Can a Greek Monastery Be Ground Zero of Global Financial Meltdown?

That is the rather unexpected question raised by a fascinating expose in this month’s Vanity Fair. According to Michael Lewis (“Beware of Greeks Bearing Bonds”), the answer may well be yes. 

In the course of what he somewhat ruefully calls “financial-disaster tourism,” Lewis went to Greece in search of the root causes for the very particular, and particularly shocking, form the 2007-2008 economic meltdown took in Greece.  

The main lines of this story are well known by now: a glut of global credit not only invited but actually encouraged people to live beyond their means. Americans bought houses they could not afford; everyone who got out in time made fortunes in the stock markets. Lewis describes the particularities of the Greek case with cruel humor:

what the Greeks wanted to do, once the lights went out and they were alone in the dark with a pile of borrowed money, was to turn their government into a piñata stuffed with fantastic sums and give as many citizens as possible a whack at it. 

Once the shocking state of the Greek economy became clear to the international community and representatives from the IMF and the EU had a closer look at the Greek books, the story we’ve all heard in pieces began to emerge.  

Nationalized industries like the railroads paid employees salaries out of all proportion to their competitors (in reality of course nationalized companies have no competitors—that’s part of the problem), and offered their services at such a premium that a latecoming Minister of Finance was forced to conclude in exasperation “that it would be cheaper and more efficient to put all of Greece’s rail passengers into taxicabs.” The public schools operate with surprising inefficiency, with students scoring the lowest numbers in Europe despite having four times as many teachers as Europe’s highest ranked system, in Finland. There are there separate government owned defense corporations. As for Greek health care, it is unclear whether waste or outright theft by state employees is the greater drain on a hopelessly overburdened system. 

And then there are the pensions: all men who work in professions deemed “arduous” by a mystifying government metric are eligible to retire at age 55, the women at age 50. And those arduous professions include hairdressing, restaurant work, and music. 

This mingle-mangle of inefficiency, lack of accountability and oversight, and the inevitable white-collar theft that’s resulted have bled the Greek system dry. What is more amazing is the way the Greek state managed to hide this reality from its partners in the European Union for so long. Any EU member state is required by law to keep its deficit below 3% of GNP. Greece admitted to being slightly over that target figure, estimating its 2009 deficit at roughly 3.7%. It is currently estimated to be around 14% and seems to grow larger every time some new oversight organization takes a look at things. The current situation amounts to a $1.2 trillion national debt, which cashes out to roughly one quarter of a million dollars for every Greek citizen employed in the country today. 

What made matters even worse was the cultural fact—also evident in Italy, but nowhere near the same degree—that no one in Greece who can avoid it pays any taxes at all. A good portion of the Vanity Fair article walks us through the complex and marvelously creative ways in which many Greeks avoid paying any taxes. Even real estate and sales taxes are eminently avoidable: leave the top floor of your house unfinished, and the home is not yet taxable; neglect to print out or submit sales receipts, and those sales are untaxed too. 

It was always a recipe for disaster: little in the way of reliable state income; staggering amounts of money borrowed on the cheap to make up the margins; and books consistently cooked to hide the scale of the national debt. 

(There are more sympathetic ways to tell parts of this story, about which Lewis has little to say. Greece was singularly ravaged by the Second World War; the German occupation was especially brutal there, with one million deaths from starvation recorded in the first winter alone. President Truman declared Greece to be the European front in the new Cold War, and a three-year civil war, from 1946-1949, further decimated the country. The country opted for tourism in the 1960s, arguably the least “trickle-down” of all economic forms, and thus made itself further dependent upon and vulnerable to European whims. The U.S.-supported military junta was not expelled until 1974. And so on.) 

How to Sue a Monastery

Into that atmosphere—one part boom town, and one part Wild West—we now inject the unlikeliest of financial players: the monks of the Vatopaidi Monastery on the sacred peninsula of Mount Athos. 

Mount Athos is considered to be the most sacred geography in the Orthodox Christian world. Its oldest monasteries were built in the 10th century, and there are currently twenty of them (19 Greek and one Russian Orthodox) scattered along the lovely coast of a nearly forty-mile peninsula not far from Thessaloniki, Greece’s second largest city. No women are permitted to set foot on this peninsula (nor are female animals larger than chickens). Athos is also the notorious butt of many jokes in Greece, whose monks are often caustically represented as the very souls of epicurean excess: gourmandes who eat and drink far too well; homoerotically inclined men who enjoy the favors of their many doting pilgrims; spendthrifts who have lately taken to fiddling while Athens burns. 

The story of what happened here is a complicated one, beginning in the very different era of Reagan and Thatcher. Greece was deemed a bad risk in the 1980s and thus money was lent in Greece at nearly 10 percentage points higher than it was in northern Europe. Virtually no Greeks had credit cards in the 1980s; precious few had access to the kind of credit that made businesses big and profitable. And so, in the late 1990s, Greece cast its lot on the European Union, and turned itself into a pretzel to hit those 3% benchmarks. Greece was finally admitted into the Euro zone in 2001… and the cost of living immediately skyrocketed. 

Then came the Athens Olympics in 2004, and more staggering debt. But things came apart fairly suddenly, and very recently. The conservative (New Democracy) government of Prime Minister Kostas Karamanlis fell victim to scandal in late 2008 and was replaced by the nominally socialist government (PASOK) of Prime Minister George Papandreou. 

At the very heart of the scandal lay this storied Byzantine monastery on Mount Athos. It is currently being sued for the return of government property, with damages. It has already been subject to one government investigation and is now being investigated again. Its story runs in surreal parallel to the story of the Greek nation I just rehearsed. 

Trading a Worthless Lake for Valuable Property

The Vatopaidi Monastery is led by its abbot, Father Ephraim, and he is assisted by Father Arsenios, who has become the face placed upon this scandal by friend and foe alike. Michael Lewis interviewed him at the monastery for several hours. Here’s what he learned. 

In the 1980s, the Vatopaidi monastery, like all the monasteries on Athos, was is desperate straits. Fewer and fewer men were entering the priesthood; fewer still felt attracted to the grueling life on an isolated northern peninsula. The Russian monastery was closed, as the Soviet regime had made it impossible to supply the place with monks. The libraries were entirely unused; staffed in most cases by a single monk, all they could do was to keep the place clean and dry; no librarian had any sense of what these libraries contained. 

Father Ephraim and some other enterprising young monks saw an opportunity on Mount Athos, and made their way to Vatopaidi in the 1990s. Discussions of membership in the European Community made it plausible to hit the EU up for money, in order to preserve what were now deemed to be European cultural treasures. 

But the real novelty of the fiscal approach at Vatopaidi involved their close attention to the books, literally. The monastery’s books. Land grants from emperors were fairly common throughout the Byzantine era. Mount Athos was the regular source of such imperial largesse. The monks at Vatopaidi ransacked their own library and eventually found a copy of the title to a lake in northern Greece that had been granted to the monastery in the 14th century by Emperor John V. Paleologos. After some confused negotiating, the monastery’s title to the lake was confirmed by the Greek state in 1998. 

Then things turned strange. The monks at Vatopaidi sought to make a deal, trading what was for their purposes a worthless lake that generated no income into commercial (or at least commercializeable) real estate that would. By the time they had finished with their full-court press in Athens, the monks at Vatopaidi had been awarded 73 different government properties in exchange for that lake. They were even given the site of the old gymnastics venue from the 2004 Athens Olympics, which they immediately set about converting to lease to a for-profit (!) hospital. These various monastic holdings are now estimated to be worth somewhere between one and two billion dollars. 

When the sweet scale of this deal became public, heads of state rolled. This scandal literally brought down the Karamanlis government and led to the investigation that has revealed a far more disturbing glimpse into the current state of the Greek economy.

Those Greek citizens (who will be asked to foot the bill and to pay the cost of the austerity measures currently being imposed upon Greece by moralizing Germans and nervous French) are now calling for the heads of the Vatopaidi monastery as well. 

Father Arsenios’s way of deflecting the criticism is fascinating, if puzzling. “The Greek newspapers, they call us a corporation,” he observes. “But I ask you… what company has lasted for 1,000 years?” 

It is an interesting rhetorical ploy, but it is a question with an obvious answer. The Roman Empire. The Catholic Church. The Byzantine Empire. The Orthodox Church. All corporations. All lasting more than a millennium. 

In more ways than have been understood to date, Greece has become Ground Zero of the global meltdown, the epicenter of a shockwave that will yet reveal to us the surprising extent, not just of corporate excess, but of corporations themselves; corporations that now include governments and congregations. We have yet to think through this new way of seeing some very old things: and thus what it means for the Catholic Church or the Orthodox Church to be a transnational corporation today. 

But that is precisely what they are. And that is the real revelation these churches are currently transmitting to a perplexed world.