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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 19 - The scam of the 2012 debt restructuring

In March 2012, European leaders announced that €107 billion of public debts were cancelled. On paper private creditors renounced 53.5% of their debt obligations. But contrary to appearances the operation was actually good news for the Greek and European (mainly French and German) banks, and not for the Greek people whose living conditions were to further deteriorate.

Indeed private creditors, the Troika and the Greek government had set up a complex mechanism: private creditors would exchange their Greek securities against others at a lower nominal value. For a €100 bond they would get one for €46.5. But instead of losing at that game creditors were actually exchanging securities they could sell for €15 to €30 on the secondary market against much safer securities. Moreover they received compensations for tens of billions of euros.

Now to finance compensations to the banks as well as the furthering of neoliberal policies, the Troika granted another loan in the amount of €130 billion on condition that it be used to repay the debt and support the banks.

While all major media intoned the official anthem that said that the Greek debt had been reduced by €107 billion, they forgot to include the loan of €130 billion granted by the Troika. At the end of the day private creditors had made a good bargain and were replaced by international public creditors (ECB, Eurozone member states, IMF) that were going to exert an unrelenting pressure on the Greek authorities to implement ever worse antisocial measures.

Furthermore, while in case of litigation 85% of the former securities were subject to Greek law, all the new securities came under Luxembourg law. The creditors’ aim was to curtail Greece’s possibility to default or cancel its debt.

The major losers of the 2012 restructuring were public social-security entities and small shareholders. Adopting the two laws enforced by the Troika had as a consequence that hundred of public entities had to bear losses for a total amount of €16.2 billion. Most of those losses were borne by public pension funds (€14.5 billion, out of their €21 billion provision). The other group that registered significant losses consisted of small holders.

The number of households who lost most of their savings overnight is estimated at over fifteen thousand. Such a situation can be explained from the fact that for years state securities were sold as absolutely safe.

Source, links, references:


[1] [2] [3] [4] [5] [6] [7] [8] [9] [10] [11] [12] [13] [14] [15] [16] [17] [18] [20] [21]

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