OPEKEPE, ITALIAN MAFIA AND THE GREEK ECONOMY
Banking supervision analyst at the European Central Bank and doctoral candidate at the Frankfurt School of Finance, Ixart Michael-Flores considers that the fight against corruption is not an obstacle but an investment.
In an article in Financial Times with title «How a Mafia crackdown drives economy growth», he argues that the fight against organized financial crime can act as a lever for development.
His position is based on empirical analysis rather than ideological certainties, as he shows how the police dismantling of hundreds of companies with mafia ties led to increased productivity, a rise in loans to healthy businesses and a revival of the local economy. The removal of the “parasite tax” on organized crime did not bring recession but relief.
His intervention takes on new significance in light of the OPEKEPE scandal. The case of fake subsidies through virtual pastures, family ties and party connections constitutes an institutional symptom that shows us how harmful impunity can be for the very economic life of a country.
Flores describes how the mafia in Italy infiltrated legitimate market sectors, draining creativity and distorting competition.
Banks were afraid to lend to healthy businesses, because the “known” ones dominated with threats and backbiting. When the state took action and removed the criminal networks, the market took a breather. Loans to legitimate players increased by up to 2%, while up to 3.6 billion euros in new credits were directed to small and medium-sized businesses.
In Greece, subsidy control mechanisms appear to be in a state of functional abdication. The OPEKEPE scandal, as revealed by the European Public Prosecutor’s Office, shows a well-organized network of corruption within the state apparatus. Instead of boosting production and rewarding extroversion, waste is being boosted and party affiliation is being rewarded.
Flores points out that the new EU Anti-Money Laundering Authority (AMLA) offers a unique opportunity to overhaul the system at the European level and break the false dichotomy of “transparency or growth”.
The AMLA, he underlines, can coordinate national supervisors, enhance cross-border cooperation and information exchange, and contribute to creating a more efficient and fair financial environment. It is a structural response to the impunity that undermines trust and stifles real investment.
The author concludes that too often discussions about combating organized crime focus on arguments about ethics and security. However, the economic arguments are just as strong.
Italy's experience with the mafia shows that by reducing parasitic taxes (such as mafia income, bribes, or the extraction of economic resources from real producers) the creative forces of an economy are released.
Similarly, the Greek state must support not those who are declared workers but those who actually work hard and not parasitically.
Because otherwise, when the European subsidy pipelines are closed, investors will prefer states where justice and control mechanisms do not malfunction.
This concern is reinforced if we consider that, based on the historical behavior of the relative strength of the Italian and Greek stock markets, long-term waves of relative strength appear to alternate periodically, approximately every decade.
The relative strength of the Milan Stock Exchange against Athens, as expressed by the ratio of the normalized indices with a base of 100 in November 1997, is interpreted as follows: when the index rises (black line), then Italy outperforms; when it falls (red line), then Greece outperforms.
However, overall, if the ratio is below unity (1), this means that the total performance of the Italian stock market since 1997 has lagged behind that of the Greek one, and vice versa. Thus, the first decade (1997–2007) belongs purely to Greece, due to its entry into the EMU and the stock market euphoria. The second decade (2008–2018), which includes the global crisis and the memoranda, brings a significant decline in Athens and a strong relative performance of Milan.
The turning point was in 2015 when Athens took the lead in the race for relative power, with a gap between the 2019 elections and the first phase of the pandemic. Since October 2020, Athens has taken the lead again, in a rally of relative speed that now seems to be peaking.
Certified Technical Analyst (MSTA) and financial/sports writer with expertise in capital markets, trading systems and trading strategies.
Graduate of the Department of Statistics of the London School of Economics and Finance of ALBA Business School.
