1 February 2016 by Eric Toussaint
Photo from Flickr - CC - by Nana B Agyei
The need for a Plan B in Europe
After the Greek government’s capitulation to the creditors and the European institutions in July 2015, it is urgent for a Plan B to be developed. If we want to break away from the neoliberal orientations that have been applied for decades, a number of measures have to be taken simultaneously: implementing a different taxation system – both to take as much as possible away from the rich to put it in the coffers of the State and to drastically reduce the unfair taxes that weigh on the majority of the population –, developing measures regarding the debt and the banking sector, introducing complementary currency – especially, but not only, in the context of the euro –, obviously doing away with a series of unjust austerity measures, and launching a democratic constituent process, based on active participation by all citizens. The purpose of our coming together in a European Citizens’ Assembly on Debt is not to become some batch of experts that will discuss the issue of debt in all future debates, and repeat the same points over and over; our purpose is to discuss amongst ourselves, among all the organisations and movements that are participating in the debt movement and the general movement to resist neoliberalism, in order to bring our struggles closer together while seeing to it that demands and alternatives that include refusal of illegitimate debt are well represented.
In Europe the movement for a citizen audit of debt is still very young
In Europe the movement for a citizen audit of debt is still very young. It is a new movement that must be consolidated. I’ll give just a few dates: the movement in Greece came into being in March-April 2011 – the Committee for a Citizens’ Audit of Greece’s Debt, known as ELE in Greece – and 3,000 of us participated in its launch in May 2011 at a university in Athens (see the final declaration: http://elegr.gr/details.php?id=134). It then rebounded, or developed almost simultaneously, in Spain, as part of the Indignadxs movement in March-April-May 2011 when a series of economic committees in that movement, and in particular the economic committee of the Puerta del Sol in Madrid, began to raise the question of the debt, challenge its legitimacy, and use the tool of citizen audit. Out of the Indignadxs movement came the Citizens’ Debt Audit Platform (PACD, http://auditoriaciudadana.net/). Then it arrived in Portugal, where a debate over challenging debt repayment arose, with an audit as a preliminary step. An initial conference took place in Lisbon in June 2011, which led to the creation of the Initiative for a Citizen Audit (IAC) of the Debt in December 2011 (see the IAC site: http://auditoriacidada.info/). The IAC produced an initial report in 2012 (see http://cadtm.org/Portugal-Connaitre-la-dette-pour [in French]). In France the movement was born in September 2011 after ATTAC and the CADTM joined with a number of other movements in launching the Collectif pour un audit citoyen (CAC; see the reference document: http://www.audit-citoyen.org/texte-reference/ [in French] and http://cadtm.org/France-The-citizens-debt-audit). In Belgium it took some more time since the Citizen Debt Audit (ACiDE) came into being in February 2013 (see http://www.auditcitoyen.be/lacide/ [in French and Dutch]).
At the level of Europe and the Mediterranean, the first initiative for coordinating citizen audit initiatives occurred in Brussels in April 2012 when the International Citizen Audit Network (ICAN – see http://cadtm.org/ICAN) was formed at the invitation of CADTM Europe. The first Euro-Mediterranean meeting of the ICAN was held on 7 April 2012 in Brussels. Twelve countries were represented – Greece, Ireland, Portugal, Spain, Italy, Poland, the UK, France, Germany, Belgium, Egypt, and Tunisia. In all these countries, citizen debt audit initiatives and/or campaigns against austerity that include the problem of debt had just come into being (see the webpage http://cadtm.org/Coordinated-efforts-in-Europe-and and also the ICAN site: http://www.citizen-audit.net/).
It is a new movement that has run into problems from the start. A number of radical political groups say “Why audit the debt? Debt needs to be abolished, and to audit debt is a way of legitimising it,” consequently the representatives of these groups leave the movement and refuse to support a citizen debt audit initiative. In Greece, the majority of the radical Left decided not to support the citizen debt audit (including the radical Left coalition Antarsya, a large part of SYRIZA, and the Communist Party, which even went so far as to treat us as enemies). Fortunately there were members of some organisations of the Left (part of SYRIZA, a few NAR members who were members of Antarsya, and union members) who joined us; but most members were individuals or else citizens’ organisations mobilised around the issue of the debt, without the support of political organisations. Meanwhile we’re still waiting for the political organisations who refused to support the debt audit in Greece to tell us, after having read the reports we issued in June (see http://cadtm.org/Preliminary-Report-of-the-Truth) and in September 2015 (see http://cadtm.org/Greece-Assessment-of-the-debt-as), whether our work has indeed served to legitimise a portion of the debt or not. One thing that is certain is that if these organisations, instead of criticising us or remaining on the sidelines, had participated in the audit and presented arguments in favour of cancellation, it would have given more strength to those who wanted to mount a real alternative to the capitulation by Alexis Tsipras and his government.
Such problems have been faced by the debt auditing movements in all countries. What is obvious is that we have not been at all well received by the governments. As Zoe Konstantopoulou, who was Speaker of the Greek Parliament from February to September 2015, said (see the video of her speech in English http://cadtm.org/Zoe-Konstantopoulou-at-the), governments don’t want to audit the debt because they don’t want to radically challenge its legitimacy, its odious nature, or its sustainability from the point of view of respect for human rights. The height of irony is that there is a European Regulation, dated May 2013, which requires States receiving financial assistance to audit their debt. |3| Until now, no government has initiated such an audit, let alone successfully completed one. Fortunately, in March 2015, the Speaker of the Greek Parliament decided to do so, as an extension of the citizen debt audit (ELE) –see http://cadtm.org/4-April-2015-a-landmark-in-the -. At first, she succeeded in winning support from the government, but in the end they chose not to use the weapon of the audit or to rely on the findings of the preliminary report published in June 2015 in opposing their creditors.
One of the lessons of Greece: The citizens’ movement did not put enough pressure on the Left parties, and in particular on SYRIZA
One of the fundamental lessons to be learned from what happened in Greece is that the citizen audit movement, which had begun very well in 2011, did not gain sufficient strength, was not maintained, and did not create the pressure – in particular on the different political groups, and not just on SYRIZA – that needed to be brought to bear to get the assurance that if they came to power, conducting an audit of the debt with citizen participation would constitute an obligation and an indispensable priority. And yet that was a part of the platform SYRIZA had put forward in the elections of May-June 2012.
Whereas SYRIZA had obtained 4% of the vote in the 2009 elections, in May 2012 it succeeded in getting 16% of the vote, then 26.5% one month later in the elections held in June 2012 – just two points below New Democracy, the major party of the Right. SYRIZA had thus become the second-ranking party in Greece. Between the two rounds of the election, Tsipras put forward five concrete proposals for beginning negotiations with the parties opposed to 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 (except Golden Dawn, which was excluded though also opposed to the Memorandum of Understanding):
Citizens who had mobilised did not manage to put enough pressure on SYRIZA for these five tenets to be kept as priorities. The commitment to conduct an audit of the debt and in the meantime suspend repayment gradually disappeared from the discourse of Alexis Tsipras and the other SYRIZA leaders. |4| This all happened unobtrusively and the fifth measure proposed by Tsipras in May 2012 (see above) was replaced by the proposal to hold a European conference to reduce Greece’s debt. When SYRIZA formed a government after its victory in the 25 January 2015 elections, suspension of repayment and the audit had, wrongly, been taken off the table. This should reinforce the idea that energy needs to be devoted to strengthening citizen audit initiatives, so that political parties who seek to enter the government make strong commitments to adopting radical measures to face the challenge of paying illegitimate debt.
Lessons learned from the experience of the audit and suspension of repayment of the debt in Ecuador
I participated in the audit committee formed by the government of Ecuador in July 2007. We worked from July 2007 through September 2008 and, based on our findings (see http://cadtm.org/Rafael-Correa-actively-supports), the government suspended repayment of a portion of the debt, thus defeating its creditors. This enabled the State to save 7 billion dollars, which were reinvested in social expenditures. It was a total victory for Ecuador as regards a partial suspension. But that victory didn’t just happen; we had been building a campaign since 2000. We had carried on a six-year battle to demonstrate to the population that the issue of the debt was central. We began with something very concrete: Norway was demanding that Ecuador repay a debt that had served to purchase five fishing boats. What became of these five fishing boats that Norway delivered to Ecuador? The activists in the debt movement showed that the vessels had in fact been converted for use in transporting bananas for a large private exporter in Ecuador. We had begun attacking that problem in 2000. Who took part in that movement? One person was Ricardo Patiño, who is now Minister of Foreign Affairs, after serving as Economy and Finance Minister while we were conducting the audit in 2007-2008. In other words, among the people who led the citizen audit initiative, some went on to hold positions in the government and honoured the commitment they had made to solve the problem of illegitimate debt. It has to be recognised that at least as regards that particular issue, they have been consistent and courageous. From within the government, they took initial unilateral action by launching an audit committee that neither the creditors nor the international community wanted. Then, they took a second unilateral action on the basis of the findings of the audit committee: suspending repayment of the debt, without asking anyone for permission to do it. And the situation in which they did it was rather remarkable: Ecuador actually had the money to repay the debt. Thus it was particularly scandalous, for the creditors, for Ecuador to say, “I’m ceasing repayment of a debt I have identified as being illegitimate, whereas I have the oil money with which I could pay it. As the State of Ecuador, I want the oil revenues to serve the people, and not illegitimate creditors.” We succeeded in Ecuador because a balance Balance End of year statement of a company’s assets (what the company possesses) and liabilities (what it owes). In other words, the assets provide information about how the funds collected by the company have been used; and the liabilities, about the origins of those funds. of power had been built from the grass roots up on the foundation of the political forces that sought and won power and because the president of the Republic and several ministers in key positions supported the idea of forcing the creditors to make concessions. What I have just described applies to the first three years of the government – the period 2007-2009.
The lesson for Spain’s PODEMOS
If this experience could be applied to other countries, starting with Spain, that would be a great step forward. Make sure that PODEMOS and other allied forces, should they come to power, cannot drop their commitments on the debt, in the name of pragmatism. Try to put PODEMOS and its allies under real pressure from the Spanish popular movements who will not reduce their pressure and activism on the question of the debt. If the Citizens’ Debt Audit Platform does not apply the same pressure as it did in 2011-2012 PODEMOS could decide that “Finally, illegitimate debt is not a central question”. The Spanish media’s pressure on PODEMOS and its allies is very great; they say that “if PODEMOS gets into power Spain will suffer the same fate as Greece has”. In reply several PODEMOS spokespersons try to get around the question by declaring that Spain has no debt repayment problems. They insist that Spain has no problems raising funds on the financial markets, as opposed to Greece that no longer has access to the financial markets. Thus they affirm that Spain has no serious debt repayment problems. They are wrong, even more so since several factors that are currently making debt repayments sustainable may very well change for the worse. One of these factors is the bad health of the banks. If the citizens’ movements, the social movements, PODEMOS members and other progressive forces ease their pressure on Spain’s debt question there will be another disillusionment like the Greek one. We must therefore keep in mind the importance of this struggle and not hesitate to put all possible effort and energy into it.
Why left-leaning governments should take unilateral steps of self-defence
Another lesson to be learned from the Greek and Ecuadorian experiences, among others, is the need to take unilateral actions of self-defence. Unilateral action is not, at first sight, a pleasing idea; we have a tendency to seek multilateral actions. We denounce the unilateralism of the US that seeks to impose its will on the rest of the world. We refuse the unilateralism of the State of Israel that transgresses many resolutions of the United Nations and its Charter and oppresses the Palestinian people. Nevertheless, the unilateralism of the oppressed is a fundamental right. A government that comes to power through popular legitimacy has a duty to resist institutions that impose repayment of illegal, illegitimate, odious and unsustainable debts. A government brought to power through popular support should have the courage to act unilaterally to suspend debt repayments.
In reply to affirmations that there will be dire consequences for Greece if doesn’t pay its debts it should be pointed out that the country has transferred €7 billion to its creditors since February 2015, whereas the plan to relieve the humanitarian crisis only amounted to €200 million. €200 million against €7 billion! Between February and June 2015 Greece’s accounts were wiped out without the creditors having to make any concessions whatsoever (see: http://cadtm.org/What-if-the-Greek-government-had).
If you are repaying a creditor your debt is not his problem. As the saying goes, if you owe your bank a hundred pounds, you have a problem; but if you owe a million, the bank has a problem.
Remember, three weeks after SYRIZA’s victory in the Greek elections and the forming of the Tsipras government Greece had to face a stark refusal by the creditors, represented by the Dutch socialist Jeroen Dijsselbloem, to consider the popular will. The Eurogroup, which would now represent the Troika in the negotiations with the Greek government, basically said that “the January 2015 elections were of no importance and that 1) Thou shalt continue to repay the debt, 2) Thou shalt continue the austerity measures until the end of June 2015 and 3) Thou shalt propose new measures to show your obedience to austerity and neoliberal programmes. We shall see if we approve of your proposals”. What if, in the name of the Greek government, on 20 February, Tsipras or Varoufakis had inverted the situation by saying “Over the last three weeks of negotiation we have been as conciliatory as is possible but you offer nothing in return, you have no respect for the mandate that the Greek people have given us, we have no choice but to apply Article 7, Paragraph 9 of European Union regulation No. 472, dated 21 May 2013 that requires a member State under financial assistance to conduct an audit of its debt. |5| During the period of audit we suspend all repayments. We shall see 1) whether you respect the desires of the Greek people and 2) whether your intentions towards us are honourable [or] / whether you are trustworthy and reliable.” If Tsipras had done that there would have been an inversion in the balance of power.
That would have been a unilateral action of self-defence. In the situation that Greece was in, if there is no unilateral action by the debtors, nothing positive can be expected from the creditors.
Now that the Greek government has capitulated, what will happen to Greece’s debt? It is not impossible that the 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.
https://www.ecb.europa.eu/ecb/html/index.en.html and the Eurogroup follow up their ukases with a small offering of appeasement to the second Tsipras government, but they will never give up on the greater part of the Greek debt because for them it is a means of pressure and blackmail. The most likely outcome is that the creditors, in the best of cases, restructure the repayment schedules over a longer period.
All must read the report established by the Greek Debt Truth Committee
It is very important to read the report drawn up by the Greek Debt Truth Committee. It can be downloaded free (http://cadtm.org/Preliminary-Report-of-the-Truth). In no more than 65 pages it presents many key arguments and definitions.
The Truth Committee on the Greek Debt was made up of thirty members from eleven different countries. Among them were eminent specialists on international law, economists, an ex-president of a 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 , highly experienced auditors and comptrollers, banking specialists, and representatives of social movements who have competence in many fields and a profound knowledge of the effects of the creditors’ policies on the Greek people. One of the first tasks was to define the terms of reference (see: http://cadtm.org/Terms-of-reference-for-the) and the definitions: what does it mean to say that a debt is illegal, illegitimate, odious or unsustainable? These terms of reference and definitions, which may still be improved upon, may be useful for audits in other countries (see: http://cadtm.org/Definition-of-illegitimate-illegal).
Abolishing illegitimate debt is a necessary condition but is insufficient on its own
Resolving the problem of illegitimate debt is a primary condition of a necessary rupture with austerity policies, but it is not the only one. As suggested in the opening paragraph a coherent and fully comprehensive alternative policy should include auditing the debt and suspending repayments, but also solving the banking crisis, i.e. the socialisation of the banks (in Greece this would have meant winding up private banks and replacing them with a healthy public banking system that protected deposits); launching a complementary form of money; implementing tax measures aimed at increasing the tax participation of the rich and reducing the tax burden on the poor; repealing socially unjust measures; putting a stop to privatisations; deprivatising; developing public services; sharing available work time; introducing a programme towards an ecological transition. If leaving the Euro becomes necessary, it must be managed along with redistributive monetary reforms (see at the end of this article: http://cadtm.org/Greece-an-alternative). A constituent process must also be launched in order to democratically change the country’s constitution. Not only must national constitutions be changed but Europe must also be re-founded, starting with the abrogation of unacceptable treaties. A constituent process implies very broad public debate: European citizens must again become involved in political issues and choices, and achieving this empowerment of the many starts with drafting new constitutions. We can draw this important lesson from the South American experience, where successful constitutional processes occurred in Venezuela (1999), in Bolivia (2006-2008) and in Ecuador (2007-2008), where constitutional changes included elements as important as totally prohibiting the socialisation of private debt.
The bull of the private illegitimate debt problem has to be taken by the horns
In Belgium or in France, private illegitimate debt has not yet become a central issue, but in Spain if you do not raise the matter of the hundreds of thousands of illegitimate mortgage
A loan made against property collateral. There are two sorts of mortgages:
1) the most common form where the property that the loan is used to purchase is used as the collateral;
2) a broader use of property to guarantee any loan: it is sufficient that the borrower possesses and engages the property as collateral. repayments that are demanded from Spanish families you are not facing up to a fundamental injustice. Between 2008 and the second quarter of 2015, 416,332 homes were repossessed from families unable to repay their mortgages. The foreclosures are one of the consequences of the crisis but the “mortgage law” goes back to a much earlier date, in fact to a decree issued under the Franco regime in 1946 and still in force. |6|
How do you expect overindebted and humiliated people, who have been abused by the banks, thrown out of their homes, and still have a part of the burden of debts to repay, to find the strength and hope to get together to cancel the State’s public debts? If they have been defeated in their personal struggle because there was no sufficiently strong and organised resistance to prevent them from being evicted they cannot be expected to feel concerned by illegitimate public debt. Fortunately a big anti-foreclosure movement has developed in Spain since 2010. The mortgage victims platform (PAH) highlights the fact that “many abusive articles are tied to the loans and that the values of the properties, in their functions as guarantees Guarantees Acts that provide a creditor with security in complement to the debtor’s commitment. A distinction is made between real guarantees (lien, pledge, mortgage, prior charge) and personal guarantees (surety, aval, letter of intent, independent guarantee). , were very much overvalued and should be considered to be toxic financial products”. Ada Colau, the new mayor of Barcelona since 2015, has made her name as one of the forces of the anti-foreclosure movement and has taken part in numerous bank occupations (See her biography here https://en.wikipedia.org/wiki/Ada_Colau).
In the UK, where neoliberalism is even more entrenched than on the Continent, if you do not talk of the illegitimate student debt, you are ignoring an essential issue. In the US also, illegitimate student debt amounts to $1,000 billion and since the outbreak of the crisis over 14 million homes were foreclosed, at least 500,000 of these evictions being illegal. Many victims, assisted by social movements, in particular “Strike Debt,” have been at the forefront to face off bailiffs and refuse foreclosures. |7| Thousands of writs have been issued against banks. Between 2010 and 2015, US authorities came to out-of-court agreements with banks so as to avoid their being brought to justice for their scandalous activities in the mortgage sector. They all got away with fines. |8|
In Belgium, although the overindebtedness of impoverished households has not reached the same alarming proportions as in the US, Greece or Spain, 352,270 people could not pay their debts (mortgage, electricity bill, etc.) in 2015 and the average rate of indebtedness has steadily increased since the beginning of the crisis. Austerity measures obviously increases the vulnerability of the most indebted households. Since over-indebtedness is not an issue that can be solved on an individual basis a new initiative is under way that raises the question of debt auditing and of the cancellation of illegitimate private debts; it brings together the CADTM, the Walloon network against poverty, a service for the mediation debts in Brussels, other associations and over-indebted people.
Illegitimate private debt is also causing great problems and challenges for movements in struggle against the debt system outside of the most industrialised countries. In India more than 300,000 overindebted small farmers have committed suicide over the last fifteen years (see http://cadtm.org/The-Debt-Relief-Package-of-Rupees). In Morocco the victims of shady micro-credit systems are getting organised, with the help of ATTAC/CADTM Morocco. |9|
There is no longer any time for procrastination regarding the possibility of negotiating with the creditors of illegitimate debts. It has been clear for years now that they are not looking for compromise, nor for amicable arrangements, but that they are bent on putting all possible means in place for maximising their profits. And they will do it regardless of the human cost – which the people are already bearing, from Athens to Delhi, from the US university campuses to the streets of Bamako. Nor can we blindly count on the good intentions of political parties of the radical Left any longer, despite the increasingly rare hope they represent – SYRIZA is the sad proof of that. Only massive mobilisation around strong demands can bring about a real and lasting change towards a more just society, one that respects nature and the fundamental rights of all human beings.
Translated by CADTM
|1| Eric Toussaint is a historian and political scientist with a PhD from the universities of Paris VIII and Liège. He is spokesperson for the CADTM (Committee for the Abolition of Third World Debt) international network. He sits on the Scientific Council of ATTAC France. He is the author of numerous books, of which the most recent are: Bankocracy (2015); World Debt Figures 2015 co-authored with Pierre Gottiniaux, Daniel Munevar and Antonio Sanabria (2015); The Life and Crimes of an Exemplary Man (about Jacques de Groote, former Executive Director of the IMF) (2014).
|2| This text was drawn from the oral presentation at the European citizens’ conference on the debt held 16 October 2015 in Brussels. See the minutes of the event: http://cadtm.org/Compte-rendu-de-la-conference (in French). The author would like to thank Noémie Cravatte, Damien Millet, Rémi Vilain, Brigitte Ponet, Jérémie Cravatte and Pierre Gottiniaux for their collaboration and Mike Krolikovski, Snake Arbusto, Christine Pagnoulle, Vicky Briault for the translation.
|3| See Éric Toussaint, “What if SYRIZA took the EU at its word and audited Greek debt?”, published 22 January 2015 http://cadtm.org/What-if-SYRIZA-took-the-EU-at-its
|4| I explained this in: Éric Toussaint, “Greece: Why Capitulate? Another Way Is Possible (text version of the video with explanatory notes)”, published 27 August 2015 http://cadtm.org/Greece-Why-Capitulate-Another-Way
|5| “A Member State subject to a macroeconomic adjustment programme shall carry out a comprehensive audit of its public finances in order, inter alia, to assess the reasons that led to the building up of excessive levels of debt as well as to track any possible irregularity.” in http://eur-lex.europa.eu/legal-content/EN/TXT/?qid=1453659299341&uri=CELEX:32013R0472
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.
22 April, by Eric Toussaint
21 April, by Eric Toussaint
19 April, by Eric Toussaint
18 April, by Eric Toussaint , Teresa Rodríguez , Miguel Urbán Crespo , Angela Klein , Stathis Kouvelakis , Costas Lapavitsas , Zoe Konstantopoulou , Marina Albiol , Olivier Besancenot , Rommy Arce
13 April, by Eric Toussaint
11 April, by Abul Kalam Azad , Nathan Legrand , Eric Toussaint , Sushovan Dhar
30 March, by Eric Toussaint
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