International

According to SP Member of Parliament and finance spokesman Ewout Irrgang, the new European accord once again represents no kind of solution for Greece. ‘Cancelling 53% of the debt to banks might perhaps two years ago have been enough,’ says Irrgang. ‘But since then so much debt has been added, that this alleged solution is merely more muddling through for the Greeks and the entire Eurozone.’

The agreement arrived at in Brussels in the end changes nothing when it comes to the Greek national debt. Two years ago this stood at 120% of the country’s Gross Domestic Product and even without further setbacks it will remain above that level in 2020. This least negative scenario is to be doubted, however, because the economic aims set for privatization are extremely ambitious and the Greek economy still shows no sign of recovery. In addition, because of the rigorous austerity policies in the rest of Europe, demand for the country’s exports has shrunk considerably. Meanwhile the EU has loaned Greece €240 billion, a sum which may well be increased by €50 billion. “It’s great that now at last a start has been made on the rescheduling of the Greek debt, but it’s too little too late,” says Irrgang. “This is not sufficient to bring about a lasting solution.”

Because we have had to wait so long for the rescheduling of the debt, banks have been able to some extent to pull out of Greece. European governments have gradually taken the Greek debts over from the banks, so that the debt has become ever less a private matter and increasingly public. “Banks which have made a great deal of money from risky Greek loans have withdrawn and thus evaded their responsibility,” Irrgang notes, adding that “it’s certainly the case that the banks bear a heavy responsibility for the Greek tragedy currently being played out.”

An immediate cancellation of half of the Greek debt two years ago would have left a debt equivalent to half of the country’s GDP. Now that the economy has shrunk in the meantime by some 20%, the total Greek debt is much higher, and now also almost half of it is in public hands and a much bigger cancellation of the debt to banks would be needed to arrive at a sustainable level of Greek public debt. Because the cancellation is voluntary on the part of the banks €30 billion of European taxpayers’ money has been used to tempt the banks to write off €107 billion of their Greek loans.

As Irrgang says, “The banks are now getting sweeteners while for the Greeks all that’s left is a bitter pill which probably won’t even provide a cure. The financial sector throughout Europe is being handled with kid gloves and as a result the European peoples are left to foot the bill.”