BRUSSELS, Belgium — After weeks of pointing fingers at Athens for sparking a crisis in the eurozone, Brussels itself is being blamed for many years of passing the buck, so to speak.
Late Monday night came the most visible sign that the eurozone is taking a close look at its own processes.
“I’d like to apologize to the world at large that I wasn’t able to prevent a bad decision,” said Eurogroup President Jean-Claude Juncker, referring to the fact that finance ministers, under his leadership, had previously rejected giving the EU statistics agency some fact-checking powers. “I’m sure we were wrong, I confess it,” Juncker said, “not to have looked closely enough at divergencies of competitiveness that we had noted in Greece and elsewhere … we hadn’t drawn all the operational conclusions that we might have drawn from that fact.”
The Eurogroup comprises the finance ministers of countries that have adopted the euro and has oversight of European Union matters affecting the eurozone.
Juncker’s humility was striking in a city full of blustery bureaucrats, but he may also be trying to head off accusations of hypocrisy.
As Greek Prime Minister George Papandreou has become more frustrated with taking the heat for his country’s immense economic mess and its implications for the rest of Europe, he has hit back, saying there has been “quite a big effort in the European Union to hide their responsibilities behind Greece.”
Juncker noted a 2005 effort by the EU’s executive arm, the European Commission, to equip the EU’s statistics agency Eurostat with the right to check up on figures submitted by member states. The recommendation was rebuffed at that time because finance ministers did not want to give up autonomy to the Luxembourg-based EU agency.
That decision allowed Greece to get away with submitting falsified finance reports and now allows the EU some degree of deniability. Despite his candid admissions, Juncker defended the EU by saying, “If we haven’t spotted everything that we should have spotted in the case of Greece, that’s not due to a lack of observation on the part of the commission or the eurogroup. It’s due to a Greek way of presenting figures which weren’t all ones we could validate.”
Even so, there was plenty of warning that Brussels’ suspicions should have remained on permanent high alert when it came to Greece: The country’s very entry into the eurozone was predicated on falsified figures.
In 2004, Athens admitted that it had lied about its national deficit three years earlier in order to be allowed to join the euro area. Greece's finance ministry had claimed that its deficit was below the EU limit of 3 percent of GDP in 1999, on the basis of which it was allowed to adopt the euro. The country later acknowledged that, even if that were true then, the deficit hadn’t been that low since. Even so, the other eurozone countries, some of which had also breached the 3 percent limit at times, assured Greece it would not be kicked out.
So the EU should have kept its eyes on the ball, suggested Greek political economist Sotiria Theodoropoulou, who specializes in the EU at the European Policy Center in Brussels. She said the crisis had actually been building for three decades.
“Messy public finances and the Greeks living beyond their means is not something that started yesterday,” Theodoropoulou said. “I don’t want to let the Greeks off with any excuses. They are completely responsible for the state of the budget deficit and the public debt. But how could the European Commission and Eurostat let things get that bad?”
Theodoropoulou underscored that Greek culpability should not mean “they should be left alone because they operate in the broader market which is interdependent.”
Spain and Portugal, while also heavily indebted, are escaping most of the heat for the moment, she noted, because they showed more spending restraint. Spain in particular should not be thrown in the same category as Greece, Theodoropoulou said, having saved a lot of money during better economic times.
The Greeks have always been spendthrifts: Even though the country had one of the highest growth rates in Europe for almost a decade, it didn’t manage to reduce its debt. “That’s their biggest sin,” she said. “If you don’t consolidate your public finances when your output grows, then obviously now that the economic situation is so dire it’s more difficult. They don’t have the alibi of ‘at least they tried.’”
Apart from Juncker, the EU doesn’t seem inclined to apologize for the past, but it is looking forward intently, trying to rectify the dearth of coordination and oversight. New Monetary Affairs Commissioner Olli Rehn says he will soon present a plan to create better communication and transparency amongst member governments, a concept that might have been shot down as a violation of national privacy before the current crisis.
The 2005 proposal on boosting Eurostat’s audit powers will now be resubmitted to member states, unchanged from its earlier form, and the commission expects it to pass.
Asked where that confidence comes from, commission spokesman Amadeu Altafaj Tardio laughed wryly: “Read the newspapers!”
Editor's note: This story was updated to clarify an attribution.