Interview of the Greek constitutionalist George Katrougalos by Christina Laskaridis

Ultimately the problem of the debt is a political problem

1 August 2011 by George Katrougalos

C.L : Starting with the legality of the bailout itself: What is the legal framework which anchors Greece’s bailout between the Greek government and the 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.

(the EC, 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.
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.
)? And is this the same for future bailouts as well?
What is the need for an International Treaty between the ECB, the Eurozone countries and Greece, and how does it differ from the legal framework surrounding the IMF portion of the loan?

G K: There is a dual legal basis regarding the Greek bailout. We have, as usual, a stand-by agreement with the IMF, which according to the IMF does not have the character of an International Treaty. The IMF doesn’t want its agreements to have the character of an International treaty in order to escape the jurisdiction of domestic international courts as well as the obligation of ratification by national governments. So the process of formation of a legal agreement between a country and the IMF begins when first of all the country which wants a loan addresses a Letter of Intent to the IMF in which it describes all the measures it is going to implement in order to comply with all the measures the IMF wants to impose. It is only nominally that this letter is a letter by the government to the IMF, as if one reads all the similar stand-by agreements and Letters of Intents from Argentina to Greece, one sees that there is a commonality of goals and policies. And the reason is very simple; they are not the governments themselves that are writing these letters, these letters are actually dictated and imposed by the IMF.
Regarding the bailout and the loan that Greece has received from the other Eurozone countries, the International Treaty was necessary because the primary European law does not provide anything similar to a bailout. On the contrary, there are some clauses in the Maastricht Treaty which formally do not allow a country to be bailed out using European resources. So, a special agreement had to be made so that first of all the limitations of the European law could be bypassed and secondly in order to impose concrete obligations for Greece’s economic policy in a neoliberal direction. I must add that this Treaty should have been ratified by the Greek parliament, as we have a very concrete constitutional obligation for this, yet despite this obligation, and although the Greek government has deposed the treaty to the parliament it has never brought it for the necessary ratification. So this is the first formal but very concrete unconstitutionality of Greece’s bailout.

CL: Would it be the same treaty that will apply for the new bailout package?
GK: Most probably we will see a second, similar treaty. This will be necessary, firstly in order to have the legal provisions for the new loan, and secondly for the new obligations (i.e. collateral Collateral Transferable assets or a guarantee serving as security against the repayment of a loan, should the borrower default. agreements) that Greece will most probably have to undertake.

CL: Could you maybe explain why they have not brought it to Parliament for voting whereas at the same time they have managed to vote through the austerity packages?
GK: The Memorandum was a political programme which could be imposed to the MPs of PASOK. The reason the treaty has not been brought to parliament to be ratified is that it contains some so exorbitant clauses regarding national sovereignty that would make it impossible for an important number of MPs to vote for it. For instance, there is a very unique in the history of international treaties waiver of immunity for reasons of national sovereignty. We have many examples of waivers of immunity clauses in different treaties, but I have not yet seen waivers of immunity clauses directly associated to national sovereignty. So an MP that would vote for this Treaty would be voting against the national sovereignty of its country, something unacceptable even for MPs who belong to the government party.

How would you summarise the impact of the treaty on national sovereignty?
First of all there is a very serious problem regarding the disrespect of the constitution, to the extent that the treaty has never been ratified. But this is only the formal aspect of the problem. The most substantive thing is that a country which gives up its sovereignty ceases to be an independent country, both politically and with regards to the future of the political regime of the country. Its legitimacy is at stake, and this was obvious during these last months when a large majority of the Greek population did not accept the continuity of the government in these terms.

Given the situation that Greece is in now how do you see the non ratification of the treaty in relation to the austerity packages being passed?
Surely, the role of a constitution is to assure that parliamentary decrees cannot override constitutional obligations? So what does this mean for constitutional law?
Exactly. The whole process of economic globalization aims to weaken the possibility for national electorates to influence the economic policies of their countries. In normal situations this is not so obvious. We have international treaties with the WTO WTO
World Trade Organisation
The WTO, founded on 1st January 1995, replaced the General Agreement on Trade and Tariffs (GATT). The main innovation is that the WTO enjoys the status of an international organization. Its role is to ensure that no member States adopt any kind of protectionism whatsoever, in order to accelerate the liberalization global trading and to facilitate the strategies of the multinationals. It has an international court (the Dispute Settlement Body) which judges any alleged violations of its founding text drawn up in Marrakesh.

for example or EU rules where during normal situations it is not so clear that national sovereignty is limited. One could also argue that it is limited, but it is limited for reasons of some higher good, for instance for the improvement of international commerce. On the contrary, when we have a crisis situation, like the one in Greece, it is more obvious that the decisions taken are not for the 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. and 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 the people, but in the interest of the creditors and for the economic centres outside those crisis countries. And this is not just problematic on the basis of sovereignty or of constitutional legitimacy, it is very problematic on the ground of the democratic principle. In all democracies, even formal ones, ultimately the political decisions must be presented as taken and implemented in favour of the people.

Do you see a way out if this crisis for Greece and what way is that? And does the current situation contravene any other international treaties that Greece may have ratified?
I will first answer the second question as it is in the same line of legal questions and then I will give my opinion about the way out.
A first problem is that there isn’t a constitutional court in Greece, and although we have tried to bring cases to the Supreme Administrative Court (which, in some ways, plays a similar role to that of a constitutional court) we have not succeeded in bringing down the unconstitutional clauses; first of all because for many of them the administrative court has no jurisdiction. This is the case, for instance, of the non ratification of this treaty. On the other hand there are other fora, for example the Committee of the European Social Charter, the ILO which offer a legal possibility for challenging these policies. We have tried with many trade unions to go before these fora and prove that the government policies are contradictory with the rights guaranteed by the related international instruments (the European Social Charter, the ILO Treaties etc.). And so far we have succeeded. We have just received the first decision of the Committee of European Social Charter on the admissibility of our petitions. In September we will have the discussion on the merits. And although the government has tried to prove that in times of crisis not even the admissibility for applications such as the one we have made are acceptable, we have at least overcome this first obstacle and these applications will be discussed in their substance.

Now regarding the most important question, which is the way out: we the lawyers are trying to find legal remedies to the problem, because this is our profession. But the crisis is not a legal question, it is not even primarily an economic question, it is above all a political question. It is a question of how the important political decisions regarding the distribution of wealth are going to be taken. And I must confess that at the beginning of the crisis I was very pessimistic about the future because a climate of fear reigned in Greece; a climate that the government tried to cultivate, according to which there was no other alternative, no other option than to submit to what our creditors demanded; that as a country that can’t sustain itself we must abide and obey to their demands. But fortunately in the last two or three months we have seen the rise of a very genuine and massive political movement, an independent movement that has escaped this trap of fear and tried to reinvent democratic solutions that are going to be imposed by the people and not by foreign powers or our creditors. It is still an amorphous movement and it mainly has negating features, for example, it does not want the implementation of policies that are undemocratic and unproductive. But I am very optimistic that it is not going to be only a movement of resistance but a movement that is going to produce concrete political and economic alternatives to these issues. I also hope that we will have a panEuropean movement because the problems are similar especially in the south, but actually, throughout the EU. As the historical British prime minister of 19th Century, Benjamin Disraeli said, within every nation there are two nations, the poor and the rich, and their interests are never the same. So as we have a commonality of problems, we, who are not rich, have very important and vested interests to have a common ground and common policies against this neoliberal assault on our rights.

So regarding the neoliberal attack on European countries, just last week was the EU summit where they are still desperately trying to find some Eurowide solution, what do you think of the outcomes of that meeting?

It was really a solution, but a solution for the banks and for the creditors. What this summit has succeeded is to guarantee to all creditors that the debt will be repaid, if of course these decisions get implemented. And it has just given a delay of execution to the Greek economy because the situation has not changed, and whatever we have gained by the relative reduction of the interest rate we are going to pay it with the prolongation of the debt and all the serious measures that will be imposed on us from September.

Regarding the availability of information for the public, is there anything that can legally back the people of Greece to seek information about the debt contracts?

This would be really problematic if we did not have members of the parliament in our initiative who can demand various documents from the government though constitutionally provided procedures, as we would only have access to documents that have already been published in the Official Gazette. Most of the loans and the agreements are formal agreements similar to one another and it is not very easy for someone to read between the lines and to find out whether it is really an odious debt or whether it is a completely legitimate one. This is one of the problems regarding the implementation of the doctrine of odious debt in Greece as well as in other developed European countries. The clauses are not as exorbitant as in developing countries where it is sometimes so obvious to the naked eye that a clause is so unreasonable that is cannot be considered legitimate. In the cases of Greek loans, at first sight everything seems ok, and one must dig a lot in order to find problems of legitimacy or to expose the ways of transfer of public money to private sector.

Is the necessity of having MPs to seek this information comparable or is it very different to the freedom of the information act in the UK?
There is legislation, like the information act, that obliges all public entities to give information related to documents in their disposal, but there are serious exceptions to documents for example, those regarding the national interest. So there are loop holes that allow someone who wants to hide to succeed in doing so.

If any of these favorable to Greece international conventions and treaties were to be successful, such as in a human rights court or another equivalent, how do you see favorable debt resolutions working out on the European level?First of all, globalization is not a uniform movement, we have trends of globalization that are neoliberal but we have aspects of globalization that pertain to human rights actors who try to act globally. We have of course popular movements but we have also some fora, for instance the two UN Covenants regarding the protection of civil and social rights or the Social Charter of the Council of Europe. So, there are legal instruments which can be useful at international level. However, the important question is how to build a global political movement that is going to be a considerable opponent to the neoliberal political and economic domination. I think that everything we do in this direction is going to help everybody, not only the people of Greece but all the other people to be found in the same front in the future.

As this is a European debt problem and the movement against the austerity measures is also pan European, I am curious as to whether other countries which although have different constitutions may nonetheless take some advice from the Greek example. A question about the UK: what would be the implication for countries such as the UK trying to pursue unconstitutionality as a basis for a debt audit, given the different nature of the state and the rule of law, and what else could the basis be?

The basic constitutional problem for the UK would be the limitation of parliament’s sovereignty vis-à-vis those policies. Because these are not policies that are decided on a national level, but are decided at forums where the national legislator, the parliament, has no influence at all, such as for example the WTO, the IMF, or for some important competencies the EU. As ultimately the problem of debt is a political problem, the basic problem is whether we have a real implementation of the democratic principle. Are all these economic decisions being taken by representatives of the people and are they in favour and in the interest of the people? This is a basic political question which also has important constitutional ramifications. Besides the democratic aspect to the problem, there is also the aspect relating to human rights. Fortunately there are a number of important conclusions at the European level, such as the decisions of the Constitutional court of Latvia, the Constitutional Court of Romania or the Constitutional Court of Hungary, which found that the IMF policies were at least partly unconstitutional because of their conflict with human rights, especially social human rights. I think this is the common ground in European legal culture, that we do not only have political and civil rights but also social rights, and I have great hope in the possibility to use social rights as a kind of shift against this neoliberal attack.

What would be the next stage after the recognition of unconstitutionality? How would that then move forward?
The problem in Greece is that we do not have a constitutional court. So, our next step will be to address the European court of human rights of Strasbourg, if the decision of the Supreme Court is, as according to press information, not favourable to our positions. So the next round is going to be in the European arena.

OK one last question. Any words of advice to other European countries which are also under austerity programmes? Anything regarding the debt audit?

I would not like to use the word advice because we have profited by the experience of other countries, especially countries in Latin America and other parts of the third world, but we have tried to implement this experience, for instance the doctrine of debt audits in our own way. What I would ask and not advise (as I am not in a position to advise anyone) is to try to find our common ground, to find what we have in common, what we can learn from our experiences, and try to build a common front, because our opponents have a very strong and solid common front. They have the Club of Paris, the Club of London, they have the IMF and all the others institutions of the Washington consensus. We do not have something similar and we must try to build something like that.
Thank you.

George Katrougalos is a Greek constitutionalist and international lawyer, Associate Professor of public law (Demokritos University of Thrace, President of the Department of Social Administration), Mediator and Arbitrator of the Greek Organization for Mediation and Arbitration Services (O.ME.D). G. Katrougalos is a founding member of the Greek Initiative for an International Auditing Commission of the public debt.

Christina Laskaridis directed the interview



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