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In Greece, New Commission Will Audit All National Debt

The new commission will determine which part is illegal, illegitimate, unsustainable or odious.

Eric Toussaint speaks at the Conference European United Left / Nordic Green Left, May 31, 2011. (Photo: GUE/NGL)

In this interview, Eric Toussaint, a founder of the Committee for the Abolition of Third-World Debt, discusses a new commission to audit Greece’s public debt to determine which parts are illegal, illegitimate, unsustainable or odious.

Michael Nevradakis: Share with us a few words about the Committee to Abolish Third-World Debt (CADTM) and its work.

Eric Toussaint: It is an international network; organizations from over 40 different countries are members of our international network, 18 from Latin America and the Caribbean, 15 in Africa, eight in Europe, and four in Asia. It’s a network of social movements struggling for the cancellation of illegitimate debt and for the conquest of alternatives, not only on the question of the debt, but also generally on the question of social emancipation. We were created 25 years ago exactly, in March of 1990, and we participated actively in the so-called antiglobalization movement since the beginning. And as you said, we are part of the World Social Forum since the beginning, and presently, we are participating in the World Social Forum, which is taking place this week in Tunisia for the second time in two years.

Our task is to identify illegal, illegitimate, unsustainable or odious debt.

We are working for decades, analyzing the illegitimacy of major parts of third-world debt. We also analyze the policies dictated by the creditors, like the World Bank and the IMF and others, and we participate in different countries, in experiences of citizen outrage, not only in Latin America, but also, for instance, in Pakistan or in Mali or here in Tunisia, because I am speaking from Tunisia now and you know that a few years ago, Tunisian people entered in rebellion against Ben Ali’s dictatorship, and since the Arab Spring, which began with the Tunisian rebellion, the question of mobilizing against the repayment of the creditors who supported the dictatorship for decades began to be a major political item in the political life in this country. So we are very active in several continents on that question. We also are taking part in movements; we are supporting movements like “Strike Debt,” the movement in the United States against the repayment of the illegitimate student debt. Also, the movement against the forced foreclosures of houses by the US banks. So the activity of the CADTM, from the question of the illegitimate public debt of the third-world countries, has extended to other items, like the private illegitimate debt of the people in the north and also the public illegitimate debt of the northern countries.

You have been in Greece recently for meetings with government officials and, in particular, the president of the Hellenic Parliament, Zoe Konstantopoulou, and these meetings have resulted in an announcement that Greece will go ahead with the creation of a commission that will audit the public debt. Tell us about these meetings and about the commission that is being formed.

This committee will be composed of 15 individuals from outside Greece and 15 Greek people – experts in international law, in constitutional law, in macroeconomics, in auditing public accounts, from people with different experiences from different countries, and I will coordinate – I will assume the central coordination of this commission. Our task is to identify illegal, illegitimate, unsustainable or odious debt. We define illegitimate debt as a debt contracted against the general interest and in favor of privileged minorities. Illegal debt is debt contracted that violates the laws of the country and international law. Unsustainable debts are debts for which repayment impedes the government to guarantee to its citizens fundamental human rights – and odious debt is debt for which reimbursement is linked with violation of human rights.

You know the creditors don’t want an audit. They don’t want a characterization of the debt as odious or illegitimate or illegal.

We will analyze the debt contracted by Greece from the mid-1990s until now, taking into account that in the last five years, the main creditor is the “troika,” or the different parts of the troika. That’s to say, the IMF, 14 European countries who lent money to Greece since 2010, the European Central Bank, the European Commission and the European Stability Fund. They are the different creditors of Greece, and they represent more than 80 percent of the Greek public debt. We will analyze these debts reclaimed by these creditors to determine if they are illegitimate, illegal, odious or unsustainable.

When will this commission to audit Greece’s debt first convene?

The first plenary session will take place from April 3 until April 7, and we will make public the composition of this commission at this time. We will convoke a press conference on the 7th of April to inform about what will be our calendar and what the composition of the committee will be.

Will the entirety of Greece’s debt be examined by this commission, or will there be any limitations imposed on which parts of the debt will or will not be audited?

No, we will audit all the debt, all the present debt. Eighty percent of the debt is in the hands of the troika, and the other part, the other 20 percent, is mainly in the hands of the Greek banks, and some, I would say 3 to 4 percent, are owned by vulture funds and hedge funds and some investment funds, but that’s a small minority.

Has there been any resistance to the creation of this committee on the part of European officials and the so-called “institutions,” or even from within the Greek government? Certainly we’ve seen the new Greek government backtrack on some of its pre-election promises these past two months.

There is no official reaction from the European Commission or foreign governments, but I imagine that they don’t see this initiative as a good one, because as you know the creditors don’t want an audit. They don’t want a characterization of the debt as odious or illegitimate or illegal, and from the part of the Greek government, the prime minister is supporting the initiative of the president of the parliament. Some ministers are very enthusiastic. For instance, George Katrougalos, who is the Minister of Institutional and Administrative Reform, came to the press conference to express his support of this initiative.

Iceland decided not to pay back the debt reclaimed by the United Kingdom and the Netherlands in 2008-09, and Iceland is in a much better economic and social condition now than Greece.

We should also mention that there are five ministers in this government who participated, in 2011, in the creation of the initiative for a citizen’s audit of the debt. We should also say that the Minister of Finance Yanis Varoufakis, in 2011, was not in favor of this initiative, and his priority is the negotiation with the European Commission. Until now, the question of the reduction of the debt was aside from the negotiation. So I think that the situation is complex, but we cannot speak about contradiction or tension, and in the next weeks and months, this issue will be clarified.

Are there any estimates as to what the actual percentage is of Greece’s debt that is likely to be odious or illegitimate or illegal? Prior to the elections, the current economy minister Giorgos Stathakis had said that only 5 percent of the Greek public debt is odious. What are your estimates?

I will not now give precise answers, because we have to make the audit. The commission is pluralistic, I have my own criteria, but I will not give them now because we have to collectively work as a commission.

Throughout the crisis, we have constantly heard that there are no alternatives to the politics of austerity for Greece and for the full repayment of the debt, but in your case, you have taken part in similar audit committees in other countries, the Debt Audit Commission that was formed by Ecuador and its president Rafael Correa in 2007, for instance. You also advised countries such as Paraguay and Venezuela on this issue. What examples could Greece draw upon from these countries in launching this new commission to audit the public debt?

Ecuador really is a source of inspiration. Of course, you cannot repeat exactly the experience of Ecuador, but we should take lessons from the Ecuadorian experience, and one of the main lessons is to say that it’s totally feasible to confront the creditors. Suspending the payment of debt changed the correlation of forces. When you are paying back the debt, you are in a situation of inferiority. When you make the decision to suspend repayment on the basis of an audit, you are in a position of superiority in front of the creditors. Ecuador’s suspension of payments showed to the world that you can, for good reason, impose on the creditors’ conditions they will never have accepted without this suspension of payment and the audit.

We could also take the example of Iceland. Iceland decided not to pay back the debt reclaimed by the United Kingdom and the Netherlands in 2008-09, and Iceland is in a much better economic and social condition now than a country like Greece, which is respecting the rights of the creditors and is still paying back the debt. So we should demonstrate, through the audit, that this debt is illegal and illegitimate, and we will discuss the feasibility of taking a strong decision.

It’s clear that the final decision about suspending the payments, repudiating or not the payment of the debt, is the decision of the government, not the decision of the commission. The commission is in charge of auditing, not of making the decision of what we have to do after the audit. But I am sure that by informing correctly the Greek opinion and the international public opinion, that we will make progress on the question of confronting the creditors.

What do you make of statements that were made by the government recently saying that Greece will repay, in full, its debt obligations specifically towards the International Monetary Fund and the European Central Bank?

This agreement [with the Eurogroup] signed on February 20-21 is related to the program which has been prolonged until the end of June. So we will see what will happen after June, and we will see what will happen until June, if the creditors don’t make real concessions to Greece. So things are moving; there is no definitive orientation, I think. The Greek government made big concessions to the creditors in relation to the debt, expecting from the creditors that they will give a real margin of maneuver to stop the policy of austerity. But if the creditors don’t really give space to the Greek government to stop the austerity, I think that all the discussion will be on the table again.

What other policy initiatives do you believe that Greece could undertake, in your experience, above and beyond the creation of this commission to audit the public debt?

They took two initiatives recently: the creation of a parliamentary commission to investigate how the Greek government reached the first agreement on the memorandum of 2010, to see if it was legal, what were the conditions, etc. It’s a good initiative. Another one is the creation of a parliamentary commission on the question of the German debt of World War II to Greece. Greece, for several years, has been asking Germany to make reimbursements for the forced loans given by Greece to the Nazi regime during World War II. And also the question of reparations, because Greece was one of the most victimized countries by the Nazi regime, at the level of cost of human life and also destruction of the economy during the second World War. That’s also an important question.

The main initiative now in relation with the citizens of Greece is the laws to go against the austerity, like the law voted last week to alleviate the private debt of the poor citizens in relation to the state, the private debts under something like 4,000 euros, which will be reduced. It’s a good decision taken by the government. Also, the reconnection of electric power to the 300,000 families who were cut off of electricity in the last years.

You mentioned the issue of the German war debts and war reparations to Greece. Is this an issue that the audit committee will also deal with, and is there also any estimate as far as what this amount owed by Germany might be?

No, we will not tackle this question. We have a specific parliamentary commission on the reparations, and so as the audit commission, we will not take this question into account, but we will collaborate with this commission on reparations, and we will also collaborate with the commission on the memorandum. About the estimation of the cost of reparation, it’s also the work of this commission to reach an estimation, but I would say generally the estimates are from something like $100 to $200 billion, while some people are speaking about $1 trillion, but generally the specialists are speaking about an amount of $100 billion to $200 billion, which is a huge amount, of course.

In terms of the debt audit commission, what will its next steps be once it has finished its audit? Will the results of its investigation be publicly available, and will there be any chance, in your opinion, for these results to translate into action on the part of Greece and Europe?

One important thing is to say that the president of the Hellenic parliament wants to make this audit participative with the citizens of Greece. We will work transparently. We will publish preliminary results. We will ask people to testify; we will ask for the participation of citizens who could bring to the commission some knowledge about illegal or illegitimate behavior regarding the negotiation of the debt with the troika and also the debt incurred by big contracts with transnationals like Siemens or the armament firm corporation Thales from France. And when we will conclude our work, we will make it public. We will communicate it officially to the government, so the government will have to make a decision on the basis of the results of the audit. We cannot determine what will be the decision of the government, but I think that Greek citizens will wait and will expect from the government some decision. And, the president of the parliament, who took the initiative, said in the press conference that the Greek people have a right to say, “We don’t want to pay back an illegal or an illegitimate debt.”

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