Greece: Cancelling the majority of sovereign debt is an overdue necessity

9 May 2014 by Greek Debt Audit Campaign

Announcement approved at public meeting, 7 May 2014

The debt crisis has acted as a lever to dismantle labour rights and transform Greece into a creditor’s colony. The increase of unemployment to 27%, the reduction of wages and pension by 40% on average, the explosion of over 6000 recorded suicides, and the migration of young people, reaffirm the severity of the social conflict, created by offloading the bill of the crisis onto the 99%.
The responsibility is shared by Greek governments and creditors alike (both the private financial sector and the official creditors: 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 global capital: it acts as policeman when it enforces its Structural Adjustment Policies and as fireman when it steps in to help out governments in risk of defaulting on debt repayments.

As for the World Bank, a weighted voting system operates: depending on the amount paid as contribution by each member state. 85% of the votes is required to modify the IMF Charter (which means that the USA with 17,68% % of the votes has a de facto veto on any change).

The institution is dominated by five countries: the United States (16,74%), Japan (6,23%), Germany (5,81%), France (4,29%) and the UK (4,29%).
The other 183 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.
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.
), who exploited the fiscal crisis to safeguard their profits. This led to an increase in debt, to 175% of GDP and an increase of the fiscal deficit, to 12.% of GDP GDP
Gross Domestic Product
Gross Domestic Product is an aggregate measure of total production within a given territory equal to the sum of the gross values added. The measure is notoriously incomplete; for example it does not take into account any activity that does not enter into a commercial exchange. The GDP takes into account both the production of goods and the production of services. Economic growth is defined as the variation of the GDP from one period to another.
in 2013.

The initiation of the euro zone discussions on the 5th May should be a cause for concern, as the protagonists’ previous actions (such as the PSI, the debt buyback in November 2012 etc) have repeatedly deepened the crisis, as their interests remain diametrically opposed to those of society.

The only solution is to create an independent debt audit commission which will substantiate the need to cancel the majority of sovereign debt Sovereign debt Government debts or debts guaranteed by the government. , beginning with 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.

’s own loans, which amounts to over two thirds of the total.
Such a cancellation should occur on the terms of a sovereign state, and not on the creditor’s terms. There are positive precedents from the countries which have concluded cancellations, such as Ecuador, Russia, Iceland etc.

Cancelling the majority of sovereign debt is an overdue necessity that can create conditions to enable improvements to working people’s situations, support social spending (in health, education, culture etc) and conclude wage and pension increases. Cancellation can be substantiated through notions and legal principles regarding odious debt, the ‘state of necessity’, and by examining the extent of the humanitarian crisis. All that is needed is the political will.

The Greek Debt Audit Campaign will step up its activities in the near future to hamper the attempts by the creditors to restructure Greek debt (e.g. by extending the repayment dates) by transferring the burden of repayment onto future generations, and will strive to make the issue of debt cancellation a popular concern.

Other articles in English by Greek Debt Audit Campaign (2)




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