Athens.- Special for the Greek News
The Athens Exchange (ATHEX) plummeted nearly 10 percent on Friday, with the Greek banks leading the “dive”. Senior bank sources have attributed the selling pressure to panic conditions on the market and broader risk aversion by institutional investors. And while market analysts recognize that Greece simply gets hit by the effects of the global financial tsunami and not because of the economic policies of the government, they fear that the recent crisis over the Vatopedi Monastery scandal will further weaken the ruling party and will hurt the investorsʼ confidence in the governmentʼs ability to apply the necessary measures.
The Vatopedi scandal claimed its first victim on Thursday, even before Parliament begins its investigation into the affair, as State Minister and government spokes-man Theodoros Roussopoulos resigned from his posts, saying that he wanted to be free to fight the allegations of corruption.
Last month, the Greek merchant marine minister quit after accusations that his wife had acted as the notary public for several land-swap deals between Vatopedion and the state.
Alternate government spokesman Evangelos Antonaros will take over as the main press representative, while Interior Minister Prokopis Pavlopoulos will look after the Press and Information Ministry.
The political news overshadowed the bad financial news. Greek media split their attention between the dive of ASE, the resignation of Roussopoulos and the monks of Vatopedi.
“We are moving to a stage where emerging market exposure is very bad. If you look at where defaults on sovereign debt is going to be, it is going to be in the emerging markets somewhere,” said Jim Wood-Smith, head of research at Williams de Broe, according to Reuters.
In recent years, Greek banks have been increasing their exposure in emerging markets such as Bulgaria and Turkey to offset a slowdown in lending growth in the domestic market. National Bank of Greece was hit the most (-16%) over suspicions that their investments in Turkey are unsafe.
Greeceʼs economic growth, which has been one of the eurozoneʼs outperformers in recent years, is also heavily dependent on neighboring emerging markets.
The events also heart Greeceʼs international image, that had improved significantly after the Olympics. In an article published on Saturday under the title “Land Scandal Threatens Greek Leader”, New York Times points out that “A scandal over more than 250 questionable land swaps is threatening to bring down the Greek government and tarnishing a storied Greek monastic society. Two government officials have already resigned over the dealings, in which a wealthy Orthodox monastery traded cheap tracts of lakeside property for prime public real estate, including a housing venue for the 2004 Athens Olympics. An initial judicial inquiry put the loss to the state at $136 million.
The monastery, Vatopedion, is one of 20 on the northern peninsula of Mount Athos, home to a 1,000-year-old monastic community in which all females are entirely barred.
The scandal embroils its abbot, Ephraim; at least three senior aides to the prime minister, Kostas Karamanlis; judicial officials linked to Orthodox faith groups; and the wife of a former minister who acted as notary public for the land swaps. And many Greeks are asking whether Mr. Karamanlis, who canceled the deals after their scope emerged this month, knew of the arrangements all along.
According to publisher George Kirtsos, “This is the biggest scandal to hit Greece in recent decades. Its effects are bound to be far-reaching because of the wide range of interests that are implicated.”
The NYT article says, “Revelations by the news media of the deal details and grainy pictures showing government officials hobnobbing with Abbot Ephraim — whose monastery is the legal proprietor of a number of houses, hotels and mines and the owner of large pieces of land in Greece, Cyprus, the Balkans and Turkey — have drawn furious accusations of corruption and breach of faith, even from members of New Democracy.”
Mr. Karamanlisʼs aides contacted Friday by NY Timesʼ Athens correspondent Anthee Karassava suggested that his decision to endorse a congressional commission to investigate would buy him time for a fresh political offensive.
“Karamanlis has to show again that he is fighting for Joe the Greek Plumber and that small and medium-size enterprises are the governmentʼs priority,” said Nicholas Karahalios, a senior New Democracy strategist.
It had been rumored over the last few weeks that Roussopoulos, who has been the target of heavy criticism in the media and from opposition parties over his alleged crucial role in the property exchange, would step down.
However, Thursdayʼs announcement appeared to be timed to coincide with the decision by New Democracy that its deputies would not participate in Fridayʼs vote on whether Parliament should hold a preliminary judicial inquiry into the claims that the land swap left state coffers some 100 million euros short.
By not turning up for the debate and the subsequent vote, the conservatives effectively will make it impossible for the motion, put forward by PASOK, to be passed, as it would need the support of 151 MPs and there are only 148 opposition deputies.
On Wednesday night, Parliament unanimously approved the setting up of a investigative committee to examine whether any members of the government were involved. But PASOK wanted the more powerful inquiry to be set up to examine the role of Roussopoulos and two other conservative ministers and possibly bring charges against them.
Theodoros Roussopoulos pointed at PASOK leader George Papandreou during Wednedayʼs debate in Parliament. PASOK has identified Roussopoulos as the moral instigator of the deal but the prime ministerʼs close aide blasted the Socialists and their leader George Papandreou, saying he was the victim of “an unprecedented attack and political cannibalism which in a haphazard manner targets human and political relationships.”
Officially, New Democracy said it would not take part in the vote because there was no evidence indicating wrongdoing at a ministerial level and that taking part in the vote would “ridicule” the process.
However, according to sources, Prime Minister Costas Karamanlis took the decision to keep his MPs away from Parliament after aides told him that up to 15 ND deputies were prepared to cast blank votes in the ballot, which would have been a public relations disaster.
The governmentʼs decision not to take part was roundly condemned by all the opposition parties.
As things stand, the parliamentary committee approved in the midnight vote on Wednesday will begin its work on October 30 and will have until December 15 to conclude its probe. The 23 deputies – 12 from ND, eight from PASOK, one from the Communist Party, one from the Coalition of the Radical Left (SYRIZA) and one from the Popular Orthodox Rally (LAOS) – were named yesterday.
Meanwhile Athens First Instance Court judge Constantine Simitzoglou on Friday filed charges against notary public Ekaterini Peleki, wife of former merchant marine minister George Voulgarakis.
The charges are based on press reports claiming that she participated in limited liability companies and the fact that she drafted the contracts for transactions involving a designated archaeological site that was among the controversial land swap deals between the State and the Mt. Athos monastery of Vatopedi.
Peleki’s case will be considered by the appropriate disciplinary council, which will decide whether to acquit the notary or impose some kind of penalty.
Arriving at Thessaloniki’s ‘Macedonia’ airport on Saturday, where he will attend a grand military parade and other festivities for the northern Greek city’s triple anniversary from October 26-28, President of the Republic Karolos Papoulias referred to the global economic crisis and the difficult days that lay ahead.
“What is emerging in recent times is the downfall of a specific cultural model, the ideological delegitimisation of a method of economic development and operation of society,” Papoulias said.
The world was approaching a difficult conjuncture when it would have to face the combined challenges of the international financial crisis, the food crisis, the energy crisis, the environmental crisis and geopolitical conflicts that threatened global peace and stability, the president added.
He stressed the need for everyone to “seek the deeper meaning of these crises and empathize with the concerns of those affected by them” in order to protect the values that will build a democracy orientated toward social justice, solidarity and humanity.