat he pulled off one spring night seventy-three years earlier, a few weeks after the Germans had entered and occupied Athens. Glezos, who was eighteen at the time, climbed up to the Acropolis with a high school classmate and pulled down the large, swastika-emblazoned Nazi war flag from its place above the city. The following day, a notice went out in Greek newspapers condemning the culprits to death, but the young men were never caught, at least not for that particular act. The deed became known as the first act of resistance in occupied Greece, and Glezos later attained an almost demigod status, particularly among those who shared his leftist politics.

  The German president smiled broadly when he met Glezos at the plush Hotel Grande Bretagne, across the street from the Greek parliament building. “It is a joy and honor to meet a hero, a myth that I see standing alive before me,” said Gauck, shaking Glezos’s hand. Glezos, on the other hand, had a stern look on his face. He wore a baggy, dark suit and no tie. His thin, long white hair was combed back to his shoulders and a thick white mustache reached the creases of his cheeks. Glezos’s elderly body was slightly bent, but he nevertheless looked younger than his age, and his wide blue eyes appeared sharply in tune with the world around him. Glezos addressed his response to the translator rather than to Gauck, breaching, it seemed, diplomatic etiquette. “I was expecting him at the shooting range of Kaisariani and he didn’t come.” The shooting range Glezos was referring to—named after the Athens suburb where it is located—is a memorial where the Nazis executed hundreds of Greek partisans and communists during the occupation. Among the people killed there was Glezos’s younger brother, Nikos, who was executed on May 10, 1944, for resistance activities. That day, as Nikos Glezos was being taken away in a truck to the shooting range, he hastily scribbled a note on the lining of his cap. “Dear Mother. I kiss you. Greetings. Today, I’m going to be executed. Falling for the Greek people.” Nikos Glezos signed the hat, added his address, and threw it from the vehicle. Someone on the street found it and took it to his mother, who read it around the moment her son was shot dead.

  Gauck did his best to maintain his smile as a phalanx of Greek news photographers illuminated his face with flashes. Glezos and Alexis Tsipras, Syriza’s leader, then went into a conference room with the president. There, Glezos said, he read the German president a poem he had written for four comrades executed during the occupation. At the time of their murder, Glezos had been imprisoned with the men in Athens’s Averoff Prison, a drab stone mass that has since been demolished. The poem began:

  One Achtung, two verboten, three raus

  and one and two and three and four times

  the shrill voices rattle the silence’s calm

  A buildi
ng skinned the earth

  And entered the flesh of the wound

  Expressing penitence for the evils of the Third Reich is a persistent duty for any German president, and one purpose of this trip, Gauck told the newspaper Kathimerini, was to acknowledge Germans’ “moral debt” to Greece. Yet, while expressions of moral debt were welcome, what Glezos and many Greeks were really looking for was an admission of material debt. “What does moral debt mean?” Glezos told a Greek radio station before he met the German president. According to Glezos and others, in fact, the amount Germany owed Greece for occupation-era damages and debts was 162 billion euros, not including interest. That sum would have halved Greece’s total debt, thereby going a long way toward resolving the country’s vast fiscal quandary. The Germans were not exactly open to the idea of paying the Greeks, though. Glezos said he presented his argument about Germany’s debts to Gauck in the room at the Grande Bretagne. The German president mostly “said nothing” in response, according to Glezos’s account of the meeting, only that he would relay the message to the German government.

  —

  The suggestion that Germany owed Greece money and not the other way around did not sit well in Germany. A summer 2013 article that appeared in the German tabloid Bild, the country’s largest-circulation newspaper, probably summarized the common German sentiment regarding the reparations claim pretty well: “Have these Greeks gone completely crazy?” To make its case, Bild published a graphic laying out the aid payments disbursed to Greece under the bailout agreements, which to that point amounted to about 210 billion euros. This was to emphasize who the real debtors were. The article ran on the occasion of another visit by a prominent German politician—finance minister Wolfgang Schäuble. If there was one politician as disliked in Greece as the German chancellor, it was the cantankerous Schäuble, considered, along with Merkel, to personify punishing policies that had resulted in diminished wages, pensions, and economic output. Schäuble had visited Athens to declare German readiness to contribute 100 million euros to an investment fund that would help credit-deprived Greek businesses borrow money—a gesture, though relatively paltry, meant to illustrate that Germany was promoting more than just fiscal stringency, and was in fact doing something to help spur growth. “But instead of a thank you comes from Athens once again hate and malice,” the Bild article read. In addition to the fact that one Greek newspaper greeted the finance minister with the headline “Heil Schäuble!” the main affront, according to Bild, came from Syriza’s leader, who during the visit made the unbelievable claim that Germany should compensate Greece for wartime damage. Schäuble had already shared his views on the matter with another German newspaper, saying Greece had no hope of getting reparations and that any insinuation otherwise was irresponsible. Greece’s leaders, he said, should advocate the reform path rather than “lead people astray with such stories.”