Super rich take funds out as Greeks battle debt crisis

Billions of euros may have been taken out of Greece by private investors since the country began to be engulfed by economic turmoil in November.

Under pressure from the European Union and international markets to rein in the nation's €300 billion ($593 billion) debt, the Socialist Prime Minister, George Papandreou, announced last week that he would have to enforce tough deficit-cutting measures.

But the coming austerity package is leading panicked wealthy Greeks to divert their savings out of the country.

"In the last four to six weeks a lot of money has been moved abroad; I've heard extraordinary figures," a prominent analyst, Kostas Panagopoulos, said.

"People are moving funds either because they don't trust our banking system, want to avoid what they fear will be taxes on deposits or are simply anxious about the future of our economy."

Traditionally, the country's super rich, not least ship owners and mercantile elite, have favoured the Swiss bank and offshore account. But now huge sums are also being spirited away to banks in Cyprus.

"Very big transactions are going through Cypriot banks," added Panagopoulos. "Greeks feel that Cyprus is not only close, but safe."

In the 29 years since Greece entered what was then called the European Community, it has increasingly become divided between the very rich, who live in Hollywood-style opulence in the outer suburbs, and the ranks of the poor who are forced to survive on pensions of €500 a month.

While a fifth of the population lives beneath the poverty line, about 20 per cent of Greeks are believed to earn more than €100,000 annually - even if, according to income tax records, 90 per cent declare salaries of less than €30,000 a year.

"Greece has a lot of rich people who are not being taxed properly because there is so much tax evasion," the Finance Minister, Giorgos Papaconstantinou said.

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