The agreement of the 26/27 October 2011 European summit meeting is unacceptable

28 October 2011 by Eric Toussaint , Griselda Pinero , Pascal Franchet , Yorgos Mitralias

The agreement made at dawn on the 27th October 2011 brings no solution to the eurozone crisis, neither to the banking crisis, the sovereign debt Sovereign debt Government debts or debts guaranteed by the government. crisis or the euro crisis. The decisions taken do not solve any of the problems in an acceptable way, they only postpone them. CADTM considers this agreement unacceptable.

The heads of states, heads of governments, the leaders of the European commission (EC), the private banksters and the managing director of the the IMF IMF
International Monetary Fund
Along with the World Bank, the IMF was founded on the day the Bretton Woods Agreements were signed. Its first mission was to support the new system of standard exchange rates.

When the Bretton Wood fixed rates system came to an end in 1971, the main function of the IMF became that of being both policeman and fireman for globalised capital: it acts as policeman when it enforces its Structural Adjustment Policies and as fireman when it steps in to help out governments that are going bankrupt.

As for the World Bank the votes resulting in decisions are based on the amount paid as contribution by each member states. 85% of the votes are required to modify the IMF Charter (which means that the USA with 17,35% of the votes can paralyse any decision).

The institution is dominated by five countries: the United States (16,75%), Japan (6,23%), Germany (5,81%), France (4,29%) and Britain (4,29%).
The other 177 member countries are divided into groups led by one country. The most important one (6,57% of the votes) is led by Belgium. The least important group of countries (1,55% of the votes) is led by Gabon and brings together African countries.
met in Brussels in order to find a solution to the risk of serial bankruptcies among Europe’s biggest banks, particularly French, Spanish, Greek, Italian, German, Portuguese and Belgian... Those who, before and after 2007 - 2008, multiplied their risk taking behaviors to make short term profits for their shareholders and to give marvelous bonuses to their directors and traders. Domestic and business loans being only a small part of their turnover : between 2 and 5 %. The massive support they have received from the states, the ECB ECB
European Central Bank
The European Central Bank is a European institution based in Frankfurt, founded in 1998, to which the countries of the Eurozone have transferred their monetary powers. Its official role is to ensure price stability by combating inflation within that Zone. Its three decision-making organs (the Executive Board, the Governing Council and the General Council) are composed of governors of the central banks of the member states and/or recognized specialists. According to its statutes, it is politically ‘independent’ but it is directly influenced by the world of finance.
(European Central Bank Central Bank The establishment which in a given State is in charge of issuing bank notes and controlling the volume of currency and credit. In France, it is the Banque de France which assumes this role under the auspices of the European Central Bank (see ECB) while in the UK it is the Bank of England. ) or the Fed FED
Federal Reserve
Officially, Federal Reserve System, is the United States’ central bank created in 1913 by the ’Federal Reserve Act’, also called the ’Owen-Glass Act’, after a series of banking crises, particularly the ’Bank Panic’ of 1907.
(Federal reserve Bank of the USA) has not been used to stimulate the productive economy, it has been diverted to more highly speculative activities. Private banks are financed for the short term at the same time as they take on medium and long term engagements : public or private bonds, commodity futures Futures A futures contract is a standardized advance commitment, negotiated on an organized futures market, to deliver a specified quantity of a precisely defined underlying asset at a specified time – the ‘delivery date’ – and place. Futures contracts are the most widely traded financial instruments in the world. , currency swaps and positions on derivatives Derivatives A family of financial products that includes mainly options, futures, swaps and their combinations, all related to other assets (shares, bonds, raw materials and commodities, interest rates, indices, etc.) from which they are by nature inseparable—options on shares, futures contracts on an index, etc. Their value depends on and is derived from (thus the name) that of these other assets. There are derivatives involving a firm commitment (currency futures, interest-rate or exchange swaps) and derivatives involving a conditional commitment (options, warrants, etc.). that are not under any public control. The bankruptcy of the Franco-Belgian bank Dexia at the beginning of this month of October 2011 is the direct result of these policies. The fear of an oncoming domino effect in Europe and north America weighed heavily on the meeting of the 26/27th October 2011.

The decision to give Greek bonds in bankers possession a 50% haircut, as opposed to the 21% cut agreed on the 21st July, had become inevitable since August following their 65% to 80% price fall on the secondary debt market. Although the state leaders announced they had imposed important sacrifices on the banks, as usual the banks are coming out well. This explains why for the time being, bank stock in particular and the financial markets in general have shown important upward movements.

The 27th October agreement is not a solution for the Greek people who are suffering the full effects of the crisis, aggravated by the austerity measures the government has inflicted on them. This operation is entirely managed by the creditors and is in conformity with their interests. This debt reduction plan is a European version of the “Brady plans” that had such devastating effects on the developing countries during the eighties and nineties. The Brady plan (named after the US Treasury secretary at the time) involved debt restructuring by exchange of bonds, in the principal indebted countries that took part. These were Argentina, Brazil, Bulgaria, Dominican Republic, Ecuador, Jordan, Mexico, Nigeria, Panama, Peru, Philippines, Poland, Russia, Uruguay, Venezuela and Vietnam. At the time, Nicholas Brady had announced that the volume of the debts would be reduced by 30% (in fact, the reductions, when they did happen, were much less ; in some cases, and not the least, debts even increased) and the new bonds (Brady bonds) guarantied a fixed interest Interest An amount paid in remuneration of an investment or received by a lender. Interest is calculated on the amount of the capital invested or borrowed, the duration of the operation and the rate that has been set. rate of around 6%, which was very favorable to the creditors. This also assured application of austerity measures dictated by the IMF and the World Bank World Bank
The World Bank was founded as part of the new international monetary system set up at Bretton Woods in 1944. Its capital is provided by member states’ contributions and loans on the international money markets. It financed public and private projects in Third World and East European countries.

It consists of several closely associated institutions, among which :

1. The International Bank for Reconstruction and Development (IBRD, 180 members in 1997), which provides loans in productive sectors such as farming or energy ;

2. The International Development Association (IDA, 159 members in 1997), which provides less advanced countries with long-term loans (35-40 years) at very low interest (1%) ;

3. The International Finance Corporation (IFC), which provides both loan and equity finance for business ventures in developing countries.

As Third World Debt gets worse, the World Bank (along with the IMF) tends to adopt a macro-economic perspective. For instance, it enforces adjustment policies that are intended to balance heavily indebted countries’ payments. The World Bank advises those countries that have to undergo the IMF’s therapy on such matters as how to reduce budget deficits, round up savings, enduce foreign investors to settle within their borders, or free prices and exchange rates.
. Today, under other latitudes the same logic provokes the same disasters. The Troika Troika Troika: IMF, European Commission and European Central Bank, which together impose austerity measures through the conditions tied to loans to countries in difficulty. (ECB, EC, IMF) imposes endless austerity measures on the Greek, Irish and Portuguese people. If there is no reaction from their people in time, others will have the same : Spain, Belgium, France...

This plan cannot validly permit Greece to resolve its problems for two reasons :
- 1. the debt reduction is totally insufficient ;
- 2. the economic and social policies applied in accordance with the Troika demands will fragilize the country even more. This characterizes the odious nature of these financial agreements with Greece, any future loans in this framework and the restructuring of the previous debts.

Greece must make a choice between two options :

- Throw in the towel and be again subject to the gauntlet of the Troika ;

- Refuse the dictatorship of the markets and the Troika in suspending the payments and by proceeding to a debt audit so that the illegitimate part may be repudiated.

Other countries are, or soon will be, confronted with the same choice : Spain, Ireland, Italy, Portugal... This list is far from exhaustive. In any case, these same policies are applied, in differing degrees, all over the EU. These austerity plans must everywhere be refused and citizen controlled audits of public debt put int operation.

The events of 2007 - 2008 have not incited governments to imposing strict prudential rules. On the contrary, measures must be taken to prevent financial institutions, banks, insurance companies, pension and hedge funds Hedge funds Unlisted investment funds that exist for purposes of speculation and that seek high returns, make liberal use of derivatives, especially options, and frequently make use of leverage. The main hedge funds are independent of banks, although banks frequently have their own hedge funds. Hedge funds come under the category of shadow banking. from causing further damage. Public authorities, company directors directly, or complicity responsible for the stock market and banking Kraches must be brought to justice, it is urgent to expropriate the banks and put them to the service of the common good by nationalizing them under worker’s and citizen’s control. Not only must any form of indemnity for the shareholders be refused but they should also have there own wealth put to contribution to cover the cost of repairing the financial system. It is also necessary to repudiate the illegitimate claims that the private banks hold on public authorities. Of course a series of complementary measures must also be adopted : control the movements of capital, prohibit speculation, prohibit transactions going through tax havens, creation of taxes aimed at establishing social justice... In the European Union certain treaties, such as Maastricht and Lisbon must be repealed. It is also necessary to radically change the statutes of the ECB. Before the crisis gets to its worst it is high time to radically change direction. The CADTM supports, along with other organizations, the initiatives that have been taken in certain countries in favor of public debt audits under citizens control. The « Occupy Wall Street » movement has set a creative and emancipative ball into motion. It must be reinforced.

Translated by Mike Krolikowski

CADTM Europe (Comité pour l’annulation de la dette du tiers monde) is present in Greece, France, Belgium, Spain, Switzerland and Poland. In all, the CADTM network is present in 33 countries. The most recent CADTM book is : La dette ou la vie : Damien Millet – Eric Toussaint (coord.), ADEN, Bruxelles, 2011.


Pascal Franchet

Vice-président du CADTM France

Other articles in English by Pascal Franchet (3)


Yorgos Mitralias

member of this Committee and initiator of the appeal to support this Committee.


Griselda Pinero


Eric Toussaint

is a historian and political scientist who completed his Ph.D. at the universities of Paris VIII and Liège. He is the President of CADTM Belgium, and sits on the Scientific Council of ATTAC France. He is the co-author, with Damien Millet of Debt, the IMF, and the World Bank: Sixty Questions, Sixty Answers, Monthly Review Books, New York, 2010. He is the author of many essays including one on Jacques de Groote entitled Procès d’un homme exemplaire (The Trial of an Exemplary Man), Al Dante, Marseille, 2013, and wrote with Damien Millet, AAA. Audit Annulation Autre politique (Audit, Abolition, Alternative Politics), Le Seuil, Paris, 2012. See his Series “Banks versus the People: the Underside of a Rigged Game!” Next publication : Bankocracy Merlin Press, Londres, May 2015 (English version).
Since the 4th April 2015 he is coordinator of the Truth Commission on Public Debt.



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