Photo Credits: Jublilee Debt on Flickr. Jubilee Debt Campaign members dressed as bankers outside the European Commission hold Greece hostage
Eilis Ryan of the Debt & Development Coalition writes about recent events in Greece and draws out the lessons we need to learn.
From the election of Syriza in Greece last January on a platform opposed to unjust debt, we have witnessed the clear willingness of Europe’s leaders to overrule the democratic mandate of a people.
After protracted negotiations the eventual “deal” reached between Greece and its creditors involves a third 86billion euro “bailout”, in exchange for Greek commitments to privatise 50billion euro of public assets and services, hike VAT on basic goods and weaken pension conditions.
Debt relief – critical to any recovery of the Greek economy – was absent from the negotiating table. Meanwhile, minimal amounts of new loans will reach the Greek people. What has become clear is that those in power in Europe are not subject to public, democratic pressure and that the gap between democratic process and economic decision-making widening. Europe’s most democratic structure for example – the European Parliament – has had negligible engagement in the Greek debt crisis. In such situations it is not surprising that the interests of the wealthiest step in to fill the chasm. For those committed to bringing about just solutions to sovereign debt crises there are lessons to be learned from this.
How can we as citizens exert influence if those making the decisions are no longer the politicians we elect? Is a default on unjust debt ever possible without disastrous consequences?
In a recent report published by DDCI, professor Alan Cibils examined the Argentinean government’s efforts to solve its debt crisis by defaulting on IMF loans, and instead regaining monetary sovereignty by de-pegging the peso from the dollar, and subsequently devaluing the currency. This was accompanied by a realistic renegotiation of debts with creditors, and significant write-downs. There were clear economic benefits to pursuing such a strategy. Pursuing it within the current economic and political structures of the EU however would be near impossible.
For us in Ireland, as for those in Greece, a unilateral approach to debt write-down which depends on leaving the euro becomes more complex. A withdrawal from the euro does not take us out of the globalised economy within which Ireland is deeply integrated.
Neither does it protect us from the speculation on our newly “independent” currency that would inevitably follow any euro exit. We would be left between a rock and a hard place.
A small step towards tackling this broader global economy of debt is the attempt to establish a UN-based sovereign debt resolution body. Countries entering debt crisis could approach such a body and ask for them to mediate between them and their creditors, to ensure a just and swift resolution to debt crises. The Argentinean and Bolivian governments have since last September been attempting to push forward such a mechanism at the United Nations. While it is easy to dismiss such global UN-style mechanisms as soft and ineffective, the level of political opposition to it should serve as an indicator that it is seen as a threat by the powers that be.
The United States and a majority of European states, including Ireland, voted against the mechanism in the first place, and there has been a comprehensive boycott by wealthy countries of the subsequent negotiations on what shape the mechanism might take.
Such unprecedented levels of opposition is an indicator that a global debt resolution mechanism, run under independent United Nations rules, could have real teeth, and for that reason alone, should be welcomed by debt activists.