The Troika’s Policy in Greece: Rob the Greek people and give the money to private banks, the ECB, the IMF and the dominant States of the Eurozone
On
20 August 2018, the Greek government of Alexis Tsipras, the IMF and
the European leaders celebrated the end of the Third Memorandum.
On
this occasion, the major media and those in power spread the
following message: Greece has regained its freedom, its economy is
improving, unemployment is on the decline, Europe has lent Greece 300
billion and the Greeks will have to start repaying that debt in 2022
or in 2032.
The
main claims are completely unfounded as Greece remains under the
control of its creditors. In compliance with the accords that the
Alexis Tsipras government signed, the country must imperatively
achieve a primary budgetary surplus of 3.5% which will force it to
continue brutal policies of reduction of public spending in the
social sector and in investment. Contrary to the dominant message
that Greece will not begin to repay its debt until some time in the
future, it should be clearly understood that Greece has been repaying
considerable amounts constantly all along to the ECB, the IMF and to
private creditors, and this prevents it from responding to the needs
of its population.
by
Eric Toussaint
Part
14 - The IMF’s intolerable interference in Greece from 2010
In
January 2017, the CADTM drew attention to two documents kept secret
by the IMF, a passage from which about the situation of Greek banks
is quoted above. These authentic documents were placed at the
disposal of the Truth Committee on Greek Public Debt by Zoe
Konstantopoulou, the President of the Hellenic Parliament in office
from 6 February to 3 October 2015.
The
contents of these documents dated March and May 2010 respectively is
damning for the IMF. They clearly show that a large number of its
Executive Board members expressed severe criticism of the programme
the institution was preparing to implement. Some of them denounced
the fact that the programme was aimed at rescuing the private
European banks – mainly certain major French and German banks –
who were holders of Greek debt, both public and private. Several of
them denounced the selfsame policies that had led to the Asian crisis
of 1996-1997 and the Argentine crisis in 2001.
Several
executives denounced the fact that the principal executive officers
(mainly the Managing Director, Dominique Strauss-Kahn and the Deputy
Director, John Lipsky) had, unbeknownst to the other members of the
Board, modified one of the fundamental rules that condition credits
allocated by the IMF to its members.
Indeed,
for a loan to be granted by the IMF, it must be shown that this loan
and the accompanying programme will render debt repayment
sustainable. This condition could not be satisfied in the case of
Greece, since the IMF directorate and the European authorities
refused to reduce the Greek debt or to make private banks contribute.
Therefore the above-mentioned condition was deleted on the sly, and
replaced by a new criterion: the need to avoid a high risk of
international systemic financial destabilization.
The
IMF’s Management invoked urgency to justify this totally irregular
change of the rules. To persuade the IMF executives who were the most
reticent, the French, German and Dutch directors lied, each promising
that their country’s banks would not disengage from Greek bonds.
They claimed that the French, German and Dutch banks would hold onto
their Greek bonds to enable the newly-starting programme to succeed.
Since
then it has been proven that the French, German and Dutch banks
massively sold off the bonds they held on the secondary market, thus
aggravating the Greek crisis and transferring to European tax-payers,
especially Greek tax-payers, the burden of the risks they had taken
and of the crisis which was largely their fault.
Again,
to calm the reticence of certain executive directors, the IMF
directors handling relations with Greece declared that social
measures would be taken to protect people with low salaries and small
pensions from the austerity measures. They lied.
Furthermore,
to get the agreement of the executive members of the IMF, they
claimed that Greek banks were sound and that their problems were
entirely due to risks engendered by far too much public debt and a
colossal public deficit. This was untrue: Greek banks were in a
disastrous situation. Another lie invented to convince the doubters
was that the plan would be submitted to the Hellenic Parliament for
approval.
To the
executive directors of the IMF who wanted the banks to contribute
“collectively” to the solution by agreeing to debt reduction,
those handling the Greek dossier claimed that the Greek authorities
would not hear of public debt reduction. The Greek representative,
Panagiotis Roumeliotis, confirmed this fabrication.
Later,
this same representative claimed that it was under pressure from the
European Central Bank (ECB) that Greece had declared that it did not
want a debt reduction. According to Roumeliotis, Jean-Claude Trichet
threatened to withdraw Greek banks’ access to ECB liquidities.
Certainly, Jean-Claude Trichet did use this threat during the months
of negotiation of the Memorandum. It turns out that he used the same
threat against Ireland, too, a few months later during the
fine-tuning of the Memorandum concerning that country.
It is
also known that Greek bankers, like the French, German and Dutch
bankers, were not interested in reducing Greece’s debt as they
refused to contribute to their own rescue package. The Greek bankers
managed to get two years’ respite which enabled them to disengage
and obtain significant compensation.
The IMF
contended that as Greece belonged to the Eurozone, devaluing its
currency to regain competitiveness was impossible, so it would have
to devalue wages and social benefits. This is what is known as
internal devaluation, and it is wreaking havoc in Greece and other
peripheral countries within the Eurozone.
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