Did 2004 Olympics Spark Greek Financial Crisis?

When it comes to overspending, Greece gets the gold medal.

Governments in the Greek capital of Athens haven't balanced a budget in nearly 40 years, and the country narrowly averted bankruptcy in May before panicky European partners grudgingly put up massive rescue loans.

Fabrie Coffrini | AFP | Getty Images

While many factors are behind the crippling debt crisis, the 2004 Summer Olympics in Athens has drawn particular attention.

If not the sole reason for this nation's financial mess, some point to the games as at least an illustration of what's gone wrong in Greece.

Their argument starts with more than a dozen Olympic venues — now vacant, fenced off and patrolled by private security guards.

Stella Alfieri, an outspoken anti-Games campaigner, says they marked the start of Greece's irresponsible spending binge.

"I feel vindicated, but it's tragic for the country ...They exploited feelings of pride in the Greek people, and people profited from that," said Alfieri, a former member of parliament from a small left-wing party. "Money was totally squandered in a thoughtless way."

The 2004 Athens Olympics cost nearly $11 billion by current exchange rates, double the initial budget.

And that figure that does not include major infrastructure projects rushed to completion at inflated costs.

In the months before the games, construction crews worked around the clock, using floodlights to keep the work going at night.

In addition, the tab for security alone was more than $1.2 billion.

Six years later, more than half of Athens' Olympic sites are barely used or empty.

The long list of mothballed facilities includes a baseball diamond, a massive man-made canoe and kayak course, and arenas built for unglamorous sports such as table tennis, field hockey and judo.

Deals to convert several venues into recreation sites — such as turning the canoe-kayak venue into a water park — have been stalled by legal challenges from residents' groups and Byzantine planning regulations.

Criticism of the Olympic spending has sharpened in recent weeks, after parliament launched an investigation into allegations that German industrial giant Siemens AG paid bribes to secure contracts before the 2004 Games.

A former Greek transport minister has been charged with money laundering after he told the inquiry that he had received more than $123,000 from Siemens in 1998 as a campaign donation.

International Olympic Committee president Jacques Rogge said linking the debt crisis to the games is "unfair." He argues that Athens is still reaping the benefits from its pre-games overhaul of the city's transport systems and infrastructure.

"These are things that really leave a very good legacy for the city ...There have been expenses, of course. You don't build an airport for free," Rogge told The Associated Press in Lausanne, Switzerland. "Had Athens still been outmoded, the economy would have been much worse probably than it is today."

Greek Olympic officials insist the scale of the country's dire financial problems - and its staggering national debt of $382 billion - are simply too big to be blamed on the 2004 Games budget.

Some financial experts agree.

"Put in proper perspective, it is hard to argue that the Olympic Games were an important factor behind the Greek financial crisis. It is, however, likely that they contributed modestly to the problem," Andrew Zimbalist, a U.S. economist who studies the financial impact of major sporting events, said in an email.

"The empty or underused facilities are a problem and the maintenance and operating costs continue to impose a burden. That said, Athens also benefited from infrastructure development and the Greek public debt is $400 billion," he said.

Before the games, Greece's densely populated capital got a new metro system, a new airport, and a tram and light railway network, along with a bypass highway, while ancient sites in Athens' city center were linked up with a cobblestone walkway.

It's those advantages that organizers of the 2012 London Games are quick to point out, as Britain now also faces high public debt levels.

"I think the underlying issues in the Greek economy were far greater than a snapshot of the Olympic Games," Sebastian Coe, chairman of London's organizing committee, told the AP.

London's main Olympic budget now stands at $13.3 billion.

Last week, Britain's new coalition government announced $38 million in Olympic budget cuts as part of efforts to slash the nation's budget deficit.

Over the last decade, Greece's budget deficit remained well above the limit set by the European Union of 3 percent of gross domestic product, but rose abruptly last year to reach an estimated 13.6 percent — the highest level since Greece was previously in recession in 1993.

Greece will get up to about $135 billion in bailout loans through 2012 from the International Monetary Fund and European governments worried the Greek crisis could damage the euro.

The European Debt Crisis - See Complete Coverage
The European Debt Crisis - See Complete Coverage

Prime Minister George Papandreou blames the debt crisis on decades of poor management, putting off unpopular reforms, and vast clientele networks set up by political parties, promising government jobs, social security perks and loss-making regional projects to win votes.

Nassos Alevras, the lead government official for Olympic projects, insists that, overall, the games carried a net gain including a tourism boost.

"The issue of venue use is a sad story...Plans for post-Olympic use were later ignored," Alevras told the AP.

But he added: "The money spent on the Olympics is equivalent to one quarter of last year's budget deficit. So how can the amount spent over seven years of preparation for the Olympic Games end up being considered responsible for the crisis? That's irrational."