Christine Lagarde: Shoot the messenger ?

Dear reader,

as always the author wants to bring in some 'food for thought' into the discussion. It is not intended to provoke, on the contrary. In order to add some facts to an odd discussion which started last Friday after Christine Lagarde
gave an interview to the Guardian newspaper, in which many people see a 'provocation' where only publicly known facts were communicated along with a perhaps a bit clumsy wording in order to make the point that the organization Ms Lagarde heads is recently under fierce criticism of those members of 'emerging world' who were asked to contribute to IMF funding in order to help out European countries. Among those which are earmarked for IMF emergency funding is of course Greece.

So in order to make some points in this blog entry there will be some links to articles which give the readership more background. So far it seems that many people with no or only minor knowledge of the 'context' of Ms Lagarde's remarks seemed to have shouted 'foul play'.

So in order to understand the 'usual' tasks of the IMF it is necessary to see the big gap between European countries like Greece seeking help also from the IMF and those countries from the African and American continent which are normally in the focus of their loans. One also have to keep in mind that the IMF is some kind of trustee for its member countries, known for its very conservative lending practice where usually all the money handed out to counties in need is repaid in full.There have been 'strong recommendations' by Ms Lagarde regarding Greece before: IMF's Lagarde urges Greece to implement fiscal program




So one important point is that China and others (also Eastern European countries like Slovakia) are making is this one: While the majority of their people have much less than 500 €/month to make it, they are nevertheless asked for contributions to help Greece with a much higher average wage level and even some of world's super rich which have as much wealth as smaller states which also contribute their share to the IMF. So the BRICS countries are only reluctantly supporting European IMF members. And if they do they want a strict regime of compliance:

"Brazil’s Finance Minister Guido Mantega said after meeting with his counterparts from Russia, India, China and South Africa that the BRICS group of major emerging markets will only add more funding for Europe if the region’s leaders follow “precisely to the letter” a 2010 agreement to give them a bigger say in how the IMF is run."

source: G-20 Rebuffs Europe Aid Calls With Bigger Firewall

and they also ask for more control over how their contributions are being used.

The readership must realize that Ms Lagarde isn't voicing her own opinion maybe originating from a French perspective, but she will without doubt fulfill her role as a representative of all IMF contributors around the globe. Many of them from outside Europe and maybe situated in regions where poverty is as much of a problem as e.g. much weaker local currencies than the common European one. The Euro often compared in strength to the D-Mark and Greece 'suffering' as member of that strong currency area where other IMF contributors face as well partially huge inflation as well as very weak exchange rates towards the greenback or the European currency. 

>>Nevertheless, while this might come as a surprise to Greeks suffering under extreme austerity, some say Lagarde's approach to the eurozone is less draconian than the IMF's traditional policy towards developing world economies. Is it easier to impose harsh demands upon small economies, but much harder to tell difficult truths to the big ones – particularly fellow Europeans? "No," she says firmly. "No, it's not harder. No. Because it's the mission of the fund, and it's my job to say the truth, whoever it is across the table. And I tell you something: it's sometimes harder to tell the government of low-income countries, where people live on $3,000, $4,000 or $5,000 per capita per year, to actually strengthen the budget and reduce the deficit. Because I know what it means in terms of welfare programmes and support for the poor. It has much bigger ramifications."<< Excerpt from:
Christine Lagarde: can the head of the IMF save the euro?

So it is not only about 'poor kids' in Greece vs those in Africa but also about income levels and tax avoidance by some Greeks which Ms Lagarde pointed out but some people rather incapable of proper reading made a fuzz as if she would have said all people. In fact she said if all people from Greece were paying the taxes they would be obliged to pay if they were honest about their income and wealth.
Here is the paragraph is question:

>>"Do you know what? As far as Athens is concerned, I also think about all those people who are trying to escape tax all the time. All these people in Greece who are trying to escape tax"<< excerpt from: Christine Lagarde: can the head of the IMF save the euro? (highlighted words by the author here)

It's the author here who thinks it's rather a question of getting upset for the sake of being upset and once the blood boils there isn't a real motivation of reading a text twice in order to comprehend the logic behind it once.
Or are there any persons who seriously dismiss those reports of Greek individuals and organizations who were/are cheating during several years, some of them fleeing the country with their hoarded (probably so far untaxed) cash in order to escape future mishap when Greece has finally achieved to have a working tax system. Some of the most appalling evidence the author here cannot even present to his audience, since it was aired on several TV channels, where some wealthy Greeks denounced the State of Greece and openly admitting that they prefer to withhold their wealth from it. One of the people was living in Switzerland, the other one the author here saw was then still in Greece speaking proudly from his yacht to the TV crew from Europe's North. There are numerous reports of wealthy Greeks acquiring not shabby and not cheap property in European countries seen as 'safe havens'. As a matter of fact some new neighbors of this author here have acquired a nice condo here and their fancy black Merc with Greek plates was spotted in the car park for some month. It's not assumed that they were involved in Greek tax dodging but at least it can be said, that they haven't committed an act of patriotism to move to other countries while less well off Greeks are being obliged to stay and face the rather unpleasant consequences of their stay.

Another aspect to those remarks made by Ms Lagarde is a far less noticed paragraph in another related interview published by The Guardian last Friday:

 >>"The intervention by Lagarde comes after the caretaker Greek government met to discuss a sharp fall in tax revenues – down by a third in a year. Under the terms of the country's bailout, Athens has agreed to improve Greece's poor record for tax collection in order to reduce its budget deficit, and Lagarde's remarks are evidence of a growing impatience in the international community."<< Source: It's payback time: don't expect sympathy – Lagarde to Greeks

a reaction to reports like this one:
Euro exit worry prompts more Greeks not to pay tax
issued just 2 days before Ms Lagarde made her meanwhile notorious remarks! 

Although Ms Lagarde didn't elaborate so far (as the author here knows) on her knowledge of all these facts in and around Greece but it can be assumed from her former post as French minister of finance that she knows about taxation and its evasion in general. As a leading member of the IMF she will have looked closely also to Greek taxation 'successes' since the outbreak of the crisis and even more since the IMF joined those other lenders to help funding Greece. Taxes are a crucial factor of Greek efforts to reduce their chronic budget deficits and only after several earlier warnings of 'not falling back in complacency' she obviously saw the risk of yet another Greek elections not in favor of compliance with the international creditor's demands. Maybe some resentment to ideas expressed by the communist Tsipras existed, who was touring Northern European 'comrades' in order to be in the limelight of world's attention.

Yet another angle of the whole story should be seen by especially those Greeks feeling 'insulted' by Ms Lagarde's interview(s). The fact that some of the  politicians notorious for being in charge while Greece's financial problems were getting out of control (Mr Venizelos as 'big spender' as former Minister of defense) and those who are now seeing themselves already as the successors of just those 'not so lucky ones' (to put it mildly and to prevent getting lawsuits) now having found the perfect distraction for their electorate. What could be better suited for deflecting the (rather legitimate) anger of the Greek people away from those promising everyone a life in prosperity without hard work towards an 'outside enemy'. So of course the author here refers to Mr Venizelos who made some 'interesting' comments recently: Greek Socialist leader slams IMF chief’s tax comments where he says:

>>"Nobody can humiliate the Greek people during the crisis, and I say this today addressing specifically Ms. Lagarde... who with her stance insulted the Greek people," Evangelos Venizelos told an election rally.<<

Strangely enough the author here sees it more as a 'blame game' by Ms Lagarde pointing her finger towards those Greek individuals who act in betrayal of their fellow countrymen. Maybe with an intention to invoke a more thorough response and focus on those mega tax evaders described in those many reports.

If Ms Lagarde was indeed intending to 'humiliate' the Greek people why did she encourage more foreign visits (tourism) to Greece: 

>>I ask if I'll be packing euros if I go on holiday to Greece next year and she just smiles. "A holiday in Greece, it's a good investment for the country!"<< source: Christine Lagarde: can the head of the IMF save the euro?

While many of those pointing their finger towards Ms Lagarde and calling for a witch hunt might even be in danger of getting into the prosecutors' focus for 'mysterious accumulation of wealth' like those described here: Financial Crime Unit thoroughly investigates 500 politicians and elected officials


Coming back to the point of outlining specifically those other Greeks who not only harming their fellow Greek citizens by withholding their fair share of taxes to their common state, but thereby also enlarging the chunk the international contributors must make available to the Greek state. The author here just can't imagine how it is possible to attack Ms Lagarde for pointing out specifically some of those factors responsible for Greece's decline and trying to point out that Greece isn't an inner African country with perhaps facing decline to levels of other European countries such as Bulgaria but certainly not in desperate straits as some of those countries where children are dying of starvation for decades and war lords are terrorizing the local population.  

And when she clearly points her finger of blame towards those offenders who harm and even kill their fellow citizens by driving some to commit suicide (a very serious point the author here also made in the past when thinking of recipes for e.g. Greece) isn't it a bit like when someone is trying to warn a proud home owner that there is crook in the back yard just busy to escape with the loot he just robbed from his home through the backyard and his accomplice (which might be in real life the politician) on the watch to secure the operation.
And instead the warning guy gets some kind of gratitude of the one just being made another victim of crime the poor bastard gets a blast how on earth could he insult his fellow countrymen ?
Or to use the example of the mayor of Zakynthos: Instead of getting a big hug he gets the heat of those now being exposed by him for long lasting fraud. Greek people who felt the necessity to write some rather insulting insults on Ms Lagarde's Facebook pages must ask themselves if they are not just getting fooled by those who mugged them ! 


Christine Lagarde: can the head of the IMF save the euro?
It's payback time: don't expect sympathy – Lagarde to Greeks

Japan pledges $60 billion to European firewall

Greece tries to crack down on fraud as mayor of Zakynthos faces revolt
Greece: Little lust for truth (Ger) (Die Presse,AT)
 note: some articles of individuals dodging Greek taxes will be added during the week.