Eric Toussaint: What can we learn from what has happened in Greece?

13 November 2015 by Eric Toussaint , Mimi Podkrižnik

Interview with Professor Eric Toussaint, invited to Ljubljana by Slovenian Trade Unions to take part in a panel entitled Public debt: who owes whom?

By Mimi Podkrižnik, for the Slovenian daily Delo.

Do you still believe in the “European project”?

Most definitely, I don’t. The “European project” has turned into a straitjacket to coerce populations. There is no leeway for democratically elected governments to implement policies that both comply with EU rules and work towards the common good. Indeed the various treaties and the institutional architecture through which they operate - European Parliament, European Commission, national governments and the European Central Bank Central Bank The establishment which in a given State is in charge of issuing bank notes and controlling the volume of currency and credit. In France, it is the Banque de France which assumes this role under the auspices of the European Central Bank (see ECB) while in the UK it is the Bank of England.

- have established a strict hierarchical framework that leaves little room for autonomous decisions, i.e. for democracy and the voice of ordinary citizens.

This has been demonstrated by the case of Greece. In January 2015 a majority of the people voted for a party that had promised to break away from policies that had completely failed. They rejected austerity measures once again in the 5 July 2015 referendum, but that only exacerbated the determination of the various EU institutions to prevent this popular aspiration from becoming reality. It was even clearly stated . Jean-Claude Juncker maintained that a referendum was not called for. EU leaders consider that EU policies should be determined by the Commission and the Eurogroup: there is no way either to get out or to change direction.

Why is this? Are we caught in a vicious circle?

The construction of the EU itself, i.e. adhering to treaties and a highly autocratic conception of the way the institutions function, is aimed at restricting democracy as much as possible. Major private corporations exert intense lobbying pressure on the Commission and Parliament to ensure that they make decisions that favour corporate interests. The head of the ECB ECB
European Central Bank
The European Central Bank is a European institution based in Frankfurt, founded in 1998, to which the countries of the Eurozone have transferred their monetary powers. Its official role is to ensure price stability by combating inflation within that Zone. Its three decision-making organs (the Executive Board, the Governing Council and the General Council) are composed of governors of the central banks of the member states and/or recognized specialists. According to its statutes, it is politically ‘independent’ but it is directly influenced by the world of finance.
, Mario Draghi, used to be one of Goldman Sachs’ strategists for Europe. This is emblematic of the situation we are in, where the major European companies have managed to place people coming from their own ranks key positions, or to obtain the full support of heads of state and senior civil servants to implement policies that favour their interests. Such a system looks very much like an oligarchy, in which a few individuals impose their decisions and define policies in the interest Interest An amount paid in remuneration of an investment or received by a lender. Interest is calculated on the amount of the capital invested or borrowed, the duration of the operation and the rate that has been set. of a small minority.

Left-wing parties also fell into the trap – we can see what has happened to the traditional left in France, with François Hollande’s socialist party or to the radical left in Greece, with Alexis Tsipras’ new party

I make a distinction between traditional and radical left-wing parties, since clearly we cannot use the word ’left-wing’ for François Hollande, or indeed for Tony Blair or Jeroen Dijsselbloem. The latter is a member of the Dutch socialist party but that didn’t stop him being among the most actively obstructive to the Greek government after the 25 January 2015 elections. We can place this kind of ’socialist’ party on the side of the conservative and forces. They can be called ’neoliberal’ or ’social-liberal’. These parties still have genuinely left-wing members who try to make themselves heard. The Labour Party elected Jeremy Corbyn in spite of Tony Blair’s and Gordon Brown’s opposition. But how much room will Corbyn have in which to manoeuvre? We shall wait and see what will happen with the Labour Party.

In any case, Corbyn has clearly indicated that if he becomes Prime Minister the UK would go back on what was done by Margaret Thatcher and Tony Blair. He talks of renationalising the railways, thus going further than what Tsipras had announced in January 2015 … François Hollande, the Dutch socialists, the German socialists, all those so-called socialists voted for the European treaties along with the other large right-wing parliamentary group, the Popular Party. The conclusion is clear; those socialists are the architects of everything we now face. Movements such as that of Alexis Tsipras or Podemos in Spain and other similar initiatives have had no hand in the construction of this system.

Not yet...

They are not in positions of power within the EU. Why did they fall into the way of thinking that we know about in Greece? Because they were under the illusion that the European power structure would give them room to manoeuvre. They genuinely thought that the failure of the policies applied to Greece was obvious, because the fact was recognized by so many leading economists ...

... yes even Nobel-prize laureates...

Yes they thought, in exchange for their sense of responsibility, that European leaders and leaders of other national governments would agree to let them carry out their experiment, radically reduce austerity measures and attempt to boost economic activity in Greece. But they were mistaken. Their calculation was completely wrong. For European leaders it was essential to show all the peoples of Europe that there is no way to deviate from the path of austerity, that privatization cannot be halted. For all of them, whether Matteo Renzi or François Hollande or Wolfgang Schäuble or Jeroen Dijsselbloem – it was essential to prevent SIRYZA’s experiment from succeeding. Among the most determined to counter Tsipras was of course Spanish Prime Minister, Mariano Rajoy, and that of Portugal, Pedro Passos Coelho. Because they thought to themselves: if Tsipras succeeds, Podemos will sooner or later come to power in Spain, and then the same thing in Portugal. No government in any of the 27 other EU countries, nor the EU institutions, ever gave the Greek government a chance;. Yet Tsipras clearly thought that the governments of Matteo Renzi and François Hollande, who also wish for more flexibility with regard to deficits, would support him. But it didn’t happen.

Surveys show that the harm suffered by SIRYZA also affected Podemos, whose popularity rating fell from 20 to 14%...

The aim of the European leaders is to tell the Spanish people: “do not vote for Podemos”, and to tell Podemos: “give up your desire to really change things. You can see that Tsipras agreed to capitulate. You too, if you have a chance to enter a government, will have to accept the rules.

You distinguish between countries in the centre and countries on the periphery of Europe. Slovenia lies on the periphery, of course, just as Greece or Portugal. Yet those two countries are talked about very differently: while Portugal is the ’star pupil’ concerning its policies and Troika Troika Troika: IMF, European Commission and European Central Bank, which together impose austerity measures through the conditions tied to loans to countries in difficulty.

bailout, Greece is castigated for not playing the game

In the same way as Ireland is said to be a star pupil. But the actual situation is very bad in Portugal, as in Ireland and Spain. They seem to be meeting the criteria set by EU leaders because they manage to pay their debts without asking for any reduction. But this is entirely due to interest rates Interest rates When A lends money to B, B repays the amount lent by A (the capital) as well as a supplementary sum known as interest, so that A has an interest in agreeing to this financial operation. The interest is determined by the interest rate, which may be high or low. To take a very simple example: if A borrows 100 million dollars for 10 years at a fixed interest rate of 5%, the first year he will repay a tenth of the capital initially borrowed (10 million dollars) plus 5% of the capital owed, i.e. 5 million dollars, that is a total of 15 million dollars. In the second year, he will again repay 10% of the capital borrowed, but the 5% now only applies to the remaining 90 million dollars still due, i.e. 4.5 million dollars, or a total of 14.5 million dollars. And so on, until the tenth year when he will repay the last 10 million dollars, plus 5% of that remaining 10 million dollars, i.e. 0.5 million dollars, giving a total of 10.5 million dollars. Over 10 years, the total amount repaid will come to 127.5 million dollars. The repayment of the capital is not usually made in equal instalments. In the initial years, the repayment concerns mainly the interest, and the proportion of capital repaid increases over the years. In this case, if repayments are stopped, the capital still due is higher…

The nominal interest rate is the rate at which the loan is contracted. The real interest rate is the nominal rate reduced by the rate of inflation.
being provisionally very low. All EU countries, Slovenia included, currently borrow at a very low cost but there is no guarantee that this will continue. In Portugal or in Spain, the rate of growth is very low or stagnant, the rate of unemployment is very high, the situation of Portuguese, Spanish and Irish banks is also very poor; they will require continual recapitalisation. Last year one major Portuguese bank, Banco Espírito Santo, failed. In fact the major media and the EU government show their approval of some governments because they want to say: “you see, the Greeks don’t play the game and they’re badly off because of it. The others, those that apply the reforms as they should, get by fine”. But this is all just mystification. The actual situation is thoroughly different.

We are entering the realm of psychology...

In Slovenia you are in a rather surrealist situation. If I’m not mistaken most Slovenian people, the Slovenian government and the major media consider that you are so close to the centre of major powers, in particular Austria and Germany, that you will always get by. You may be on the periphery but with one foot in the centre. And some think that you are right in the centre. But we shall see whether that can last. Your public debt is skyrocketing because of bank bailouts, and things are not going to improve in the short term. Slovenia is not sheltered from hardships in the next two or three years. And the big difference between Slovenia and Germany or Austria is that you are not at the centre of EU decision making. It is Berlin, Paris and London, and to a more limited extent Brussels and Amsterdam, that influence the policies of European leaders, not Ljubljana.

What do you think of the part played by the media? They cover Portugal and Greece in different ways. There is a lot of emotional manipulation. We get lost in style and forget content. With Yanis Varoufakis, for instance, the media focus on his finger, or even his clothes.

Greece and the Greek population were clearly stigmatised. Some commentators who should have know better claimed that Greece had not collected taxes for centuries and that this was something inherited from the Ottoman Empire. Of course, there is a lot of tax avoidance in Greece...

... and corruption. We are in the Balkans, after all

There is corruption everywhere in Europe. Everywhere. Within the FIFA, in all organisations… But some want us to believe that it is limited to a few countries. To conceal high-scale corruption they focus attention on a small country, which is stigmatised. What Slovenian public opinion does not know is that a Greek Defence Minister, a member of PASOK [Akis Tsohatzopoulos] was sentenced to 20 years in jail for corruption in 2013. Five members of his family are also in prison. But this is never mentioned. How many ministers are in prison in EU countries? I think that some Slovenian ministers or former ministers belong in jail, but they have not been judged. In Greece they have trials for corruption and people are sentenced: there is a big trial of 69 Greeks involved in corruption with the multinational corporation Siemens and there will be sentences in the coming months.

Greece does indeed have serious problems of corruption and collection of taxes, but this is also the case in other European countries. All over Europe, every large corporation and the wealthiest 1% of the population have been granted tax privileges. States have to compensate for this loss of tax revenues and by borrowing. There is also tax evasion, for example the HSBC affair, or Luxleaks, in which Juncker is directly involved. And we shouldn’t forget that Draghi was directly involved in the scandal of the falsification of Greek public accounts in 2001 and 2002 ... We have a major problem in Europe, as in the US: large corporations, especially banks, are systematically guilty of tax evasion and corruption. The EU only takes extremely weak measures to control them.

Nobody feels either guilty or responsible.

The European institutions, the European Commission, and the governments of the major States could implement strong measures to prevent tax evasion – which is on a massive scale and has the heaviest impact on the weakest economies. The wealthy in the peripheral European countries put their money where it is most secure — Luxembourg, Germany, Austria, Belgium, the City of London. Of course the European leaders have the power to take measures. But they don’t want to.

Is it possible that someone will eventually be brought to trial?

I’m not optimistic — especially in the short term. I don’t think that these individuals will be brought before a court, nor be found guilty, even though their behaviour would deserve it. The positive thing that may occur would be for us to learn lessons from what has happened with Greece and for the new progressive democratic governments to understand that they must be more firm, more firm than Tsipras was, which means that as democratically elected governments they have to be ready to disobey the orders of the European Commission and the ECB, if – as has been the case with Greece – they take measures that are unjust for the economies of their countries.

The wave of indignation has already lasted quite some time. Stéphane Hessel issued a call for indignation a few years ago. We’ve seen the birth of the Indignados movement in Spain and the formation of Podemos, but nothing has really come of it all yet. We feel a little bit at a dead end.

Those movements are driven by a part of the population who want radical answers. That’s why Jeremy Corbyn, who had no institutional influence outside the trade unions, won the Labour Party leadership, and it’s also why Bernie Sanders in the US, who has very few resources, is drawing considerable grass roots support from the Democrats, although he’s considered a radical socialist. Twenty years ago, those who had the momentum were people like Tony Blair and Gordon Brown, Clinton or Barack Obama... Now it’s Sanders, Corbyn, and Podemos. Why? Because they correspond to what a part of the population wants, people who have come to the conclusion that it’s time for policies that deal with the problem at its roots. In certain cases, the new political formations like SYRIZA and Podemos are too moderate. Even though they say that radical solutions are needed, and therefore get support from the people, they’re afraid to actually put them into practice. What’s needed is a progressive government that isn’t afraid to disobey. The value of Stéphane Hessel’s message was to say to people: when those in power apply policies that are fundamentally unjust, you have a duty to rebel, to revolt, to disobey. And it’s important that it was coming from someone who resisted Nazism, because those are the people, in France, who resisted the Vichy regime and the French police, and not only the Nazis. It took courage to struggle against your own country’s police and against your own collaborationist government. Today, of course, we aren’t in the same situation; the Germany of Angela Merkel and Wolfgang Schäuble is not that of the Nazis. There’s a huge difference, but it’s undeniable that in the current context, a situation does exist where there is not enough space for the exercise of democratic rights, and therefore we have to be ready to disobey and to rebel. I hope that political movements will understand that. If not we’ll experience one disappointment after another. The danger is that the Far Right, with...

...Marine Le Pen in France...

or Viktor Orbán in Hungary... will come to power. There’s a great danger that the Far Right will eventually find charismatic figures and with violent disobedience, directed against immigrants, it could appear to be a credible alternative for ordinary citizens. There’s a real danger in Europe. It’s not immediate, it won’t be in the next year or two, but the danger is nevertheless there.

What’s your opinion of the role of the trade unions? It’s clear that in the private sector, many factories have closed down. The working class is

That’s exaggerating a little, but it is clear that there’s a structural weakening of the major wage-earning sectors. Concentrations of wage earners are certainly diminishing in certain countries, or in entire regions of Europe. The trade-union movement has lost strength in a large number of countries.

Trade unionism is getting lost, at least in Slovenia, in a certain nostalgia, but also – it has to be said – in demagogy. The world is undergoing radical change, and trade unions need to keep up with it.

I have a lot of faith in the union movement’s ability to redefine a coherent doctrine in the new context. One of the major problems in Europe is that there’s a European Trade Union Confederation with, if I’m not mistaken, close to 60 million members. But the Confederation has supported all the European treaties, except for the latest one, the Treaty on Stability, Coordination and Governance — the TSCG or Fiscal Compact, which it criticised. It opposed it, but in a very limp way, without mobilisation. Despite the reduction in major industrial concentrations, we still have – with the European Trade Union Confederation, which brings together all the trade unions – quite considerable potential power. But it’s only potential. In practice it remained passive, in the belief that the European Union would allow it, as union leadership, to be a partner in a social dialogue. But in reality European policy-makers had no other goal than to make work more precarious everywhere and call collective bargaining agreements into question. The European Trade Union Confederation has taken a long time to realize what is happening and is incapable of reacting, because its enormous superstructure prevents it from functioning democratically, and also because most of all because its leaders and certain major unions who are members refuse to confront the proponents of these anti-Labour policies.

What role do the arms manufacturers play, considering the public debt and migration crises?

Arms manufacturers incontestably play an important role: In the case of Greece, their suppliers of military equipment are mainly French, German and North-American. They are responsible for a lot of corruption. I have just mentioned the condemnation of a Greek minister; he was obviously corrupted companies such as Rheinmetall in Germany, Thales in France and Lockheed-Martin in the US. It is well known that some very big deals have been struck where considerable sums, involving up to hundreds, of millions of Euros, have been used to corrupt political leaders. Several European countries aim to develop their arms industries, for example Poland has recently organised a major arms fair.

The high level of refugees coming from Syria is the direct result of European and US Middle-East policies. I have in mind the 2003 invasion of Iraq, which did not really bring more democracy to the country and only destabilised the region; the intervention in Libya and the attitude towards Syria, which ended up strengthening Al-Qaida in the frontier zones close to Sudan and Mali and favouring the creation and growth of IS. We have arms dealers who are supplying all sides in the conflicts and keeping the war going. As in other moments in history, arms dealers’ strategies and the policies applied to problems in other parts of the World are interlinked. These policies are not in the general interest of the people and the effects are disastrous, whole sections of the populations are displaced and have to seek asylum wherever they may be accepted, however unwillingly.

Recently, in Who Owes Whom? the Slovenian publisher CF included a photo of German soldiers hoisting the Nazi flag over Athens’ Acropolis in 1941. What do you think of this?

The publisher wants to make a strong message. Its value is to make people think. because European history must not be forgotten. It was not so long ago that Greece was occupied by Mussolini’s troops and then the Nazis. Greece was one of the European countries that suffered most during the Second World War, along with the Soviet Union, Poland and, to some extent, Yugoslavia. Greece still has a war damages claim on Germany. And I support that claim. This photo should make people think. It is not a caricature, it doesn’t show Schauble or Merkel wearing a Nazi helmet. The photo does not say that Merkel is behaving like a Nazi, but it should be considered a reminder of our history.

I think the media should change their rhetoric and stop talking about the ’Fourth Reich’, for example. Too many memories prevent us achieving our objectives; the discourse should be tempered.

It is quite clear that we are not in a situation of outright domination and certainly not under German military domination of the whole of Europe. On the contrary, many governments of European countries were glad to see Merkel and Schäuble being cast as the bad guys. Mateo Renzi and Francois Hollande were quite pleased to be able to say “They’re the ones that prevent us from making concessions”.

The problem in Europe today is not only Germany, it is the way Europe has been built. To change all that – if we want a Europe that is truly democratic – it is obvious that many of the existing European treaties must be abrogated. A Europe-wide democratic constituent process, that would create a constituent assembly elected by the different European peoples, is urgently needed. Each EU country would also initiate a national process to collectively and democratically develop a new “European project”. We could take inspiration from the French experience in the 18th century when the different regions made up “cahiers de doléances” where they expressed their feelings, expectations and requirements. It is high time to take stock of what the European Union has become over the last 60 years and to say: “now we are going to rebuild it, make it truly democratic and empower the peoples”. I believe that several European treaties prevent that. So Europe needs a major upheaval, a major European movement, in order to achieve such changes. When could this happen? It will start in a few countries that disobey, and some may leave the Eurozone. Europe will enter a period of even more serious crisis than today, maybe lasting ten or twenty years. The process will be slow and long. Freeing France from absolute monarchy was the fruit of a long struggle.

Will it be possible to do this peacefully, considering history and the crisis?

I believe that the strength of the European authoritarian structures is based on the submission and docility of its peoples, and their political representatives. Our resigned obedience is their strength. Should the indignation become widespread and start to mobilise, Europe will be forced to change, but this does not imply violence. It is possible to change with firmness and determination, but without violence.

Is it correct to speak of a rich 1% and a poor 99%?

Yes, that’s fine. Of course it’s schematic, but it does correspond to reality. I have studied this issue, and the work of Thomas Piketty is very revealing. The richest 1% in the US possesses 50% of the country’s wealth. Adding the next 9% does not add very much wealth. Speaking of the 1% targets a small minority and does not include the middle classes. We are now into such levels of concentrated wealth accumulation that it is quite true to speak of 1%, whereas thirty years ago it would have been truer to speak of 10%.

Is the current situation comparable to the period before the first World War?

We have returned to the same levels of wealth concentration as a century ago. That is what Piketty shows.

Source in Slovenian : Delo

Delo is the best-selling Slovenian daily newspaper


Eric Toussaint

is a historian and political scientist who completed his Ph.D. at the universities of Paris VIII and Liège, is the spokesperson of the CADTM International, and sits on the Scientific Council of ATTAC France. He is the author of Bankocracy (2015); The Life and Crimes of an Exemplary Man (2014); Glance in the Rear View Mirror. Neoliberal Ideology From its Origins to the Present, Haymarket books, Chicago, 2012 (see here), etc. See his bibliography: He co-authored World debt figures 2015 with Pierre Gottiniaux, Daniel Munevar and Antonio Sanabria (2015); and with Damien Millet Debt, the IMF, and the World Bank: Sixty Questions, Sixty Answers, Monthly Review Books, New York, 2010. Since the 4th April 2015 he is the scientific coordinator of the Greek Truth Commission on Public Debt.


Mimi Podkrižnik

journaliste du quotidien slovène Delo.



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