Down with the Greek debt!
These days, government leaders of the Eurozone meet again to discuss the Greek debt crisis. It is all or nothing; Greece’s future hangs by a thread. Greece cannot possibly meet its payment obligations, so the only way to help the country back on its feet is debt cancellation. Such is the view of a large number of organisations in Europe, including Both ENDS. Wiert Wiertsema of Both ENDS explains why.
How much is Greece’s debt?
“The Greek bailout programme began in 2010 when Greece’s debt had reached the amount of €310 billion, or 133% of Greece’s GDP. Today the Greek government is still in €317 billion of debt, of which it owes 78% to the ‘Troika’ – the International Monetary Fund, European Union and European Central Bank.”
What about the bailout?
“The bailout has been primarily directed to the European financial sector. Less than 10% of the bailout money has reached the people of Greece, with 90% of the loans being used to bail out European financial actors that had overexposed themselves to Greek government debt, including European banks, hedge funds, pension funds and other investors.”
What has been the impact of the Greek debt crisis and bailout conditions?
“The ongoing debt crisis and austerity conditions imposed on Greece in return for bailout loans have devastated Greek economy and society. Austerity measures have entailed huge cuts in public sector wages, jobs, pensions and basic services like healthcare. Millions of Greeks have been cast into poverty as a result of the crisis, with solidarity networks stepping in to help people meet their basic needs. Unemployment in Greece has risen to more than 25%, with almost two-in-three young people out of work.”
How common are debt crises?
“The frequency of debt crises has increased tremendously since governments, in the 1970s, relaxed the rules governing the global financial system. Between 1941 and 1970, governments defaulted on their debts only six times. Between 1971 and 2004, this occurred 129 times! Debt crises in the 1980s and 1990s, and austerity conditions imposed through bailout loans from the IMF and the World Bank, caused two or more ‘lost decades of development’ in the global South. Between 1980 and 1990, the number of people living in poverty in Latin America increased from 144 million to 211 million. In Africa, the number of people living in extreme poverty (on less than $1.25 a day) increased from 205 million in 1981 to 330 million in 1993.”
What is Both ENDS' role in anti-debt campaigns?
“For many years now, international anti-debt campaigns have called for debt cancellation as an effective form of development cooperation, enabling poor countries to invest in sustainable development instead of constantly having to pay interest and repayments on new loans. As a member of Jubilee Nederland, Both ENDS has always supported these campaigns.”
Does debt cancellation work?
“As a result of global protests and anti-debt campaigns, $130 billion of debt was cancelled for 36 countries – mainly in sub-Saharan Africa – at the beginning of this century. This occurred through the Heavily Indebted Poor Countries (HIPC) Initiative for countries with large debts. Every year, debt cancellation through the HPIC Initiative has saved billions of dollars. Moreover, it has improved the protection of natural resources and has provided millions of people with access to healthcare and education. So it works indeed!”
What has gone wrong?
“Unfortunately, not all countries in need of debt relief were able to benefit from the HIPC Initiative. Moreover, debt cancellation through the HPIC Initiative involved cumbersome and adverse conditions for developing countries. These conditions were to a large extent formulated by creditors – in particular rich countries that are well-represented in the IMF and the World Bank. The Dutch government, too, has always considered the HIPC Initiative, including its conditions, as the international norm. Having little influence in the process, developing countries had no choice but to participate. Yet these countries had insufficient resources to monitor the inflow and outflow of capital. As a result, the threat of new debts has never really disappeared.”
What needs to happen and what should the Netherlands do?
“What Greece is currently experiencing, could just as well happen to developing countries. This is one of the reasons why we need new UN rules to deal with debt crises promptly and fairly. On the initiative of a large number of developing countries, a UN committee to create such rules was established in the beginning of 2015. So far, however, the EU and the US have boycotted this committee’s sessions. The Netherlands should put an end to that boycott and should, together with developing countries, start working towards a fair international system, which ensures that the richest countries contribute most to solving and preventing debt problems.”
For more information about the Greek debt cancellation campaign see cancelgreekdebt.org.
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