From Democracy to Debtocracy

The Greek-in-the-street, noisily opposed to a government regarded as defaulting on its electorate rather than on global bankers, is being urged to “do an Ecuador” and invoke the concept of “odious debt”.

Odious debt - what the bankers don't want to hear.

Leading the call is a French-speaking leftwing academic Eric Toussaint of the Campaign for the Cancellation of Third World Debt (CADTM) and who was a member of the Audit Committee set up by Rafael Correa president of Ecuador, to avoid a large portion of Ecuador’s public debt.

(Eric Toussaint, president of CADTM Belgium (Committee for the Abolition of Third World Debt, holds a PhD in Political Science from the University of Liège (Belgium) and the University of Paris VIII (France).)

When the United States invaded Cuba in 1898, it cancelled Cuba’s debt to Spain on the reasonable grounds that the debt was invalid since it had been imposed on the people of Cuba without their consent … In 1923, the concept of odious debt formally entered international law in the judgement of US Chief Justice Taft in the case of Great Britain versus Costa Rica.

The calls come as Greece has been forced to accept even more austerity. According to Open Europe, an independent think tank campaigning for radical reform of the EU, Greece was forced to agree to more austerity cuts at the EU summit May 23, after the EU/IMF/ECB found a €5.5bn black hole in the current austerity package, further increasing the tension surrounding Tuesday’s vital vote on the plan in the Greek parliament. The Greek opposition continues to publicly oppose the current austerity plan, even though the EU summit conclusions stipulated that “given the length, magnitude and nature of the required reforms in Greece, national unity is a prerequisite for success”. FT Deutschland and Focus quote Eurogroup Chairman Jean-Claude Juncker saying, “I assume that the [Greek] government will get the majority in parliament. If not, the entire situation changes completely. No one in Greece should hope that there is such thing as a ‘plan B’.” The summit conclusions provide few details as to the exact size and structure of the plan but, as expected, it will include a combination of austerity, privatisation and some attempt at a bond rollover. Some reports suggest that the overall package will be in the area of €120bn, which would include contributions from the private sector.

It is at this critical juncture that the documentary “Debtocracy” has been released on the Internet. This grassroots Greek production is shared freely online under a creative commons license. The film, critical of “neoliberal propaganda” vividly portrays its view of the factors that are provoking the ire of the Greek-in-the-street and which in the longer term are likely to reverberate elsewhere in the EU. Readers can view the film below. If streaming is too slow for this 1 hour 14 minute documentary please try the YouTube site for faster viewing

Toussaint says Ecuador unilaterally eliminated as illegitimate (“illegal ” or “odious”) – a debt of 3.2 billion dollars. Despite the embargo of the markets, there have been no big negative consequences for Ecuador.. On the contrary, the economy grew by 3.7% in 2010 and is expected to grow by 5% in 2011.

Now, adds Toussaint: “The people of Europe should audit their creditors. It is not logical to repay illegitimate debts. Debt default and the denial of debt repayment have been linked to a national disaster. These “revelation images” are aimed to make people accept the policies that are being applied.

The Committee’s work in Ecuador has recently been mentioned in the Greek Parliament by Sofia Sakorafa. But could the experience of Ecuador be helpful in Greece? Eric Toussaint thinks so: “While the economies of the two countries are different, the structure of Greek public debt has a lot in common with that of developing countries”.

In the course of the film the point is made that the insalubrious acronym Piigs (Portugal, Ireland, Italy, Greece, Spain) adopted by markets to describe the troubled peripheral EU states, is likely not accidental. Rather it reflects a certain mindset towards the victims of this banker-driven crisis. As French-News-Online has reported before, in our view, the under-regulated risk-taking of greed-driven bankers aided by complict political allies sparked the global meltdown in 2007 that in turn provoked the European sovereign crisis. This now threatens Euroland upheaval, monetary uncertainty for euro zone residents, negative interest rates for savers, mountains of unpayable debt piled onto several generations of as yet-unborn taxpayers, along with the huge socialised tab for high-rolling bankster roulette.

As the crisis rolls on others also warn about the terms and words now used by the bankers, bonds rating agencies and hedge fund operators who bankrupted America with egregious fraud in 2008. For instance the European Central Bank (ECB)/EU/IMF team now squatting in the Greek Finance Ministry and pulling the strings, is referred to as the troika. “… Troikas were the three-person local committees, comprised by the local party commissar, the local police chief and the Cheka representative, that were established during the period officially named by the Communist Party as “Red Terror”, a response to the so-called White Terror, during Russia’s Civil War. If all three members of a Troika were to sign on it, they could decide and implement the immediate execution of any local person for “anti-Soviet activity” without a trial…” How deliberate was that choice of word one might ask?

Greeks urged to do an Ecuador and invoke "odious debt"

The film has not unsurprisingly, caught the imagination of blogosphere activists on the left and radical left who know a righteous riot when they see one.

However even in the mainstream, economists like Professor Michael Hudson are urging an end to the “financial warfare (being waged) on Greece”. In his latest analysis here the good professor also firmly advises the Greeks to “do an Iceland”.

Here BBC Newsnight economics editor Paul Mason offers some data and analysis about a Greek default.

Who owns the Greek debt?

Meanwhile Wall Street banks and their City of London counterparties are jumping back into casino banking as if nothing had ever happened since 2007, taking punts on the outcome of a Greek sovereign debt crisis which they caused: “It’s the $616 billion question: Does the euro crisis have a hidden A.I.G.? No one seems to be sure, in large part because the world of derivatives is so murky. But the possibility that some company out there may have insured billions of dollars of European debt has added a new tension to the sovereign default debate”- Derivatives Cloud the Possible Fallout From a Greek Default.

And further along on the French far-left writers like Aurélien Bernier of the militant Movement for Popular Education (M’PEP), are calling for outright disobedience aimed at tearing down an EU edifice which in its present form, suffers from a democratic deficit. Bernier’s just published book is entitled “Désobéissons à l’Union européenne !” “Disobey the European Union!” and in it he tackles a European Union that he claims is spearheaded by neo-liberal ultras. For Bernier, the founding fathers of Europe, Robert Schuman and Jean Monnet among others blandly presented in official hagiography as idealistic pacifists, were nothing less than the “instruments of business interests”.

Meanwhile two leading French economists again warn that radical solutions must be found for the euro crisis :
Pierre Khalfa: Le problème ce n’est pas l’euro, mais le néo-libéralisme
and
Gérard Lafay: il faut transformer l’euro en monnaie commune!

Lastly Der Speigel is running a series of articles on the euro crisis from the perspective of the EU’s paymaster which seems to be preparing to close the bailout tap. How the Euro Became Europe’s Greatest Threat
How European Elites Lost a Generation. This comes at a time when Open Europe warns of the hidden cost of saving the euro – the extensive exposure the ECB has to the whole eurozone and especially Greek banks, as a result of the debt crisis: “The ECB has exposure to struggling eurozone economies (the so-called PIIGS) of around €444bn. Of this, around €190bn is exposure to the Greek state and Greek banks.” Click here to read Open Europe’s report

BNP is one of the large French banks heavily exposed to Greek debt Image: Wikipedia

Story: Ken Pottinger
editorial@french-news-online.com

UPDATE:
Extracted from ‘The German Government Will Pay Up’ an article in SPIEGEL online:

“SPIEGEL: You are apparently very confident that Greece will also be bailed out if it fails to implement, or insufficiently implements, the austerity measures that are being demanded.
Homburg: Absolutely. Greece is neither economically nor politically capable of sorting out its finances. It will never be in a position to repay the money that it has borrowed up to now. The German government will pay up all the same.
SPIEGEL: And what will happen next?
Homburg: Many politicians have also come to the realization that the path that we are on ultimately leads to national defaults and currency reforms. This process is already irreversible, but nobody wants to say it out loud and go down in history as the one who triggered the explosion. So we leave the bankruptcy to subsequent German governments and, in the meantime, throw good money after bad. Sooner or later, this much is certain, the system will be blown apart by political and economic factors. And, unfortunately, there is a great danger that, when this happens, it is not only the euro that will fall apart, but also the entire EU.”