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Why is Greece’s farming industry in peril?

The scandal that has made its way up the government’s hierarchy has faced harsh penalties from the EU. However, these may ultimately affect honest farmers.

Back in its archaic days, clientelism was central to Greece. This system saw citizens relying on patronage from esteemed parties, normally political, in exchange for their loyalty or service.

Today, we refer to this act as a class of corruption, and the Greek government has once again found itself under scrutiny for such unethical practices. This time around, it involves agricultural subsidies that were found to be abused by an organised party that includes ministers.

At the centre of this scandal is the OPEKEPE, the nation’s agency that was tasked with overseeing such subsidies. Due to its oversight contributing to a 3-year-long transgression, it has garnered considerable criticism and raised questions about the future of agricultural subsidies in Greece.


What is the OPEKEPE?

The Greek Payment Authority of Common Agricultural Policy Aid Schemes, otherwise known as OPEKEPE is a private agency, supervised by the Ministry of Rural Development and Food. It is tasked with managing and distributing agricultural funds such as aid and subsidies.

These funds aid those in the industry by supporting farming practices, stabilising markets, and mitigating the risks imposed by agricultural production. The money that funds these subsidies comes directly from the European Union budget, through the Common Agricultural Policy (CAP).

With agriculture being one of the nation’s main contributors to its GDP, these subsidies are vital to sustaining its farmers. However, two months ago, an investigation revealed a major abuse of this industrial lifeline.


The scandal

Two months ago, the European Public Prosecutor’s Office (EPPO) submitted a report to the Greek parliament detailing their investigation into an organised fraud scheme. The report reveals that the mishandling of funds lasted from 2019 to 2022.

It was found that multiple individuals, some of whom were state officials, were submitting false declarations to claim the EU subsidies for farmland or agricultural activities that did not exist or were not performed. Such occurrences saw claims for owning or leasing pastureland that was public property. In other instances, subsidies were even found that have been paid to deceased individuals.

Millions of euros were improperly distributed by OPEKEPE to unsubstantial entities due to major oversight on the agency’s end. One of the documented cases in the report includes 2,500 acres of state land in Lake Karla being falsely declared as cultivated. This resulted in hundreds of thousands of euros in illegal payouts for three years.

Following the submission of the report, five high-ranking Greek government officials resigned. By Greek law, these officials have procured immunity from their positions that prevents them from being investigated by the EPPO. As such, the EPPO’s rationale for submitting the report to parliament was to get it to lift these former authorities’ immunity so that their role in the scheme could be properly investigated.

Greece has put OPEKEPE’s accreditation under probation. Additionally, it has shifted the management of subsidies to the Independent Authority for Public Revenue (AADE), indicating a significant institutional reform.


What happens to future subsidies

For starters, right after the EU discovered the fraudulent scheme, it fined Greece €392.2 million for its blunder. This penalty would be enforced by deducting that specific sum from the country’s subsidies. On top of that, the EU’s Executive Commission made a decision to reduce future subsidies to the nation by 5%, citing improper management of funds.

Unfortunately, this puts Greece’s honest industry stakeholders in a tight spot with a lack of support for their agricultural production and sustenance. So what of them?

For starters, agribusinesses with high dependence on OPEKEPE will bear the brunt of the repercussions. They would be subject to legal exposure and the loss of investor confidence. Their supply chains could be highly disrupted, with the industry seeing a loss in overall profit, with the nation’s GDP taking a hit.

Additionally, farmers will now face rigorous audits and stricter controls on how they spend the funds to prevent fraudulent claims. This will create inevitable operational challenges, especially for less bureaucratically inclined farmers.

With all eyes on it, the Greek government is now under pressure to ensure fair and transparent distribution of subsidies. However, political sensitivities in an already volatile parliament will make them reluctant to pass the full cost of cuts directly onto farmers. Yet, the reduced subsidy pool still means that many farmers will receive less aid and face more hurdles.

To quote the nation’s Prime Minister Kyriakos Mitsotakis, this scandal is ‘evidence of the state’s inadequacy’. The repercussions of this shocking investigation will follow for the years to come, unless Greece reforms its potentially corrupt government and works for its people without backhanders at play.

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