The euro and the debt crisis

25 November 2016 by Eric Toussaint

Copenhagen, 19th November 2016

Internationalist summit for a Plan B in Europe

At the beginning of the decade of the 2000s, the integration into the Eurozone generated a huge flux of finances from the core economies to the periphery: Greece, Ireland, Portugal, Spain, Slovenia, etc.

The big private banks and other financial institutions of the core economies lend money to the private and the public sector of the peripheral economies because it was more profitable to invest there than in their domestic markets.

This created a private credit bubble, in real estate mainly, but also in the consumer sector.

In Ireland the crisis had already exploded in September 2008 when important banks failed soon after the collapse of Lehman Brothers in the USA. In Spain, Greece and Portugal the crisis came in 2009-2010. [1] The bursting of the private credit bubble in 2009-2010 (provoked by the international recession following the subprimes crisis in the USA and its contagion to the banks of the core European economies) and mainly the crisis of the banking sector led to massive bail-outs of the private banks.

These bail-outs caused a huge increase in public debt.

Clearly, what was needed was NOT to bail out the banks, NOT to socialise private losses.

What was needed was to bail IN the banks and to organise a socialisation of the financial sector. That’s to say, the expropriation of the private financial sector and its transformation into a public service.

But the governments of the Eurozone countries [2] were deeply linked to and complicit with the private banking sector, and so they decided to use public money to rescue the private bankers.

Because the states in the periphery were not strong enough, alone, to support the bail-out of the banks, the governments of the core economies (Germany, France, the Netherlands, Belgium, Luxemburg, Austria, etc.) and the European Commission organised the Memoranda (in some cases with the participation of 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.
), the infamous MoUs, and used the opportunity to strengthen the offensive of Capital against Labour and reduce the exercise of democratic rights all over Europe. The MoU’s helped the big private banks and other big private financial corporations of Germany, France, Benelux, Austria, (that’s to say: the private financial sector of the core economies) to reduce their exposure to the peripheral economies.

The way in which the Eurozone was constructed and the crisis of the capitalist system brought on the crisis of the peripheral countries that we have witnessed since 2009-2010.

It’s necessary to propose an exit from the Eurozone and its disintegration.

There is no possibility of reforming the Eurozone. The Eurozone serves the interests of the big corporations in Europe and strengthens the power of the dominant economies.

We need a plan B to give a leftist answer to the crisis of the Eurozone.

Ten proposals for alternative government policy in the European Union

Ten proposals based on the lessons learnt from the capitulation of the Tsipras government in July 2015 [3]


A left-wing government must

2. CALL FOR POPULAR MOBILISATION in the country and in Europe

3. SUSPEND debt repayment and carry out a debt AUDIT
in which the citizens take an active part


5. SOCIALISE banks
(a public monopoly on the banking and insurance sector) and PROSECUTE those who are responsible for the financial crisis [4]

6. SET UP a complementary currency
b, whether the official currency remains the euro or not

>6 a If the country leaves the Eurozone, a redistributive monetary reform is required.

7. Radically REFORM the tax system

, buying out companies for a symbolic euro

> 8 a REINFORCE public services

9. REDUCE working hours without reducing wages

> 9 a CANCEL anti-social laws

> 9 b VOTE laws that deal with the crisis of private debt, e.g. mortgages

10. INITIATE a constituent process


[1In Cyprus, it exploded later.

[2Papandreou in Greece, Zapatero and later Rajoy in Spain, the Irish government, and also, of course, Merckel, Sarkozy (and later Hollande), the Benelux governments,…

[3These ten proposals were formulated in the context of a talk given in Paris on 4 June 2016 with the title ‘Après la capitulation de Syriza, quelles perspectives pour la gauche en Europe ?’ (After Syriza’s capitulation, what are the perspectives for the Left in Europe?). The two speakers were Eric Toussaint and Stathis Kouvelakis (professor of philosophy at King’s College London, former member of Syriza’s Central Committee, member of the new Greek party Popular Unity). See the video of Eric Toussaint’s talk:
For Greece, I wrote a “plan B” (that’s to say, an alternative to the orientation of Tsipras) proposal in August 2013 and presented it in March 2014 in Athens. See:

[4See “What is to be Done with the Banks? Radical Proposals for Radical Changes”, published on 13 April 2016,,13315

Eric Toussaint

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 Greece 2015: there was an alternative. London: Resistance Books / IIRE / CADTM, 2020 , Debt System (Haymarket books, Chicago, 2019), 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, etc.
See his bibliography:
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. He was the scientific coordinator of the Greek Truth Commission on Public Debt from April 2015 to November 2015.

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