Greek accession to euro zone not in doubt

EU data arm Eurostat is sending a mission to Athens to investigate Greece's pre-euro economic data, but Greek membership of the zone is not in doubt, officials said today.

Eurostat director-general Michel Vanden Abeele said a team of officials would analyse the Greek budget books over 1997-1999, the period leading up to the country's accession to the euro zone in 2001.

But he played down the political ramifications of the mission, while European Commission spokesman Gerassimos Thomas said EU member states had taken the decision in good faith to admit Greece to the euro zone.

'I don't think there is envisaged any kind of possibility to reopen these kinds of decisions,' he said, after Eurostat confirmed that Greece had under-reported its budget deficit for years.

Drastically revised figures from Eurostat today show that Greece has been running a deficit far in excess of the European Union limit ever since it joined the euro zone.

Eurostat said the Greek deficit in 2000 was 4.1% of output, 3.7% in 2001 and 2002, and 4.6% last year - all beyond the EU ceiling of 3%. The deficit figures given by Athens and relayed by Eurostat as recently as March were 2% for 2000, 1.4% in 2001 and 2002, and 1.7% last year.

The scale of the revisions has already set off political controversy in Greece and an expression of deep concern by European Central Bank president Jean-Claude Trichet.

Greece was given the nod to join the 11 other euro nations in 2000, on the basis of economic data reported over 1997 to 1999 which showed it had largely met the strict entry criteria including the deficit requirement. The country is already facing EU disciplinary measures after confirming its deficit was way beyond the 3% target last year.

The revelation that in fact Greece has never managed to get under the limit is a serious embarrassment all round, casting grave doubt on the reliability of national statistics reported to the EU.

The revisions began to flow when a new, conservative, government took office in Greece in March and ordered an audit of the budget figures reported by the previous Socialist administration. Under the Socialists, Greece seriously under-reported military expenditures and over-estimated its social-security surplus.

Last year, Greece had far less tax revenues and EU structural-fund handouts than first thought, while the accounting reclassification of a payment from the postal savings bank to the government also blew out the deficit.

The Greek government says the €7 billion cost of this summer's Athens Olympic Games will also keep the deficit well over the EU limit.