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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 6 - Let us now go back to the development of the Greek crisis

Between September 2009 and March 2010, foreign banks’ loans to Greek banks decreased by over 50%.

The Greek banks only survived thanks to liquidities made available by the Bank of Greece under ECB rules that provide for massive cash-flow to all the Eurozone banks. (The same practice is followed by the Fed, the Bank of England and the Swiss central bank).

In the following graph the green line shows how the tendencies of the Greek banks to use the Eurosystem funding massively increased after September 2008.

Blue line: Loans from the Greek banks to the government.
Green line: Loans from the Central Bank to Greek Banks
Source: Bank of Greece.

From October 2009 to early May 2010, there were a number of meetings between the European institutions, the IMF, bankers and the new government of the socialist PM George Papandreou, who had won the elections on 4 October 2009 with 43% of the votes, which is a very high rate. They were to finetune a new bail-out programme for the Greek banks and their creditors. Greece did not have enough financial resources to help them out.

What should have been done is the opposite of what Papandreou did, siding as he did with private banks that were responsible for the crisis: namely refuse point-blank to give new public money to the banks and avoid increasing the public debt for this nefarious objective. If Papandreou had adopted an attitude that suited the interests of a majority of Greece’s people, we would have avoided the social and political drama that ensued.

A first pack of austerity measures was implemented by the Greek government in complete contradiction with its electoral promises. Simultaneously the Troika was being created and the first Memorandum of Agreement, made public in May 2010, was drafted in secret (see comments on the secret IMF documents: http://www.cadtm.org/Secret-IMF-Documents-on-Greece).

Source, links, references:


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