Greece must deny to pay an odious debt

11 June 2011 by Nicolas Mottas

Today is the 11th consequent day of mass demonstrations in front of the Greek Parliament in Athens, as well as in other cities of the country. One year after the signing of the notorious bailout deal between the Greek government, the IMF IMF
International Monetary Fund
Along with the World Bank, the IMF was founded on the day the Bretton Woods Agreements were signed. Its first mission was to support the new system of standard exchange rates.

When the Bretton Wood fixed rates system came to an end in 1971, the main function of the IMF became that of being both policeman and fireman for global capital: it acts as policeman when it enforces its Structural Adjustment Policies and as fireman when it steps in to help out governments in risk of defaulting on debt repayments.

As for the World Bank, a weighted voting system operates: depending on the amount paid as contribution by each member state. 85% of the votes is required to modify the IMF Charter (which means that the USA with 17,68% % of the votes has a de facto veto on any change).

The institution is dominated by five countries: the United States (16,74%), Japan (6,23%), Germany (5,81%), France (4,29%) and the UK (4,29%).
The other 183 member countries are divided into groups led by one country. The most important one (6,57% of the votes) is led by Belgium. The least important group of countries (1,55% of the votes) is led by Gabon and brings together African countries.
and the EU, the fiscal situation is dissapointing. But even more than that, the living standards of the Greeks have been enormously affected by the unprecedented neoliberal austerity policies imposed by the deal.

The whole situation seems to be a vicious circle: Greece borrows money in order to pay off her mounting debt ( 262 billion) by creating a new future debt - the one of the IMF-EU bailout deal. On the same time the country’s financial and political sovereignty is bound hand and foot by an agreement which, although signed by the government, is not endorsed by the vast majority of the people. The future generations of Greeks will have to carry in their backs the results of an unholy alliance made by international bankers, foreign creditors and European governments. This is neither moral nor rightful.

Ecuador was in a similar position four years ago - it was then when President Rafael Correa had bravely decided to default of the latin American country’s $3.8 billion debt by unilateraly eliminating it as “illegitimate”. That should be the example for Greece, as well as for other countries which have been victims of financial speculations and neoliberal austerity. It is a historical need for the European governments which feel the loop of debt around their necks to take generous decisions contrary to the demands of the technocratic elites in Brussels, Berlin or Washington. Greece has the opportunity do the beginning of a revolutionary action against the global capitalist establishment.

1. The IMF-EU bailout deal for Greece is in fact an anti-constitutional agreement. Constitutional Law Professor at Athens University, Georgios Kasimatis, has pointed out that “the provisions included in the loan contract and the bailout deal violate all principles of the Greek constitution, the European and International Law” . Therefore, the Greeks have every legal and moral right to defend their constitution against policies which tend to eliminate the country’s very sovereignty.

2. The debt crisis in many countries of the eurozone (Greece, Ireland, Portugal etc) is nothing but part of the severe crisis which modern capitalism is passing by. The neoliberal experiments in the European Union have been proved a total failure for the working and middle-classes while it has created profit Profit The positive gain yielded from a company’s activity. Net profit is profit after tax. Distributable profit is the part of the net profit which can be distributed to the shareholders. -addicted economic elites. The denial to pay off the debt would be a blow to this anti-social liberal madness and would send a strong message to international loan sharks.

3. The case of Ecuador can be used as an example. Although the Greek debt is much higher and the economies of the two countries are generally different, Eric Toussaint (Campaign for the Cancellation of Third World Debt CADTM) argues that there are some similarities: “First, Greece is financing a part of debt in the form of bonds by the Government authorities (”securitization of public debt“), a technique used by Ecuador. Second, another large part of the Greek debt is in the form of bank loans, which is also the case for developing countries. [...]”Ecuador s debt was mainly owed to the banks in the U.S. In 200 Ecuador abandoned its national currency and adopted the U.S. Dollar, the currency of its lender. Similarly Greece has the same currency with its lenders, such as France and Germany, the Euro". (Ethnos, 9 January 2011).

4. The cancellation of the vast majority of the Greek debt is definitely a prerequisite for the recovery of the country’s economy and the relief of the population from the harsh austerity policies. The same applies to the cases of Ireland and Portugal. By challenging the overcharging debt, the Europeans can directly challenge the E.U. economic establishment itself thus rejecting the neoliberal practices of the last decades. A new policy is needed which will take into consideration the real needs of the masses, the vested rights of the working class and the strengthening of social solidarity within the Union.

5. The theory of the “odious debt” is not a general or newly-founded concept. It is based on the principles of international law (U.N. Charter) and can be legally used when the debt “has been incurred, not in the interests of people, but against its interests and/or in the personal 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 the rulers or persons close to the regime”. According to Law Professor at University of Michigan Robert Howse “the international law obligation to repay debt has never been accepted as absolute”. (U.N. Conference on Trade and Development, July 2007). But, furthermore, institutions like the World Bank World Bank
The World Bank was founded as part of the new international monetary system set up at Bretton Woods in 1944. Its capital is provided by member states’ contributions and loans on the international money markets. It financed public and private projects in Third World and East European countries.

It consists of several closely associated institutions, among which :

1. The International Bank for Reconstruction and Development (IBRD, 189 members in 2017), which provides loans in productive sectors such as farming or energy ;

2. The International Development Association (IDA, 159 members in 1997), which provides less advanced countries with long-term loans (35-40 years) at very low interest (1%) ;

3. The International Finance Corporation (IFC), which provides both loan and equity finance for business ventures in developing countries.

As Third World Debt gets worse, the World Bank (along with the IMF) tends to adopt a macro-economic perspective. For instance, it enforces adjustment policies that are intended to balance heavily indebted countries’ payments. The World Bank advises those countries that have to undergo the IMF’s therapy on such matters as how to reduce budget deficits, round up savings, enduce foreign investors to settle within their borders, or free prices and exchange rates.

and the IMF must be checked for their policies towards lending money, advocating exhausting austerity mechanisms and, moreover, co-operating with corrupt and dictatorial regimes.

6. The cancellation of the debts for third-world countries as well as for states which has been severely hitted by the recent financial crisis is, in the end of the day, a demand for a fairer world - an international environment where people will be above profits and where elected governments, not bankers, multinational companies or rate agencies, will manage the fate of a country’s economy.

When these lines were written, more than 100,000 Greeks were demonstrating outside the Parliament in central Athens - public anger and desperation becomes bigger day by day and the concequences cannot be predicted. The “indignants” are asking for jobs, social policies, fair distribution of wealth, justice and that those who are responsible for the crisis to pay for it. They are asking for hope, without the nightmare of austerity and misery imposed by a corrupted political system. The Greek government along with the EU have the moral responsibility to stand in solidarity with the people and relieve them from the unbearable weight of an illegitimate and “dirty” debt.



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