Summary of the first day of the presentation of the preliminary report of the Debt Truth Commission

22 June 2015 by Emilie Paumard

The first day of the Debt Truth Commission preliminary report was presented yesterday 17, June 2015 to the Greek parlement (the Vouli) in the presence of the Prime Minister, Alexis Tsipras and several other Greek ministers |1| as well as other international dignitaries. The event was hosted by the President of the Greek parliament, Zoe Konstntopoulou, and addressed, particularly by Sofia Sakorafa, charged with the liaison of the committee with the European parliament, and Eric Toussaint, scientific coordinator of the committee. The speakers, watched by the Greek public, explained to the members of the Greek parliament the reasons why most of the debt they are expected to repay is illegal, illegitimate, odious or unpayable.

Although the primary objective of this committee, which has been sitting for three months, was to examine the profound reasons why Greece entered into debt and why that debt grew, this initiative must be put into its political context. The President of the Vouli reminded the Greek leaders present of their obligation to respect the mandate given to them by the Greek electorate: “This commission was created on 4 April but had been under consideration for a long time, it is a social demand from the whole population that refuses the aberrant repayment of a debt from which it has had no advantages and to which it has fallen victim. Our people want to exercise their democratic right to refuse the tyranny of the Memoranda of Understanding; it is through this parliament, an essential pillar of democracy, that the legitimacy of the debt may be assesed and the truth about the debt may be learned.”

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Sofia Sakorafa

In the wake of this reminder Eric Toussaint took the floor to present the report’s guiding principals. The scientific coordinator recounted the history of the Greek debt in a way that has not been done by the mainstream medias during the last five years: “We realised that the usual explanations of a disastrous state of public finances were not confirmed”; he said. A strict analysis of the facts and the figures has allowed the commission to look at past events differently. As from the moment that Greece entered the Eurozone private capital rushed into Greece where it earned high yields. Wherever capital converges speculative bubbles are created! We have the figures that prove this happened: between 2001 and 2009 household loans increased sevenfold and small business loans increased fourfold, while State loans only increased by 20%. At end of the 2000s the finances that were suffering were heavily indebted private finances not State finances.

The IMF was well aware that its policies would have terrible social and economic consequences

As everywhere else, in Europe and the US, when the credit bubble burst in 2007-2008, the Greek State saved the overstretched and highly stressed banking sector, to the tune of €28 billion. This gift was not enough to ease the private debt crisis and 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.
soared. In 2009-2010 the Greek banks, along with the big European and US banks were in a precarious situation that could have heavy consequence and it had become impossible to continue saying to the public that they should save the banks. It was thus decided to dramatise the condition of public finances, not only through disinformation campaigns, but also through falsifying statistics to aggravate public deficits and debt. “In contradiction with the official line rehashed by the media, there is no difference in the Greek situation compared to that of other countries in difficulty. In fact, the Greek situation very much resembled the situation in the US, Ireland or Spain. The Greek specificity occurred later in the extraordinary violence of the creditors, bleeding the Greek people more every day”. This violence was closely monitored. The commission is in possession of a confidential two page 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
document, from 2010, that describes the damage that will be done: wage and pension cuts, a fall in GDP GDP
Gross Domestic Product
Gross Domestic Product is an aggregate measure of total production within a given territory equal to the sum of the gross values added. The measure is notoriously incomplete; for example it does not take into account any activity that does not enter into a commercial exchange. The GDP takes into account both the production of goods and the production of services. Economic growth is defined as the variation of the GDP from one period to another.
and increased debt. As Eric Toussaint summarised, “The IMF was well aware that its policies would have terrible social and economic consequences.”

The lies and false promises did not stop there. In 2012, the mainstream media enjoined the peoples of Europe to accept their version of the facts: by restructuring the debt, not only the private sector would be bailing-out Greece but it would put the country and the Greek people back on their feet! A strict examination of what happened shows a different reality. All the creditors were not treated equally. This late debt restructuring gave the big systemic banks Systemic bank
Systemic banks
Certain banks are known as systemic because of their size and the danger that would be incurred for the stability of the banking system on a global scale should they fail.
time to unload their ’Greek risks’ and the big creditors were protected by privileged mechanisms that allowed them to do this at the lowest cost. On the other hand, the pension funds Pension Fund
Pension Funds
Pension funds: investment funds that manage capitalized retirement schemes, they are funded by the employees of one or several companies paying-into the scheme which, often, is also partially funded by the employers. The objective is to pay the pensions of the employees that take part in the scheme. They manage very big amounts of money that are usually invested on the stock markets or financial markets.
and pension systems were not helped, they reported losses of up to 50% of the value of their assets, in Greek bonds, without prior warning. Other victims were employees of Olympic Airways who were made redundant when the airline was dismantled and had received Greek government bonds in guise of redundancy pay and 15 000 small subscribers to Greek bonds.

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Eric Toussaint

Moreover, in the context of current negotiations between Greece and its creditors to obtain the necessary financing to repay 7.2 billion to the IMF and 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.

https://www.ecb.europa.eu/ecb/html/index.en.html
, it seemed essential to the Belgian political scientist to recall the nature of the future repayments: “The sums that the ECB will demand in July and August are against bonds that it purchased at a high discount on the secondary market Secondary market The market where institutional investors resell and purchase financial assets. Thus the secondary market is the market where already existing financial assets are traded. and for which it demands 100% reimbursement. The ECB refused to take part in the 2012 restructuring and is today calling for new measures against Greece, it is taking an abusive advantage of the situation”.

Before leaving the floor to other commission members to expose their preliminary findings Eric Toussaint concluded with these words: “I am sure that during these two days, we shall learn many things, which will give arguments to the Greek government and parliament, as well as to sincere journalists who wish to really inform Greek public opinion, that we shall establish the truth about the Greek debt ”.

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Maria-Lucia Fatorelli

Other committee members that spoke were: Cephas Lumina, ex-independent expert to the United Nations on debt and human rights; Diego Borja Cornejo, ex-Minister of economic policy and ex-President of the Ecuadorian 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
; Maria-Lucia Fatorelli, member of the Ecuadorian audit committee. They presented the results of the preliminary report that will be available from 18 June 2015 in Greek and English, in very rigorous and pedagogical fashion.

The day’s events also allowed a number of other international personalities to show their support for the debt auditing initiative. Eric Calgano, President of the Argentinian Debt Audit Commission; Claudio Lozano, member of the Argentine parliament; Mikel Noval, organiser of the Basque union ELA Emergency Liquidity Assistance
ELA
Emergency funds loaned to the private banks by the Eurozone central banks.
; Raoul Hedebouw, member of the Belgian parliament and Fathi Chamki, member of the Tunisien parliament, were able to express their solidarity with the Greek people in their struggle against austerity policies and to remind all, as M Calgano did so well, that what Greece is experiencing is only one in a number of concerted global attacks against the peoples of the World: “They are like the physicians in Molière’s play: the sick person must be bled, whatever the symptoms and whatever the illness. They always apply the same treatment. Adjustment adjusts nothing. Not only does it humiliate the people but its inefficacy is an insult to their intelligence.”

The second day of the presentation and the following press conference which will be the official publication and diffusion of the report, will be another occasion for the Vouli to establish the dignity and respect that has been taken from the Greek people.

Translation : Mike Krolikowski and Christine Pagnoulle


Footnotes

|1| The full list of Ministers and Dignitaries present is being prepared for publication.

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