Breaking with Creditors’ Power: The Importance of
the Greek Debt Audit
world's media focuses on the bailout negotiations, a debt audit is
underway to prove much of Greece's debt illegitimate, illegal and
By Fanny Malinen
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.
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
illegitimate and odious nature of the Greek debt.
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
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
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.