Who's To Blame For Greek Debt? Don't Forget Tax Evaders' 60 Billion Euro Bill

Outside creditors aren’t the only ones loathe to throw money Greece’s way. Would-be taxpayers have been unwilling to part with their cash, according to a new EU Commission report that found the Greek government may have to write off some 30 billion euros

Demonstrators in Athens protesting income inequality
Demonstrators in Athens protesting income inequality
Christiane Schlötzer

In recent years, Greece has lost huge sums to tax evaders. The current amount outstanding is estimated at 60 billion euros. Most of that money will have to be written off. There are 165,000 on-going court cases that together represent about 30 billion euros worth of unpaid taxes. Some of the cases are more than 10 years old.

The figures cited come from the first "Task Force Greece" report. Two months ago, at the request of the Greek government, EU Commission researchers had begun to examine the way Greece is being run and making suggestions for improvement.

The head of the group, Horst Reichenbach, a German EU official, spoke on Thursday in Brussels of the "substantial sums some Greeks have deposited in Switzerland." Reichenbach provided no details. Swiss media estimate that the amount of Greek money in their country at around 350 billion francs (286 billion euros), but Switzerland's financial sector says that estimate is overblown. The Greek debt pile amounts to 350 billion euros.

A bottleneck in the courts

The report says that corruption and mismanagement, incompetence and even an unwillingness by authorities to collect the taxes lie at the heart of the problem. The Greek government intends to set up special tax offices to deal with this segment, the report says. Reichenbach said it's reasonable to expect some quick results, citing used new methods used over the past six months to collect 122 million euros in unpaid taxes. Experts from various EU countries including Germany, France, Austria, Norway, Denmark, and Estonia have expressed willingness to help Athens in the endeavor.

But the report also notes that a major problem remains: Greece's overburdened justice system. There is a Greek tendency to take disagreements with the authorities to court, often in the hopes of dragging the case out indefinitely. The complexity and contradictions of Greek laws and government regulations pose additional complications.

This quickly became clear to Reichenbach and his small team working out of Athens and Brussels. "The culture leans more to producing laws than it does to results," the EU official said. The implementation of administrative reforms often went entirely unmonitored, Reichenbach added, and there was a lack of coordination between the different administrative sectors.

Reichenbach also said there were problems with the way the government makes calls for tender. On average, it took 230 days for the government to award public works contracts – more than double the EU average. Here too many cases were brought to court, and many contracts were awarded without following due procedures thus offering fertile terrain for corruption and price fixing.

Read the original story in German

Photo - kouk

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How China Flipped From Tech Copycat To Tech Leader

Long perceived as a country chasing Western tech, China's business and technological innovations are now influencing the rest of the world. Still lagging on some fronts, the future is now up for grabs.

At the World Semiconductor Conference in Nanjing, China, on June 9

Emmanuel Grasland

BEIJING — China's tech tycoons have fallen out of favor: Jack Ma (Alibaba), Colin Huang (Pinduoduo), Richard Liu (Tencent) and Zhang Yiming (ByteDance) have all been pressured by Beijing to leave their jobs or step back from a public role. Their time may be coming to an end, but the legacy remains exceptional. Under their reign, China has become a veritable window to the global future of technology.

TikTok is the perfect example. Launched in 2016, the video messaging app has been downloaded over two billion times worldwide. It has passed the 100-million active user mark in the United States. Thanks to TikTok's success, ByteDance, its parent company, has reached an exceptional level of influence on the internet.

For a long time, the West viewed China's digital ecosystem as a cheap imitation of Silicon Valley. The European and American media described the giants of the Asian superpower as the "Chinese Google" or "Chinese Amazon." But the tables have turned.

No Western equivalent to WeChat

The Asian superpower has forged cutting-edge business models that do not exist elsewhere. It is impossible to find a Western equivalent to the WeChat super-app (1.2 billion users), which is used for shopping as much as for making a medical appointment or obtaining credit.

The flow of innovation is now changing direction.

The roles have actually reversed: In a recent article, Les Echos describes the California-based social network IRL, as a "WeChat of the Western world."

Grégory Boutté, digital and customer relations director at the multinational luxury group Kering, explains, "The Chinese digital ecosystem is incredibly different, and its speed of evolution is impressive. Above all, the flow of innovation is now changing direction."

This is illustrated by the recent creation of "live shopping" events in France, which are hosted by celebrities and taken from a concept already popular in China.

10,000 new startups per day

There is an explosion of this phenomenon in the digital sphere. Rachel Daydou, Partner & China General Manager of the consulting firm Fabernovel in Shanghai, says, "With Libra, Facebook is trying to create a financial entity based on social media, just as WeChat did with WeChat Pay. Facebook Shop looks suspiciously like WeChat's mini-programs. Amazon Live is inspired by Taobao Live and YouTube Shopping by Douyin, the Chinese equivalent of TikTok."

In China, it is possible to go to fully robotized restaurants or to give a panhandler some change via mobile payment. Your wallet is destined to be obsolete because your phone can read restaurant menus and pay for your meal via a QR Code.

The country uses shared mobile chargers the way Europeans use bicycles, and is already testing electric car battery swap stations to avoid 30 minutes of recharging time.

Michael David, chief omnichannel director at LVMH, says, "The Chinese ecosystem is permanently bubbling with innovation. About 10,000 start-ups are created every day in the country."

China is also the most advanced country in the electric car market. With 370 models at the end of 2020, it had an offering that was almost twice as large as Europe's, according to the International Energy Agency.

Photo of a phone's screen displaying the logo of \u200bChina's super-app WeChat

China's super-app WeChat

Omar Marques/SOPA Images/ZUMA

The whole market runs on tech

Luca de Meo, CEO of French automaker Renault, said in June that China is "ahead of Europe in many areas, whether it's electric cars, connectivity or autonomous driving. You have to be there to know what's going on."

As a market, China is also a source of technological inspiration for Western companies, a world leader in e-commerce, solar, mobile payments, digital currency and facial recognition. It has the largest 5G network, with more than one million antennas up and running, compared to 400,000 in Europe.

Self-driving cars offer an interesting point of divergence between China and the West.

Just take the number of connected devices (1.1 billion), the time spent on mobile (six hours per day) and, above all, the magnitude of data collected to deploy and improve artificial intelligence algorithms faster than in Europe or the United States.

The groundbreaking field of self-driving cars offers an interesting point of divergence between China and the West. Artificial intelligence guru Kai-Fu Lee explains that China believes that we should teach the highway to speak to the car, imagining new services and rethinking cities to avoid cars crossing pedestrians, while the West does not intend to go that far.

Still lagging in some key sectors

There are areas where China is still struggling, such as semiconductors. Despite a production increase of nearly 50% per year, the country produces less than 40% of the chips it consumes, according to official data. This dependence threatens its ambitions in artificial intelligence, telecoms and autonomous vehicles. Chinese manufacturers work with an engraving fineness of 28 nm or more, far from those of Intel, Samsung or TSMC. They are unable to produce processors for high-performance PCs.

China's aerospace industry is also lagging behind the West. There are also no Chinese players among the top 20 life science companies on the stock market and there are doubts surrounding the efficacy of Sinovac and Sinopharm's COVID-19 vaccines. As of 2019, the country files more patents per year than the U.S., but far fewer are converted into marketable products.

Beijing knows its weaknesses and is working to eliminate them. Adopted in March, the nation's 14th five-year plan calls for a 7% annual increase in R&D spending between now and 2025, compared with 12% under the previous plan. Big data aside, that is basic math anyone can understand.
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