Get Red Pepper's email newsletter. Enter your email address to receive our latest articles, updates and news.

×

Breaking with creditors’ power: the importance of the Greek debt audit

While the world's media focuses on the bailout negotiations, a debt audit is underway to prove much of Greece's debt illegitimate, illegal and odious, writes Fanny Malinen

June 23, 2015
5 min read

The world’s eyes are once more on Greece. I had the opportunity to visit Athens in mid-May, joining a knowledge exchange organised by the Political Economy Research Centre at Goldsmiths, University of London. The Greek government had just days before paid their international creditors with money from pension funds and other public organisations. There seemed little reason for optimism that the government would not give in to the pressure and accept the austerity that would come with the next debt payments.

I was told the city was far less militarised than during the previous government, even though there is still a riot police bus near every square. I could feel a whiff of expectations in the air of the city. People seemed to like the governing party Syriza mostly because they were not the previous government. Yet the government was not at that point standing strong against the creditors that own 80 per cent of Greece’s debt: the European Commission, European Central Bank and IMF. What has changed in the last few weeks?

Can’t pay or shouldn’t pay?

Of course, there are many factors. It has long been clear to economists – and most people who are not high-ranking EU officials – that it is impossible for Greece to pay its debts in full. But ‘can’t pay’ is different from ‘shouldn’t pay’. The argument is gaining traction that the loans to Greece never benefited the people and should therefore be written off.

In April the speaker of the Hellenic Parliament, Zoe Konstantopoulou, launched a Truth Committee on Public Debt. The committee consists partly of international experts, many of whom also participated in the similar process that led to Ecuador defaulting on billions of dollars’ worth of loans to international creditors in 2008. Many of the Greek participants are not affiliated with Syriza. Giorgios Mitralis, a member of CADTM (Committee for the Abolition of Third World Debt) Greece, told us that, surprisingly many are officials who had worked for the previous government. There are also grassroots activists who have been campaigning for a citizens’ debt audit since 2011 – a reminder that Greece’s rejection of austerity has grown out of years of hard work by social movements.

greekparliamentGreece’s parliament, where the committee’s findings were presented this week.

The Debt Truth Committee published its first findings this week. ‘Greece not only does not have the ability to pay this debt, but also should not pay this debt, first and foremost because the debt emerging from the Troika’s arrangements is a direct infringement on the fundamental human rights of the residents of Greece,’ it states. ‘Hence, we came to the conclusion that Greece should not pay this debt because it is illegal, illegitimate, and odious.’

The European Central Bank over-stepped its mandate by imposing political conditions on its loans. Other EU countries’ bilateral loans did not benefit the Greek people but instead European financial institutions. The IMF knew that the conditions attached to their loans were undemocratic and in breach of human rights Greece is obliged to respect under domestic and international law. These are some examples of the illegal, illegitimate and odious nature of the Greek debt.

Reclaiming default

It is difficult to over-estimate the importance of the debt audit: as Syriza’s months in office have shown, it is impossible to reject austerity when a country’s sovereignty is compromised by the power of its creditors. Many countries in the global South have known this for decades.

Creditors go to great lengths of effort to keep debtor countries on their knees enough to adhere to neoliberal policies, but this is a careful balancing act not to push them into default. That could break them free from their submissive position. Because of the imbalance of power, it does not matter that the rules of financial capitalism that dictate the situation – although presented as some law of science – are totally arbitrary.

A debt audit exposes this power. It reclaims default from a creditor-imposed disaster into a legitimate option to deal with illegal or illegitimate loans. As we can see in Greece, it broadens the discussion from how to pay onto whether to pay. The findings of the Truth Committee are not binding: they are only ‘a very strong argument not to pay’, as Giorgos Mitralis, who initiated the international appeal in support of the committee, told us in Athens.

Greece is upfront that it cannot pay the debt. Pressure from the grassroots and international solidarity is still needed to ensure Greece rejects its creditors’ grip and says ‘we won’t pay’ – not because their debts are impossible, but because they are immoral.

Fanny Malinen is a London-based freelance journalist and member of Debt Resistance UK, which challenges debt injustice on a personal and political level. She went to Athens as part of a knowledge exchange organised by the Political Economy Research Centre, Goldsmiths, University of London, with support from the ESRC.

Red Pepper is an independent, non-profit magazine that puts left politics and culture at the heart of its stories. We think publications should embrace the values of a movement that is unafraid to take a stand, radical yet not dogmatic, and focus on amplifying the voices of the people and activists that make up our movement. If you think so too, please support Red Pepper in continuing our work by becoming a subscriber today.
Why not try our new pay as you feel subscription? You decide how much to pay.
Share this article  
  share on facebook     share on twitter  

The government played the public for fools, and lost
The High Court has ruled that the government cannot veto local council investment decisions. This is a victory for local democracy and the BDS movement, and shows what can happen when we stand together, writes War on Want’s Ross Hemingway.

An ‘obscure’ party? I’m amazed at how little people in Britain know about the DUP
After the Tories' deal with the Democratic Unionists, Denis Burke asks why people in Britain weren't a bit more curious about Northern Ireland before now

The Tories’ deal with the DUP is outright bribery – but this government won’t last
Theresa May’s £1.5 billion bung to the DUP is the last nail in the coffin of the austerity myth, writes Louis Mendee

Brexit, Corbyn and beyond
Clarity of analysis can help the left avoid practical traps, argues Paul O'Connell

Paul Mason vs Progress: ‘Decide whether you want to be part of this party’ – full report
Broadcaster and Corbyn supporter Paul Mason tells the Blairites' annual conference some home truths

Contagion: how the crisis spread
Following on from his essay, How Empire Struck Back, Walden Bello speaks to TNI's Nick Buxton about how the financial crisis spread from the USA to Europe

How empire struck back
Walden Bello dissects the failure of Barack Obama's 'technocratic Keynesianism' and explains why this led to Donald Trump winning the US presidency

Empire en vogue
Nadine El-Enany examines the imperial pretensions of Britain's post-Brexit foreign affairs and trade strategy

Grenfell Tower residents evicted from hotel with just hours’ notice
An urgent call for support from the Radical Housing Network

Jeremy Corbyn is no longer the leader of the opposition – he has become the People’s Prime Minister
While Theresa May hides away, Corbyn stands with the people in our hours of need, writes Tom Walker

In the aftermath of this disaster, we must fight to restore respect and democracy for council tenants
Glyn Robbins says it's time to put residents, not private firms, back at the centre of decision-making over their housing

After Grenfell: ending the murderous war on our protections
Under cover of 'cutting red tape', the government has been slashing safety standards. It's time for it to stop, writes Christine Berry

Why the Grenfell Tower fire means everything must change
The fire was a man-made atrocity, says Faiza Shaheen – we must redesign our economic system so it can never happen again

Forcing MPs to take an oath of allegiance to the monarchy undermines democracy
As long as being an MP means pledging loyalty to an unelected head of state, our parliamentary system will remain undemocratic, writes Kate Flood

7 reasons why Labour can win the next election
From the rise of Grime for Corbyn to the reduced power of the tabloids, Will Murray looks at the reasons to be optimistic for Labour's chances next time

Red Pepper’s race section: open editorial meeting 25 June
On June 25th, the fourth of Red Pepper Race Section's Open Editorial Meetings will celebrate the launch of our new black writers' issue - Empire Will Eat Itself.

After two years of attacks on Corbyn supporters, where are the apologies?
In the aftermath of this spectacular election result, some issues in the Labour Party need addressing, argues Seema Chandwani

If Corbyn’s Labour wins, it will be Attlee v Churchill all over again
Jack Witek argues that a Labour victory is no longer unthinkable – and it would mean the biggest shake-up since 1945

On the life of Robin Murray, visionary economist
Hilary Wainwright pays tribute to the life and legacy of Robin Murray, one of the key figures of the New Left whose vision of a modern socialism lies at the heart of the Labour manifesto.

Letter from the US: Dear rest of the world, I’m just as confused as you are
Kate Harveston apologises for the rise of Trump, but promises to make it up to us somehow

The myth of ‘stability’ with Theresa May
Settit Beyene looks at the truth behind the prime minister's favourite soundbite

Civic strike paralyses Colombia’s principle pacific port
An alliance of community organisations are fighting ’to live with dignity’ in the face of military repression. Patrick Kane and Seb Ordoñez report.

Greece’s heavy load
While the UK left is divided over how to respond to Brexit, the people of Greece continue to groan under the burden of EU-backed austerity. Jane Shallice reports

On the narcissism of small differences
In an interview with the TNI's Nick Buxton, social scientist and activist Susan George reflects on the French Presidential Elections.

Why Corbyn’s ‘unpopularity’ is exaggerated: Polls show he’s more popular than most other parties’ leaders – and on the up
Headlines about Jeremy Corbyn’s poor approval ratings in polls don’t tell the whole story, writes Alex Nunns

Job vacancy: Red Pepper is looking for a political organiser
Closing date for applications: postponed, see below

The media wants to demoralise Corbyn’s supporters – don’t let them succeed
Michael Calderbank looks at the results of yesterday's local elections

In light of Dunkirk: What have we learned from the (lack of) response in Calais?
Amy Corcoran and Sam Walton ask who helps refugees when it matters – and who stands on the sidelines

Osborne’s first day at work – activists to pulp Evening Standards for renewable energy
This isn’t just a stunt. A new worker’s cooperative is set to employ people on a real living wage in a recycling scheme that is heavily trolling George Osborne. Jenny Nelson writes

Red Pepper’s race section: open editorial meeting 24 May
On May 24th, we’ll be holding the third of Red Pepper’s Race Section Open Editorial Meetings.


377