With debt restructuring a new priority in the political agenda of both the Greek government and its creditors, it is a forthright necessity to cancel public debt, starting with the debts to the Troika which currently exceed 70% of the total.
Immediate cessation of payments through the denunciation of two loan agreements, followed by cancellation is the fundamental precursor to creating the fiscal space that will allow for a social policy agenda aimed at simultaneously raising people’s living standards and at once overturning austerity. The 2015 public debt repayment schedule of 21.88 billion (5.88 of which is interest) has dire consequences:
- Up to 82% of unemployed will continue to be without unemployment benefits,
- The necessary recruitments and funding in health, education, social security and cultural sectors will remain a distant dream,
- The need to implement a generous public investment programme is deferred to the unknown future.
The creditors’ plans to extend debt maturities and lower the interest rates equate to postpone debt repayment for future generations and recognize debt. The already low interest rates indicate the minimal impact such a measure can have. Perpetuating a state of bankruptcy and indebtedness by offloading it for future generations to bear applies similarly to the plans of ‘parking’ Greek debt into the coffers of the ECB via the perpetual bond proposal.
Public debt cancellation will be either unilateral, well within the rights of every sovereign state, or, it will be detrimental to the populace. The experience of the 2012 debt restructuring (Private Sector Involvement+), value 106 bn. euro according to the Bank of Greece, showed that effective debt relief is only viable if designed at the expense of the creditors and if implemented against and despite their will. The recent experiences in Argentina, Ecuador, Russia and Iceland, which despite significant variation between them, should be a lesson for Greece, as they all pursued unilateral cancellation of at least a portion of their debts.
Greek debt cancellation is both justified and legally credible by:
- Drawing on the ‘State of necessity’ and the emergent humanitarian crisis which from 2010 to 2014 was brought about by the rapid rise of unemployment (27%), the reduction in wages and pensions (on average by 40% 2010-14), mass emigration (over 100.000 youths) and widespread suicides (over 5.000 from 2011 onwards due to economic burdens) among many others.
- Auditing the public debt from an independent commission operating under social control. The portion of Greek debt owed to the Troika is glaringly odious: not only was there no electoral mandate for the governments that signed the international loan treaties to take on such debts in the name of the Greek people, 92% of all loan tranches (232 billion out of 252 billion) were returned to the creditors or given to the banks, indicating the complicity of the creditors in creating indebtedness that did not serve the needs of the people.
- The responsibility should be borne by the creditors themselves as public debt exploded from 299 billion (115% of GDP) in September 2009 to 317 billion (175% of GDP) at the end of 2014.
- Netting out the difference to account for the debts owed by Germany to Greece from the Second World War (reparations, loan etc), which, according to international estimation exceed 1 trillion euros.
- Riding on the recent UN decision (September 2014) to dispute the current deregulated bond market framework, and protect countries from the actions of vulture funds.
An immediate moratorium on all debt repayments, followed by unilateral debt cancellation in conflict with the creditors is a blow to the IMF, the ECB, the euro states and the funds created (the EFSF and ESM). All new mechanisms and back stop measures created to model the IMF aim to ensure the crisis is paid by the people of Europe and not the elite who created it. It was their choice to re-profile the debt, transforming it from predominantly private sector bondholder debt into over 70% debt held by the official sector. Contrary to what is often maintained, debt cancellation is not a move against other people in Europe. The funds that were directed to all countries in a financial “assistance” programme (Ireland, Portugal, Cyprus) have not been used to ‘save’ populations; but rather, were saving the banks and the elites instead. The people across Europe acted as a human shield used by the EU and the IMF to conceal the backdoor bank bailouts, which in the case of Greece alone cost 211 billion. This is the amount of money that gave to Greek banks since 2008 till 2014. The people of Europe were never asked, nor did they ever agree to participate in mass bank bailouts.
The questioning of the official creditors’ (EU and IMF’s) vested interests which will pay the price of debt cancellation presupposes disobedience and leads to rupture with the euro and the EU. However:
- The long-term economic gain achieved via unilateral debt cancellation will be bigger than the short-term costs of exit. Grexit’s loser will not be Greece, as it is repeated by current ideological terrorism, but Germany and euro.
- The ability to implement independent industrial policy, through massive investments in crucial sectors of economy, irrespective of EU directives and commitments will allow a speedier recovery and reduction in unemployment together with other measures like reduction of hours of work, abolition of flexible working relations, etc.
- Cancelling the commitment to the EU for permanent austerity, implied through the promises of economic governance and Stability Pact for balanced budgets, will allow for a redistribution of social wealth.
- Overthrowing of the system of restricted sovereignty imposed by Brussels, Frankfurt and the Fourth Reich through the regulation 472/2013 ar. 13 which implies euro-monitoring until the repayment of 75% of loans will create the possibility for the people to regain sovereign and human rights.
The unilateral debt cancellation proposed is in the context of a broader rupture necessitating nationalisation of key industries, including the banks, whilst maintaining a guarantee on deposits, compensation to the pension funds, public sector organisations and small bondholders who lost out due to the PSI+, search for criminal liability to those who participating in the issuing of Greek bonds under foreign law and the cancellation of all private debts to unemployed, subsidies to small and medium enterprises aiming to the fulfilment of social needs, etc.
On the basis of the aforementioned proposal, we the signatories (economists, lawyers, academics, activists), active participants in the struggles of the past few years against debt and austerity, form an initiative of information and struggle whose aim is real Greek debt cancellation, called Debt Cancellation Now! We call to an open founding assembly for the creation of a mass movement aiming to the cancellation of debt.
We call on all groups and organisations to join us and adopt the framework for a common effort to make debt cancellation a demand from everyone!