Committee for the Abolition of Illegitimate Debt

When Syriza formed a government at the beginning of the year, one of its main objectives was to restructure Greece’s public debt. This explains why the Hellenic Parliament established the ‘Truth Committee on Public Debt’ in April. The objective of this committee is to investigate the origins and increase in the public debt, as well as its consequences.

Two months later, while everyone is interested in knowing whether the Greek government and its creditors will reach a deal, allowing a payment due to the International Monetary Fund 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 (IMF) on the 30^th of this month, the Truth Committee released a preliminary report showing why Greece should not pay back the debt owed to the former 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.

IMF : https://www.ecb.europa.eu/home/html/index.en.html , which is composed of the IMF, 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 (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 ) and European Union member states.
The preliminary report, which analyses Greece’s public debt since 1980, presents some very interesting findings that should convince the government of Alexis Tsipras to hold firm against the creditors.

Firstly, it appears that Greece’s public debt before the Troika loans of 2010 and 2012 was not created by excessive public spending as suggested by the dominant narrative. The report shows that, from 1995 until 2009, Greece’s overall public expenses, excluding overspending in the defence budget, were lower than the Eurozone average (48% average compared to 48.4%). However, Greece’s public debt increased with the growth of 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. , which impacted loans contracted in the 1980s until the mid-1990s. This represents two thirds of the debt increase between 1980 and 2007. In addition, Greece’s public debt was due to the Treasury’s financing shortfalls caused by illicit financial flows, accounting for a cumulative outflow of 200 billion euros between 2003 and 2009.

Secondly, the report explains in detail how the 2010 and 2012 loans were used, namely to save private creditors, mainly domestic and European banks rather than to save Greece (and its people). The accession to the Eurozone, and the consecutive reduction in 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. rates, led to an important growth in the private debt in Greece, exposing domestic and European banks. The 2010 a loan of 110 billion euros rescued the banks exposed to Greece’s debt with a massive risk transfer to official creditors, these being the IMF, ECB and EU member states. The situation further deteriorated and another bailout was designed in 2012. This time, it came under the condition to partially restructure the remaining debt to private creditors. The face value of Greece’s bonds was reduced by 53.5%. However, many private creditors had already been paid off with the previous Troika loans. In the end, European taxpayers’ money has not been used to fund the expenses of Greece’s government but to save banks that took inconsiderate risks in the past.

Thirdly, the conditionalities attached to both bailouts deteriorated the Greek economy, aggravating the debt to 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. ratio. At 175%, Greece’s public debt is now completely unsustainable. It is against the rules of the IMF to rescue a country with an unsustainable debt. Given the interest of major IMF shareholders to save their banks exposed to Greek’s debt, the IMF introduced the ‘systemic exemption clause’, legalising the bailout. According to the former representative of Greece to the IMF, the IMF was completely aware of the unsustainability of Greece’s public debt. It has however tried to conceal it, including by training journalists to promote the position of the IMF and the ECB in Greece, as a former official at the IMF told the Truth Commission.

Fourthly, the report shows how all the conditionalities imposed by the creditors have massively deteriorated the humanitarian situation of Greece and have broken EU and international human rights law. Greece’s public debt is unsustainable and cannot be repaid without further massive human rights violations.

The report provides a wealth of evidence to claim that certain loans of the official creditors, these being the IMF, the ECB, and the EU member states, as well as private creditors’ loans, should be considered as either illegitimate or illegal or odious – or all of these combined.

The findings of the Truth Commission might not convince Greece’s creditors to cancel the claims, however. Because of this, the Greek government will be in the difficult position of having to take unilateral steps towards default and repudiation of the debt (and accept all its consequences) or accept its creditors’ conditions for additional financing for an unsustainable debt.

There is, however, an alternative to this dilemma. With the findings of this report, Greek public authorities have solid arguments to conduct an immediate debt standstill and initiate a new restructuring of the public debt, with the aim to massively reduce the debt burden by fully cancelling the illegitimate, illegal and odious parts.

There is wide consensus among economists that Greece’s debt burden is unsustainable and needs to be reduced, including by the IMF. The overdue restructuring has thus far been delayed due to political reasons. The Truth Commissions’ report could help to trigger the political process. Its findings are that the lion’s 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. of the current debt is due to bailout loans that were provided by the EU’s official creditors for the benefit of the EU’s financial sector, while the conditions attached to the loans violated the EU’s human rights law. This is why European citizens demand that Greek debt restructuring should be negotiated at an inclusive and transparent European debt conference. To avoid that future crises such as Greece occur in the first place, the United Nations should put a multilateral debt restructuring framework in place that prevents the bailout of reckless banks and facilitates the cancellation of illegitimate debt.

Source: http://eurodad.org/Entries/view/1546440