Let’s hope the EU averts its eyes from rising Irish debt

IRELAND – how do we do it?

The figures produced during the week showed that Ireland had been cooking the books in its own fashion, but the world – luckily – didn’t seem to notice as all eyes were on Greece.

The people who really understand economics said that it was correct to ignore it, as Ireland’s misplacing of the €4 billion to that black hole known as Anglo Irish did not change the facts. It was more about accounting theology, to quote on expert, than anything else. But even so the difference between cooking the books and accounting theology did not do Greece any good last Thursday.

Their budget deficit figure was officially put at 13.6%, second only to Ireland.

It was higher than forecast – but not as high as Ireland’s, which was recorded at 14.3% compared to the 11.75% the Government had suggested. And we must quickly add that our debt is much lower and our reserves and that all important credibility remains higher.

So the Greeks may work the longest hours in Europe – longer than the Irish – but the country has been more badly managed than Ireland, and the culture of corruption is endemic from the top to the bottom of society.

Irish citizens may rightly believe it has not been given a proper answer on why each household owes more than €40,000 for bailing out what was in reality a private bank, Anglo Irish, and can question why some politicians can collect up to five pensions, several while they are still working.

But wholesale bribery – paying for services for which you are entitled – is not widespread unless you count having to take out private health insurance just to get treatment.

A recent Transparency International survey shows that corruption is part of normal life in Greece with its 11 million citizens paying out more than €780 million in bribes last year.

Compared to the €300 billion of government debt, the sum may seem small, but consider that people paid an average of around €1,700 in bribes to professionals they dealt with, including doctors, lawyers and even bankers. More than one in seven people said they had been asked for a bribe last year, and that the sums requested increase every year.

It gets even worse when, according to another survey, tax inspectors are on the take too and the result is that about a quarter of all taxes owed are not paid to the state. They split the sums between them after giving the state a fifth of the sum it should get.

Tax take even fell over the past decade despite the country growing faster than most in the EU. A government survey gave a glimpse of just why this is when last year half of doctors living in an upmarket Athens district claimed to earn just the median salary of about €30,000.

Transparency International did not even consider the massive corporate and government corruption that are fairly common knowledge in the beautiful Mediterranean country, although the US Brookings Institute estimates that public corruption costs Greece 8% of its GDP.

It all adds up to a lot of money, about a quarter of GDP according to some reports.

The frightening thing is that Greece is not alone in having a massive black economy – Italy, Spain and Portugal have a similar size problem.

Ireland fairly successfully tackled this problem some decades ago, but then failed to keep the balance right and allowed a golden circle to get preferential treatment at the expense of the ordinary worker.

Hopefully the greedy markets will not turn their attention to Ireland, even if Eurostat decides that the rest of the estimated €18 billion going down the Anglo Irish black hole must be added to the bottom line of government spending.

And let’s hope that Greece takes its medicine and that it works, that Portugal does likewise and that the markets keep their paws off Spain.

Otherwise it looks like black bread and water for us all for the next few decades.