6 April 2015 by Eric Toussaint , Michael Nevradakis
In this interview, Eric Toussaint, a founder of the Committee for the Abolition of Third-World Debt, discusses a new commission to audit Greece’s public debt to determine which parts are illegal, illegitimate, unsustainable or odious.
Michael Nevradakis: Share Share A unit of ownership interest in a corporation or financial asset, representing one part of the total capital stock. Its owner (a shareholder) is entitled to receive an equal distribution of any profits distributed (a dividend) and to attend shareholder meetings. with us a few words about the Committee to Abolish Third-World Debt (CADTM) and its work.
Eric Toussaint: It is an international network; organizations from over 40 different countries are members of our international network, 18 from Latin America and the Caribbean, 15 in Africa, eight in Europe, and four in Asia. It’s a network of social movements struggling for the cancellation of illegitimate debt and for the conquest of alternatives, not only on the question of the debt, but also generally on the question of social emancipation. We were created 25 years ago exactly, in March of 1990, and we participated actively in the so-called antiglobalization movement since the beginning. And as you said, we are part of the World Social Forum since the beginning, and presently, we are participating in the World Social Forum, which is taking place this week in Tunisia for the second time in two years.
We are working for decades, analyzing the illegitimacy of major parts of third-world debt. We also analyze the policies dictated by the creditors, like the World Bank
WB 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, 180 members in 1997), 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.
http://worldbank.org and 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.
http://imf.org and others, and we participate in different countries, in experiences of citizen outrage, not only in Latin America, but also, for instance, in Pakistan or in Mali or here in Tunisia, because I am speaking from Tunisia now and you know that a few years ago, Tunisian people entered in rebellion against Ben Ali’s dictatorship, and since the Arab Spring, which began with the Tunisian rebellion, the question of mobilizing against the repayment of the creditors who supported the dictatorship for decades began to be a major political item in the political life in this country. So we are very active in several continents on that question. We also are taking part in movements; we are supporting movements like “Strike Debt,” the movement in the United States against the repayment of the illegitimate student debt. Also, the movement against the forced foreclosures of houses by the US banks. So the activity of the CADTM, from the question of the illegitimate public debt of the third-world countries, has extended to other items, like the private illegitimate debt of the people in the north and also the public illegitimate debt of the northern countries.
You have been in Greece recently for meetings with government officials and, in particular, the president of the Hellenic Parliament, Zoe Konstantopoulou, and these meetings have resulted in an announcement that Greece will go ahead with the creation of a commission that will audit the public debt. Tell us about these meetings and about the commission that is being formed.
This committee will be composed of 15 individuals from outside Greece and 15 Greek people - experts in international law, in constitutional law, in macroeconomics, in auditing public accounts, from people with different experiences from different countries, and I will coordinate - I will assume the central coordination of this commission. Our task is to identify illegal, illegitimate, unsustainable or odious debt. We define illegitimate debt as a debt contracted against the general 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. and in favor of privileged minorities. Illegal debt is debt contracted that violates the laws of the country and international law. Unsustainable debts are debts for which repayment impedes the government to guarantee to its citizens fundamental human rights - and odious debt is debt for which reimbursement is linked with violation of human rights.
We will analyze the debt contracted by Greece from the mid-1990s until now, taking into account that in the last five years, the main creditor is the “troika
Troika: IMF, European Commission and European Central Bank, which together impose austerity measures through the conditions tied to loans to countries in difficulty.
IMF : https://www.ecb.europa.eu/home/html/index.en.html ,” or the different parts of the troika. That’s to say, the IMF, 14 European countries who lent money to Greece since 2010, 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.
ECB : http://www.bankofengland.co.uk/Pages/home.aspx , the European Commission and the European Stability Fund. They are the different creditors of Greece, and they represent more than 80 percent of the Greek public debt. We will analyze these debts reclaimed by these creditors to determine if they are illegitimate, illegal, odious or unsustainable.
When will this commission to audit Greece’s debt first convene?
The first plenary session will take place from April 3 until April 7, and we will make public the composition of this commission at this time. We will convoke a press conference on the 7th of April to inform about what will be our calendar and what the composition of the committee will be.
Will the entirety of Greece’s debt be examined by this commission, or will there be any limitations imposed on which parts of the debt will or will not be audited?
No, we will audit all the debt, all the present debt. Eighty percent of the debt is in the hands of the troika, and the other part, the other 20 percent, is mainly in the hands of the Greek banks, and some, I would say 3 to 4 percent, are owned by vulture funds
Vulture fund Investment funds who buy, on the secondary markets and at a significant discount, bonds once emitted by countries that are having repayment difficulties, from investors who prefer to cut their losses and take what price they can get in order to unload the risk from their books. The Vulture Funds then pursue the issuing country for the full amount of the debt they have purchased, not hesitating to seek decisions before, usually, British or US courts where the law is favourable to creditors. and hedge funds Hedge funds Unlisted investment funds that exist for purposes of speculation and that seek high returns, make liberal use of derivatives, especially options, and frequently make use of leverage. The main hedge funds are independent of banks, although banks frequently have their own hedge funds. Hedge funds come under the category of shadow banking. and some investment funds Investment fund
Investment funds Private equity investment funds (sometimes called ’mutual funds’ seek to invest in companies according to certain criteria; of which they most often are specialized: capital-risk, capital development funds, leveraged buy-out (LBO), which reflect the different levels of the company’s maturity. , but that’s a small minority.
Has there been any resistance to the creation of this committee on the part of European officials and the so-called “institutions,” or even from within the Greek government? Certainly we’ve seen the new Greek government backtrack on some of its pre-election promises these past two months.
There is no official reaction from the European Commission or foreign governments, but I imagine that they don’t see this initiative as a good one, because as you know the creditors don’t want an audit. They don’t want a characterization of the debt as odious or illegitimate or illegal, and from the part of the Greek government, the prime minister is supporting the initiative of the president of the parliament. Some ministers are very enthusiastic. For instance, George Katrougalos, who is the Minister of Institutional and Administrative Reform, came to the press conference to express his support of this initiative.
We should also mention that there are five ministers in this government who participated, in 2011, in the creation of the initiative for a citizen’s audit of the debt. We should also say that the Minister of Finance Yanis Varoufakis, in 2011, was not in favor of this initiative, and his priority is the negotiation with the European Commission. Until now, the question of the reduction of the debt was aside from the negotiation. So I think that the situation is complex, but we cannot speak about contradiction or tension, and in the next weeks and months, this issue will be clarified.
Are there any estimates as to what the actual percentage is of Greece’s debt that is likely to be odious or illegitimate or illegal? Prior to the elections, the current economy minister Giorgos Stathakis had said that only 5 percent of the Greek public debt is odious. What are your estimates?
I will not now give precise answers, because we have to make the audit. The commission is pluralistic, I have my own criteria, but I will not give them now because we have to collectively work as a commission.
Throughout the crisis, we have constantly heard that there are no alternatives to the politics of austerity for Greece and for the full repayment of the debt, but in your case, you have taken part in similar audit committees in other countries, the Debt Audit Commission that was formed by Ecuador and its president Rafael Correa in 2007, for instance. You also advised countries such as Paraguay and Venezuela on this issue. What examples could Greece draw upon from these countries in launching this new commission to audit the public debt?
Ecuador really is a source of inspiration. Of course, you cannot repeat exactly the experience of Ecuador, but we should take lessons from the Ecuadorian experience, and one of the main lessons is to say that it’s totally feasible to confront the creditors. Suspending the payment of debt changed the correlation of forces. When you are paying back the debt, you are in a situation of inferiority. When you make the decision to suspend repayment on the basis of an audit, you are in a position of superiority in front of the creditors. Ecuador’s suspension of payments showed to the world that you can, for good reason, impose on the creditors’ conditions they will never have accepted without this suspension of payment and the audit.
We could also take the example of Iceland. Iceland decided not to pay back the debt reclaimed by the United Kingdom and the Netherlands in 2008-09, and Iceland is in a much better economic and social condition now than a country like Greece, which is respecting the rights of the creditors and is still paying back the debt. So we should demonstrate, through the audit, that this debt is illegal and illegitimate, and we will discuss the feasibility of taking a strong decision.
It’s clear that the final decision about suspending the payments, repudiating or not the payment of the debt, is the decision of the government, not the decision of the commission. The commission is in charge of auditing, not of making the decision of what we have to do after the audit. But I am sure that by informing correctly the Greek opinion and the international public opinion, that we will make progress on the question of confronting the creditors.
What do you make of statements that were made by the government recently saying that Greece will repay, in full, its debt obligations specifically towards the International Monetary Fund and the European Central Bank
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.
This agreement [with the Eurogroup] signed on February 20-21 is related to the program which has been prolonged until the end of June. So we will see what will happen after June, and we will see what will happen until June, if the creditors don’t make real concessions to Greece. So things are moving; there is no definitive orientation, I think. The Greek government made big concessions to the creditors in relation to the debt, expecting from the creditors that they will give a real margin of maneuver to stop the policy of austerity. But if the creditors don’t really give space to the Greek government to stop the austerity, I think that all the discussion will be on the table again.
What other policy initiatives do you believe that Greece could undertake, in your experience, above and beyond the creation of this commission to audit the public debt?
They took two initiatives recently: the creation of a parliamentary commission to investigate how the Greek government reached the first agreement on the memorandum of 2010, to see if it was legal, what were the conditions, etc. It’s a good initiative. Another one is the creation of a parliamentary commission on the question of the German debt of World War II to Greece. Greece, for several years, has been asking Germany to make reimbursements for the forced loans given by Greece to the Nazi regime during World War II. And also the question of reparations, because Greece was one of the most victimized countries by the Nazi regime, at the level of cost of human life and also destruction of the economy during the second World War. That’s also an important question.
The main initiative now in relation with the citizens of Greece is the laws to go against the austerity, like the law voted last week to alleviate the private debt of the poor citizens in relation to the state, the private debts under something like 4,000 euros, which will be reduced. It’s a good decision taken by the government. Also, the reconnection of electric power to the 300,000 families who were cut off of electricity in the last years.
You mentioned the issue of the German war debts and war reparations to Greece. Is this an issue that the audit committee will also deal with, and is there also any estimate as far as what this amount owed by Germany might be?
No, we will not tackle this question. We have a specific parliamentary commission on the reparations, and so as the audit commission, we will not take this question into account, but we will collaborate with this commission on reparations, and we will also collaborate with the commission on the memorandum. About the estimation of the cost of reparation, it’s also the work of this commission to reach an estimation, but I would say generally the estimates are from something like $100 to $200 billion, while some people are speaking about $1 trillion, but generally the specialists are speaking about an amount of $100 billion to $200 billion, which is a huge amount, of course.
In terms of the debt audit commission, what will its next steps be once it has finished its audit? Will the results of its investigation be publicly available, and will there be any chance, in your opinion, for these results to translate into action on the part of Greece and Europe?
One important thing is to say that the president of the Hellenic parliament wants to make this audit participative with the citizens of Greece. We will work transparently. We will publish preliminary results. We will ask people to testify; we will ask for the participation of citizens who could bring to the commission some knowledge about illegal or illegitimate behavior regarding the negotiation of the debt with the troika and also the debt incurred by big contracts with transnationals like Siemens or the armament firm corporation Thales from France. And when we will conclude our work, we will make it public. We will communicate it officially to the government, so the government will have to make a decision on the basis of the results of the audit. We cannot determine what will be the decision of the government, but I think that Greek citizens will wait and will expect from the government some decision. And, the president of the parliament, who took the initiative, said in the press conference that the Greek people have a right to say, “We don’t want to pay back an illegal or an illegitimate debt.”
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: https://en.wikipedia.org/wiki/%C3%89ric_Toussaint 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.
24 March, by Eric Toussaint
21 February, by Eric Toussaint , Miguel Urbán Crespo , Teresa Rodríguez , Angela Klein , Stathis Kouvelakis , Costas Lapavitsas , Zoe Konstantopoulou , Marina Albiol , Olivier Besancenot , Rommy Arce
18 February, by Eric Toussaint , Miguel Urbán Crespo , Stathis Kouvelakis , Teresa Rodríguez , Costas Lapavitsas , Angela Klein , Zoe Konstantopoulou , Marina Albiol , Olivier Besancenot , Rommy Arce
14 February, by Eric Toussaint
16 January, by Eric Toussaint
9 January, by Eric Toussaint
5 January, by Eric Toussaint
25 November 2016, by Eric Toussaint
24 November 2016, by Eric Toussaint
7 November 2016, by Eric Toussaint
6 April 2015, by Eric Toussaint , Michael Nevradakis