Democracy in Greece is sacrificed to service an odious debt

2011-11-08

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A new coalition government between the two major parties in Greece, socialist PASOK and conservative New Democracy, is being formed. The final composition of the new government has not been decided, yet it is clear that it will be given the mandate to negotiate the terms of the new bailout package and lead the country to national elections within the following months. In the meantime democracy seems to be the greatest victim in the whole process, as on one hand national politicians are preparing to accept a new multi-year memorandum that will definitely bring harsher austerity measures and give a greater share of national sovereignty abroad; on the other hand foreign politicians, from European partners to important international players, are putting immense pressure on Greece’s two major parties to sign a binging document that will force them to implement in full the decisions of the October 26 European summit. The latter constitutes a clear intervention in the interior of the country as it directly suggests that elected Members of Parliament will be bound by the signatures of their parties’ leaders, not to have the option of posing any objections to the new package. Ruling out all choices with orders backed by threats, in a part of the world where democracy is considered the highest of achievements, is by all means unacceptable as it violates the very founding principles of the European Union and modern western civilization in general.

I have time and again stressed that Greece is to be fully blamed for the malignancies of its economy/society/state. I have also made it crystal-clear that the Greek people must finally take the bold and pragmatic decision to abandon all those practices that transformed the country into a barren wasteland. This however does not imply, under any circumstances, that a sense of proportionality should not exist and that any suffering or any violations of principles, values and rights are acceptable. The crisis in Greece, despite all internal maladies, is a manifestation of the broader European crisis, of the systemic crisis of the euro. A Euro that lacks a central bank that would openly act as a lender of last resort, that would maintain all necessary stabilizing mechanisms to balance the structural trade deficits within the area, that would have a well regulated banking sector where private banks would be prevented from being over-leveraged and where mandatory recapitalizations would occur in cases zombie-banks that retard growth existed.

In addition the Greek debt is odious; first because the loans that were taken in the name of the Greek people were not used for the common good, second the burdens that accompany this debt are disproportionate, in many cases inhumane and increasingly undemocratic. Greek people are forced to pay considerably higher taxes, with an exponentially diminishing income, deprived from vital services. Their contributions are not utilized for the social good, to fund public works, or to improve education, healthcare, or to stimulate the economy. All of their taxes are used in unproductive expenditures with the lion’s share going to the payment of interest on older debts that where taken without popular consent, for which the Greek people did not benefit.

Moreover the 50% haircut on private investors that will ostensibly lead to a debt reduction of a 100 billion euro, is a myth. This number is absolutely indicative, since the math that would lead to that number is filled with unknown variables as negotiations will be carried out in the weeks ahead to finalize the plan. Moreover the official document makes clear mention to “nominal discount will be 50% on notional Greek debt held by private investors” that will be accompanied by “__The Euro zone Member States would contribute to the PSI package up to 30 bn euro”. From private investors individuals and pension funds will be excluded, while states will provide 30 bn euro to the much-vaunted 100 bn debt reduction, while also bank recapitalizations will be required during the summer. All this proves that the 50% haircut is a derisory number, used to lure the Greek people into believing that its creditors are being kind with them and are making presents out of their good heart.

Yes Greece must change. Yes the economy must be liberalized, the tax collection mechanisms be enhanced, political corruption be combated. No sensible person has any objection to the above, for as long as the burdens are proportional and will eventually be for the public good. However none has the right to impose disproportionate measures, nor to intervene in the internal affairs of the country in the name of servicing an odious debt. Human dignity, individual liberty, democracy are always above any kind of debt and cannot be violated by any creditor or partner who asks for money with interest, backed by threats.