Greece 'deliberately' exploited migrants: Research

Thousands of displaced Syrians, Iraqis and Afghan's wait in squalid conditions to enter at a reception center on the island of Lesbos on October 14, 2015 in Mitilini , Greece.

Πηγή: CNBC
By Kalyeena Makortoff
9 March 2016

Successive Greek governments have deliberately adopted lax border controls in order to reap the benefits of exploitable labor, a new piece of research from the London School of Economics (LSE) has claimed.

A paper penned by assistant criminology professor Leonidas Cheliotis and released Wednesday suggests that over the past 25 years, Greek authorities have done little to reform ineffective migration policies in light of the economic and political benefits of keeping the status quo.

Cheliotis said that policies put forward by centrist parties like New Democracy and PASOK over the last two decades have maintained a high migrant population which has been crucial for filling low-prestige, poorly paid menial jobs, and holding up the shadow economy.

"Greek governments have engaged in the deliberate practice of allowing large waves of irregular migrants into the country in order to be able to exploit them once they're in, in order to satisfy the country's large informal labor market," he told CNBC in a phone interview.

Despite repeated claims to the contrary, the Greek state introduced policies and promoted practices that have kept the migrant population high by making piecemeal attempts at blocking irregular migration routes and failing to streamline processes like asylum claims, deportation or even voluntary repatriation programs, the paper explains.

Even with Greece viewed as a point of transit on the way to other European states, migrants have found themselves "trapped" by a system that relies on a highly-exploitable workforce, hemmed in by restrictive welfare and employment rights, and violent intimidation from the broader population, the report adds.

Eva Cosse, an assistant researcher with advocacy group Human Rights Watch, told CNBC that pressure on Greece to simultaneously take responsibility for both a disproportionate number of asylum seekers and for irregular migrants trying to enter EU borders "means that many asylum seekers find themselves trapped in what a 2008 Human Rights Watch report called 'a revolving door,'" she said.

"The failure of successive Greek governments to adopt coherent migration policies, chronic mismanagement of the asylum system, and, most recently, the deep economic crisis and resulting austerity have exacerbated what the United Nations High Commissioner for Refugees and others have described as a 'humanitarian crisis,'" she said.

The LSE report also claims that Alexis Tsipras' ruling Syriza party, which came to power in January 2015, may be prompting a shift just as the country faces unprecedented pressure from a ballooning migrant crisis.

Over 880,000 people illegally entered Greece in 2015, according to the EU border agency Frontex.

Cheliotis explained to CNBC that under Syriza, the legacy of deliberately exploitative migration policies has started to erode. While many of the realities on the ground have yet to change some of the harsh and discriminatory treatment of migrants and refugees landing on Greece's shores, Syriza has changed the tone of the national migrant debate.

But it may take longer to reverse reputational damages after migrants served as "scapegoats" for mainstream governments over the last two decades, he suggested, explaining there will still be difficulties in how outsiders are treated by the wider society.

The report comes on the heels of a tentative deal between the EU and Turkey to stem the flow of migrants to the bloc, with Ankara provisionally offering to take back migrants who enter Europe via their border.

The Greek Prime Minister's Office was not immediately available for comment when contacted by CNBC.

A nexus of media, business and politics lies behind the country's crisis, say critics.

A presidential guard marches by a newspaper stand featuring news about Greece's election results in Athens in this June 18, 2012 file picture.

Πηγή: Reuters
By Stephen Grey and Dina Kyriakidou
Dec 17 2012

In late 2011 the Greek finance minister made an impassioned plea for help to rescue his country from financial ruin.

"We need a national collective effort: all of us have to carry the burden together," announced Evangelos Venizelos, who has since become leader of the socialist party PASOK. "We need something that will be fair and socially acceptable."

It was meant to be a call to arms; it ended up highlighting a key weakness in Greece's attempts to reform.

Venizelos' idea was a new tax on property, levied via electricity bills to make it hard to dodge. The public were furious and the press echoed the outrage, labeling the tax ‘haratsi' after a hated levy the Ottomans once imposed on Greeks. The name stuck and George Papandreou, then prime minister, felt compelled to plead with voters: "Let's all lose something so that we don't lose everything."

But not everyone would lose under the tax. Two months ago an electricity industry insider revealed that some of the biggest businesses in the land, including media groups, were paying less than half the full rate, or not paying the tax at all. Nikos Fotopoulos, a union leader at power company PPC, claimed they had been given exemptions.

"It was a gift to the real bosses, the real owners of the country," he said. "The rich don't pay, even at this time."

This time the media made little fuss. "The news was not covered by the media ... because media owners were among those favored," Fotopoulos said later. Leading daily newspapers in Athens either did not mention or downplayed his claims, a review by Reuters found.

To many observers the episode illustrates the interplay between politics, big business and powerful media owners. The interwoven interests of these sectors, though not necessarily illegal or improper, are seen as an obstacle to Greece's attempts to rescue its economy. They are, say critics, partly to blame for the current crisis and for hindering reform.

Leading media owners contacted by Reuters denied exerting any improper influence or seeking favors, or did not respond to questions.

But given the international impact of Greece's crisis, concerns now extend beyond the country. A source in the troika of lenders keeping Greece afloat - the European Union, International Money Fund and European Central Bank - said: "The system is extremely incestuous. The vested interests are resisting reforms needed to make the economy competitive."

Opposite sides of the Greek political spectrum speak about the subject in colorful terms. "In Greece the real power is with the owners of banks, the members of the corrupt political system and the corrupt mass media. This is the triangle of sin," said Alexis Tsipras, leader of Syriza, the main opposition.

Panos Kamenos, leader of the right-wing Independent Greeks party, said: "The Greek media is under the control of people who depend on the state. The media control the state and the state controls the media. It's a picture of mutual blackmail."

Others are more measured. Asked about the haratsi tax, Venizelos acknowledged there were some "blatant cases of paying less tax or none at all", but blamed this on poor records held by the state-run electricity company. "In no way was there any discrimination in favor of specific property owners," he said.

Simos Kedikoglou, a government spokesman, said officials were monitoring the property tax and any errors would be rectified.

Previous efforts to curb potential conflicts of interest - in particular relating to the media - have had little effect, according to a European Commission report on media freedom and independence, published in December 2011. It said Greek media policy "has remained highly centralized in the hands of the government of the day," and that it "has been thoroughly influenced, albeit in opaque and informal ways, by powerful economic and business interests who have sought to gain power, profit, or both."

RISE OF PRIVATE MEDIA

Interplay between politicians and the media is common in many European countries, notably in Italy where Silvio Berlusconi was both prime minister and head of a media group, and in the UK, where media owners such as Rupert Murdoch, chairman of News Corp, have had contacts with successive prime ministers.

But critics say such connections are particularly significant in Greece because the state plays a large role in the economy, and because of the way media has developed there.

Private radio stations and TV channels emerged only in the 1980s, after decades of state media control. As businessmen hurried into the fray, regulation was haphazard. Successive governments let broadcasters operate without proper licenses, according to the 2011 EU report on Greek media. This semi-regulated approach led to Greece having a large number of media outlets for its population of 11 million.

In 2009 the country had 39 national daily newspapers, 23 national Sunday papers and 14 national weekly papers, according to an earlier EU study of media. Per capita, Greece has far more national newspaper titles than, say, Germany or the UK. The country also has nine national TV stations, six of them privately owned, and numerous private radio stations.

A 2006 cable from the U.S. Embassy in Athens, obtained by Wikileaks, noted: "How can all these media outlets operate profitably? They don't. They are subsidized by their owners who, while they would welcome any income from media sales, use the media primarily to exercise political and economic influence."

At the same time, much of the economy outside the shipping industry depends on state contracts or licenses.

"Most companies in Greece are essentially waiting to get money from the state," said Theodoros Roussopoulos, a former government press minister. "Greece is officially capitalist, but in effect socialist."

Media owner Ioannis Alafouzos told Reuters that some of the media "are in effect press offices for business groups." Alafouzos, whose family owns SKAI TV, Greece's fifth largest station, and Kathimerini, a leading newspaper, added: "It's developed into a completely unhealthy situation. The purpose of media has been largely to execute specific tasks for their owners."

Alafouzos, whose wealth comes from shipping, said his family had been careful not to depend on government dealings. His critics say that SKAI was among the companies found to be paying no haratsi tax - an omission SKAI says was caused by local bureaucracy - and that his media interests benefit from state advertising. Alafouzos described the latter as a minimal proportion of his media interests' revenue.

FAMILY CONNECTIONS

One nexus of interwoven interests is MEGA Channel, Greece's biggest TV station, which is co-owned by businessmen who are leaders in, or have strong connections to, other sectors of the economy.

The biggest collective stake in the TV station is owned by members of the family of George Bobolas. One of his sons, Fotios, is a director of Teletypos, the channel's holding company. Another son, Leonidas, is chief executive and a major shareholder of Ellaktor, a construction giant founded by his father that has participated in multi-billion euro contracts with the state. Leonidas has no stake in Teletypos.

The Bobolas family also controls Ethnos, a popular daily and Sunday newspaper, other print media and websites. From the large, grey headquarters of their publishing company in Halandri, a northern suburb of Athens, the extent of the family interests is evident. Nearby is the Athens ring-road, built by an international consortium that included Ellaktor. Alongside the road is a new railway line to the airport, also built with Bobolas involvement.

George Bobolas did not initially respond to questions about his family's various interests. Instead, his newspaper Ethnos published several articles in the days after Reuters submitted questions to him. One alleged that Reuters "continues, it seems, to target our country, the Greek economy and entrepreneurship." Another described Reuters as a "fifth column" for the troika and alleged that Athens was being flooded by foreigners out to "undertake the demolition of public figures according to Anglo-Saxon practices."

After a further request from Reuters, Bobolas said in a letter: "I have never used the media owned by companies in which I participate, for the promotion of interests of the holding company Ellaktor S.A. ... Newspaper Ethnos has never used influence or asked any favors from rulers, for the benefit of Ellaktor."

Bobolas said former prime ministers could verify he had never asked for any favors and added: "One could say that Ethnos' severe judgment on governmental actions and politicians in general, could be considered as obstacle and not help to Ellaktor's corporate interests".

In a written statement, construction firm Ellaktor said its subsidiaries engage in both private and public contracts, and that it pursues public contracts "by participating exclusively in open international tenders, in accordance with Greek and European legislation."

Other figures involved in MEGA Channel include the family of Vardis Vardinoyannis, who is prominent in oil and shipping, and Stavros Psycharis, who controls the DOL media company.

George Vardinoyannis, son of Vardis, serves on MEGA Channel's board, and the family also owns a smaller station called Star Channel. The family is also the major shareholder in Motor Oil Hellas, one of two Greek refinery operators.

In an email, a spokeswoman for the family said: "Most of our companies are based abroad or have an international exposure. The production and sales of Motor Oil Hellas refinery, our biggest investment in Greece, are consistently 70 percent export oriented ... None of our companies rely in any way on government contracts or business."

Psycharis, whose company DOL publishes leading newspapers and has won state contracts in education, culture, travel, and printing, is MEGA Channel's chairman.

In 2006, he sued two investigative journalists who alleged on a radio program that he lobbied for the sale of Eurofighters to Greece and had used his newspapers to promote the merits of a deal. Psycharis denied the allegations. Three years later, after a court hearing, his case was dismissed.

The court rejected one claim by the journalists, but accepted that Psycharis' newspaper had campaigned for the Eurofighter deal. An appeal is pending. Psycharis did not respond to questions about the case.

In late November one of his newspapers chastised Apostolos Kaklamanis, a former speaker of the Greek parliament, who had told PASOK lawmakers that the era when oligarchs "appointed the party leader" had passed. Days after Kaklamanis spoke out, To Vima, a leading newspaper controlled by Psycharis, ran an article referring to his comments and promising to make allegedly embarrassing revelations about Kaklamanis.

Psycharis did not respond to questions about his media holdings or his wider interests.

Critics of links between media and business also cite the case of a gold mine project in Halkidiki, northern Greece. The mines were sold by the Greek government in 2003 to a newly-formed Greek mining company. Soon afterwards the construction firm in which the Bobolas family has an interest acquired a stake in it.

Local opponents campaigned vigorously against a license for the mining project being granted, claiming it would harm the environment. Tolis Papageorgiou, a leading figure in the protest group Hellenic Mining Watch, alleged that newspapers controlled by the Bobolas family failed to report large demonstrations opposing the mine and vilified an environment minister, Tina Birbili, who blocked a license for it.

"Just days into her new job in 2009 she became the target of media controlled by Bobolas because she refused to issue a license to the mining company," Papageorgiou alleged.

Soon after Birbili's appointment in 2009, newspapers owned by the Bobolas family christened her "Green Tina" and criticized her performance. Reports said she was blocking many kinds of development. The articles did not mention that the newspapers' owners had a family interest in the mine or the construction trade.

In his letter to Reuters, Bobolas said that Ethnos strongly supports large-scale projects that create employment and help the country recover from its economic crisis.

Birbili, who declined to comment for this article, was sacked in June 2011; a license to operate the mine was subsequently granted. After it was issued, construction firm Ellaktor, according to its annual accounts, booked a profit of 261 million euros from partly selling off and partly revaluing its stake in a Canadian company that had by that time bought 95 percent of the mine.

A former aide to the Greek prime minister of the time said Birbili's sacking was not related to the mine. The former environment minister who authorized the license, George Papaconstantinou, said "the decision was made solely on the basis the environmental impact study", which had been positive about the mine.

In his letter to Reuters, Bobolas said the only remaining connection his family has with the mine is his son's indirect stake of less than one percent.

TWO HATS

In the media, potential conflicts of interest can arise even at low levels. Tucked away inside the headquarters of the Athens union of journalists, ESHEA, is a list of its members who work for the government, for example in press offices; dozens wear a second hat as newspaper journalists at the same time.

The union's rules ban its members from working for bodies they cover as journalists. In an effort to unmask those breaching that rule, the union obtained a list of government-employed journalists in 2005. But it was never published.

Some of those named on the list complained; Greek officials judged that publishing the list would violate personal privacy. It was a decision that Dimitris Trimis, the union president, calls a serious defeat.

"There is a triangle of political powers, economic powers and media owners, and nobody can tell who has the upper hand," he told Reuters, sitting under the dusty portraits of his predecessors. "It starts from the top, between the minister and the publisher, and it trickles down to the press office and the journalist. It's a pyramid."

One example, he said, was a TV studio set up in 2007 by the Agriculture Ministry to promote its activities. Although about 50 people, including political journalists, were hired, only a few had anything much to do, he said. "Many more than would be needed were hired and it was clear it was a perk," Trimis said.

A spokesman for the ministry said the studio never employed full-time staff and that it closed in 2009.

Reuters has identified at least nine press officers for financial institutions who also write in the media, which has largely failed to report the need for the nation's financial system to be reformed. The "double hatters" include Alexandros Kasimatis, a financial journalist at a Sunday newspaper, who also works as head of public relations for the Capital Markets Commission (CMC), a key financial regulator of listed companies. Reuters could find no articles by Kasimatis, who writes about companies but not the CMC, in which he declared his CMC role.

Kasimatis said: "It is not a conflict of interest. The Athens Journalists' Union allows members to work at press offices provided they don't cover who they work for. And I never write about the CMC."

In an email to Reuters, Costas Botopoulos, chairman of the CMC, said Kasimatis' two jobs were compatible.

Another journalist, who did not face direct conflicts of interest, was still nicknamed Ms Light-Water-Telephone by fellow journalists because she was said to work both for To Vima newspaper and three public utility companies. Ioanna Mandrou, who now works for Kathimerini and SKAI TV, confirmed she had worked in the press office of OTE, a state telecoms company, and briefly as a consultant to a state water company. She said she had not worked for an electricity company.

"In To Vima I was a reporter covering judicial affairs and that had nothing to do with my work in OTE. And when I say I 'worked' for OTE, I literally mean I worked," she said. "I can tell you that around 95 percent of the people employed in similar jobs do nothing."

She said it was common for politicians to arrange such jobs as favors.

Kedikoglou, the government spokesman, said members of the journalists' union "have the right to work in state companies and as press officers under certain conditions and providing that they do not have conflicting interests."

PROSPECTS FOR CHANGE

Over wine and kebabs on a cool October evening in 2004, then prime minister Costas Karamanlis declared war on powerful forces in Greek society.

"We will not let five pimps and five vested interests manipulate our political life," he told conservative lawmakers invited for dinner at Bairaktaris taverna in Athens, according to people present at the meeting. He did not specify who he was referring to.

Karamanlis' subsequent efforts to restrict access to state contracts by media owners were met with full-frontal attacks from the press. But in the end, defeat came from the European Commission: in 2005, it said Karamanlis' plans violated EU competition rules, forcing him to scrap them.

Since then, no significant attempt has been made to tackle the interweaving of interests. Politicians who clash with media owners risk a bad press, according to one senior Greek politician who spoke to Reuters about his experiences when he was a minister in a former government. In one instance, he said, a media owner asked him to help stop a judicial investigation into the media owner's affairs. And, in another, a newspaper publisher who owed a million euros to a state-owned company contacted him seeking a deal to escape the debt.

"He said ‘I will put an advert for the state-owned company every day in the paper to settle it.' He expected me to call the company and make a deal. I refused to intervene," said the ex-minister, who spoke on condition of anonymity. He said he was subsequently the subject of negative reports in the publisher's paper.

The persistence of potential conflicts of interest is reflected in the latest Corruption Perceptions Index compiled by the campaign group Transparency International (TI). It ranked Greece 94th - 14 places lower than in 2011 and the lowest ranking of any euro zone country - and the group's Greek branch concluded "there are significant structural issues with the executive, the media and the business sector."

Kedikoglou, the government spokesman, said ministers now want to "normalize" broadcasting. The government intends to reform the regime of "provisional licenses" and bring in "legislation that will permanently set the rules applying to the television market," he said.

Even without legislation, the landscape is changing. By 2013 Greece's economy will have dwindled by a quarter in five years. Financial pressures have intensified. Advertising has shrunk and a Reuters study of recently-published accounts shows the top 18 Athens-based media companies have declared debts totaling more than 2 billion euros.

At the same time the international lenders keeping Greece afloat want real reform in exchange for their billions. They are, for example, demanding that trustees appointed by the troika sit on bank boards and have the final say in approving major loans, including those to media organizations.

The newspapers Ethnos and To Vima reacted to that proposal with scathing editorials. "Greece is not a colony," wrote Psycharis in a front page article in To Vima. "I address those who think that what the Third Reich failed to do will now be achieved by Europe's money peddlers."

SPECIAL REPORT - Greece's other debt problem

Conservative New Democracy leader Antonis Samaras arrives at the Presidential Palace in Athens June 20, 2012.

Πηγή: Reuters

By George Georgiopoulos and Stephen Grey
Sept 27 2012

The two main political parties in Greece are facing their own financial crisis. New Democracy and Pasok, the key members of the country's coalition government, are close to being overwhelmed by debts of more than 200 million euros, say rivals, as the big parties head for a slump in state funding because of falling public support.

In Greece's state-financed political system, parties that receive more votes get more funding. Relying on past good results, the big political parties have pledged future state funding as collateral for bank loans. But in the most recent poll their support collapsed, leaving them with big loans and facing much smaller incomes.

Banking sources familiar with the issue say that conservative New Democracy and socialist Pasok now owe a combined 232 million euros to Greek banks. Some of the loans are going unpaid, those sources say. The debts far exceed the combined 37 million euros the parties received in state funding last year - a figure set to decline.

The parties' debts raise questions about potential conflicts of interest because the government is in hock to a financial system that it also needs to reform. Athens is already struggling to implement spending cuts and reforms demanded by the European Union, International Monetary Fund (IMF) and European Central Bank (ECB) in return for the 130 billion euro bailout keeping Greece afloat. On Wednesday unions called a nationwide strike protesting against austerity.

Leandros Rakintzis, Greece's independent inspector-general of public administration, believes the financial crunch the two big parties face is proof that Greece's political funding system is flawed. "This is all about the exchange of favours," he said. "These parties cannot pay the debt so it's a vicious circle in which they come to depend on the banks. It creates an interdependence of politicians and banks."

The loan pressures will intensify early next year when state funding is recalculated to reflect declines in the parties' support. At present, funding is still based on the proportion of votes each party won in the June 2009 election. But in January funding will change to reflect votes cast in June 2012.

At that election Pasok saw its share of the vote plunge from 43 percent to 12 percent, while New Democracy's share fell from 33 percent to 29 percent. The big winner was leftist Syriza, which opposed the bailout terms. Its share of the vote shot up to 27 percent from 4.6 percent in 2009, and it now stands to receive significantly more funding.

Costas Tsimaras, the general manager of New Democracy, the biggest party in the Greek parliament, told Reuters the bulk of its bank loans were currently being paid on time, but "a small proportion of the loans may have become late, non-performing."

For the parties to keep on top of the loans, he said, they should be restructured.

"It will be very difficult for the parties to pay back the debt if there is no arrangement. Down the road, a political decision needs to be made to give parties the capacity to service their liabilities, some type of settlement on these loans."

Pasok did not respond to requests for comment.

Greece's other debt problem (pdf) link.reuters.com/ryq82t

STATE HANDOUTS

Like many European countries, Greece provides some public funding for political parties and their election campaigns: last year the state handed out a total of 54 million euros.

Each year parties receive tax-free funding equal to 0.102 percent of annual state revenue, plus another 0.01 percent for "research and education" purposes. When national or European parliamentary elections take place an extra 0.022 percent of annual state revenue is handed out.

Private companies, owners of media and foreign nationals are banned from funding parties. Individuals giving more than 600 euros have to be identified and are allowed to give only up to 15,000 euros a year, though it is unclear how well these rules are enforced.

The lion's share of the state funding pie, 80 percent, is divided between parties that win seats in parliament, each one receiving amounts proportional to the votes they score. That funding does not include the cost of MPs salaries and other parliamentary expenses, which are paid separately.

Greece is among the most generous of EU countries to political parties. It provided an average of 6.5 euros per registered voter per year between 2007 and 2011 - the fourth highest funding in the EU after Luxembourg, Cyprus and Finland, according to Forologoumenos, a Greek taxpayer association that tracks state spending on politics.

By another measure, Greece hands out three times the amount spent by Germany on political parties. Per valid vote cast, Athens spends an average 9.4 euros versus Germany's 3.1 euros, says Forologoumenos.

In 2011 New Democracy, led by Antonis Samaras, received 16.9 million euros and Pasok, now led by Evangelos Venizelos, 21.7 million. That state funding accounted for about 75 percent of New Democracy's income, the party said, though the proportion fluctuates from year to year. Pasok did not comment on how much it depends on public funds.

In 2010, when Greece's debt crisis exploded and forced Athens to seek a bailout, the country spent a total of 65 million euros on funding parties in a country of 11 million people. Germany, with a population more than seven times larger, limits state funding of political parties to 150 million euros.

For German lawmaker Klaus-Peter Willsch, the generous state funding in Greece is emblematic of the country's financial malaise. "This self-serving mentality will not come to an end as long as Greece is funded by the solvent states in the euro zone," he said. "The fact that Greek parties get three times as much funding per vote as in Germany is part of the problem."

Willsch, a member of Angela Merkel's Christian Democrats who sits on the Bundestag's powerful budget committee, voted against the Greek bailouts.

MIND THE GAP

Even with state funding, Greek parties have had to borrow to fill the shortfall between their revenue and expenditure.

The main lender has been state-owned ATE Bank. By this year New Democracy owed ATE 105 million euros and Pasok owed ATE 96 million, according to banking sources. A senior source in the Greek parliament confirmed these amounts to Reuters.

Separately, Piraeus Bank, the country's fourth largest, lent New Democracy 15 million euros and Pasok 6.5 million euros. Three other banks made small loans to the parties. A banker familiar with the matter told Reuters that some of the loans "are non-performing, they are past due more than 90 days".

Piraeus denies any problem. "Piraeus Bank's loans to political parties are a small percentage of the total. They were given against guarantees of state funding. The loans are performing," said a Piraeus spokesman.

In late July, ATE had to be rescued from collapse, with parts of the bank, including the political loans, being taken over by rival Piraeus Bank. At the time the political loans were performing, said a source at ATE and a senior government official.

Piraeus has filed a lawsuit against Reuters, claiming 50 million euros in damages after Reuters published a report about a series of property deals between the bank and companies run by the family of its chairman. Reuters stands by the accuracy of its reports.

A banker with knowledge of the political loans said limits should be set "on the percentage of state funding that can be accepted as collateral and for how many years in the future. Otherwise, one would have to be a Houdini to know for sure what amount of state funds a party will be entitled to far out in the future, 10 years down the road."

For the parties, some pressures are already evident. One former staff member of Pasok, who asked not to be named, said that payments to party workers had been irregular since September last year.

New Democracy said its staff were paid on time. "We do not owe a single euro to anyone on the payroll," said general manager Tsimaras. However, he added: "Our bills to suppliers do face some delays."

A Pasok staff member said party funding had sometimes been spent poorly. In 2009, for instance, the party built a fully-equipped gym at its new headquarters and employed a personal trainer. "It is now a smaller party and costs have to be reined in," said the party staffer.

Pasok did not respond to requests for comment.

RISING ANGER

Greece is now in its fifth year of recession and is struggling to meet fiscal targets set by its euro zone partners and the IMF. The gap between government spending and revenues is projected at 7.3 percent this year, based on IMF estimates. The country's accumulated debt stands at 332 billion euros, equal to 163 percent of GDP.

Greek Prime Minister Antonis Samaras asked in August to be given a "breathing space" by the EU and IMF, which are pressing for more public spending cuts. At the same time, critics say the political system itself should tighten its belt.

"State funding to political parties must be adjusted to what the Greek economy can afford and not be far off from the corresponding average in the European Union," said Yannis Sarris, the general manager of small party Dimiourgia Xana, which calls itself the 'common sense' party.

Others say it is politically unacceptable for parties to be propped up with bank loans when many businesses are unable to obtain credit even against sound collateral. The small Democratic Alliance party (which folded into New Democracy at the June election) has previously called for a 50 percent cut in state funding to parties.

"On the one hand we have a country on the brink of bankruptcy, a suffering society, victim of an unprecedented tax onslaught," Democratic Alliance deputy Christos Markoyannakis told parliament in December last year. "On the other, we face the absolute provocation by those bearing the biggest share of responsibility for the country's crisis. As long as the cash flows into party coffers, all is fine and dandy."

The Group of States against Corruption (GRECO), a body set up by the Council of Europe, has also levelled serious criticisms at the way Greece funds its politics.

It has urged Athens to improve transparency of party funding, to strengthen controls over small donations for fear that rich donors could abuse the system, and to ensure that loans are repaid under their original terms - otherwise they risk becoming de facto donations.

The group concluded: "There is in Greece a general public mistrust of the system of political financing and supervision, which may be attributed to an overall inefficient and opaque system of supervision, in which political parties are both judge and jury.

"This system has failed, under current law, to uncover and sanction any - even minor - infringement of the rules on political financing."

So far, none of GRECO's 16 recommendations have been implemented, the organisation says.

The omens for reform are not encouraging. Last year Nikos Alivizatos, a constitutional lawyer, helped draft a new law to correct shortcomings of the current system, including barring banks from lending to political parties. The legislation was shelved because the two main parties were keen to maintain the status quo, say political observers.