In order to assess the legitemacy of the Greek Debt economists, politicians, intellectuals and activists around the world are demanding an independent debt audit like the one in Ecuador. At the same time half a million people protested in March against the austerity measures of the British government. These measures represent the deepest cuts in Great Britain since World War II. The protests ignited when the government anounced to lay off 300.000 civil servants while at the same time reducing corporate taxes. Some companies like Vodafone pay only minimal or no taxes at all in Great Britain.
Eric Toussaint: Committee for the Cancellation of Third World Debts, Brussels, John Hilary: War on Want, London
David Goeßmann: Our next place is Britain. On the 26th of march, half a million people were protesting in the streets of London against the austerity programme by the British government. This programme contains the most severe budget cuts in Great Britain since World War II. The protests were triggered by the news that the governemnt is planning to fire 300.000 employees in public services, while at the same reducing corporate taxes. Some corporations like Vodafone are paying hardly any taxes in the UK.
We talked to John Hilary of the Organisation War on Want in London about the situation in Britain.
John Hillary: Certainly you can see from a situation like in Britain where we over the last 30 years we have seen more and more of national income going towards companies and towards capital. So profit is taking a larger and larger share of national income. Whereas wages and the peoples share of income has gone down. Of a result of that the companies that are producing and producing but they have no way of actually having people consume their products. And as a result of that people have to borrow more and more. And certainly in the British situation that has often meant borrowing in relation to your house. Because the mortgage payments here, the amount of stock which is bought through mortgage is very much higher than in other places in Europe. Certainly much higher than in Germany. As a result of that the debt bubble was created in Britain and the banks exposed to that grew and grew until that structural problems manifested themselves in the crisis 2007/2008. And when the banks collapsed that was almost the consequence of coming through of those 30 years of deregulated lending and liberalised markets. We had these months the introduction of the new budget and therefore the beginning of very severe cut program. But already we are seeing around the country schools hospitals libraries being cut as a result of the government decision. Also there is great pressure on public sector jobs. We are expecting half a million public sector workers to lose their jobs. And also the public sector pensions which have been the compensation for those workers which are not very highly paid workers, their pension have been cut at the same time. What we are most angry about in my organisation but also in the trade union with which we work is that these are ideological political choices. These are not choices made out of necessity. Because we do not actually have a very high ratio of public debt in this coutry. We have a very low ratio of public debt. Both in comparison to other European countries and to our own historical position. For example after the WW II Britain had much much higher levels of public debt. But yet in those times we were able to build a welfare state, build the national health system and build all the national services that we are now enjoy. So we see this as an ideological driven attack, a political attack upon the state by some very right wing ideologues, I'm talking about our government. And that is why we are committed to fight against it. The conservative party which it brought up dreaming the Thatcherite 1980ies where they were able to privatize so much of the state. This is now their second wave of Thatcherism. It is almost the deepest dream Thatcher was never able to realize. Now brought in in a second wave I think that is partly being responsible for it. And the deep irony for us is that we just came through a crisis of capitalism which showed that free markets, liberalisation doesn't work. And so in many countries people would say, we recognize now there is an important role the state has to play in managing the economy for the benefit of the greatest number of people. Instead of that the right has been able to mount a counter offensive. We don't have any more use of the state. We want to get back to a much more severe free market economy in which the market is given free reign to operate as it wishes. That seems to me deeply problematic given that we are still living with the consequences of the greatest crash of capitalism since the Secon World War.""Many people face longterm unemployment. We already have 20 percent youth unemployment. And that's leading to a spiral of despair in many parts of the country. We are already seeing many of the public services being cut so that the support networks and the social welfare which is in place to pick up families which are feeling these pressures, that is also disappearing. So we are replacing very very quickly a lot of the state infrastructure which is supportive, the social model of Britain over the last fifty years. And it's very clear how easy it is to pull down those structures in a few days which can take years and decades to build up. So we are already seeing people who are coming forward with tales of real hardship now and families which are being pushed ? their property and people which are being thrown into longterm unemployment.""We the ordinary people are now paying for the crisis caused by finance capital and caused by the deregulated capitalism. And that's simply unfair. The protest on 26th of April was very important and certainly we all taking part in it, we with War on Want and many many individuals who have not been part of that type of political action in the past it was a very important day. But it can only be the beginning. That can not be the end of the protest. That must now spearm more and more protest in the coming months. Because our concern is that we saw major protests take place in France last year in response to the pension's reform that they had there. And huge protests week after week after week. And still president Sarkozy was able to push through the pension reform. So we know in this country that we have to build a very strong movement not just the trade unions protests but also direct action. So the work of groups that UK Uncut were doing. Direct action in shops, in high streets. And also the local mevements, local demonstrations, local protests against cuts in their local services.
David Goeßmann: The Committe for the Cancellation of Third World Debts is also calling for a cancellation of illegitimate debts in Europe. We talked to the President of the Organisation, Eric Toussaint, in Brussels.
Eric Toussaint: A debt audit serves to determine the illegitimate part of a country’s debts. It consists of a detailed analysis of the various aspects of loan agreements to determine which parts need to be paid back and which not. A considerable portion of the Greek debt is in my opinion illegitimate. There are numerous examples of this. Let’s begin with the most recent one. Since the summer of 2010 the European Union, the International Monetary Fund and the financial markets have forced Greece to take out loans at exorbitant interest rates, under conditions that clearly violate the economic and social rights of the Greek people. The conditions that the European Commission and the IMF put forward for loans puts into question basic rights such as old-age pension schemes or appropriate compensation for contracted labour. This constitutes the first part of the debt that is in my opinion illegitimate – which of course brings with it a legal debate. When we go further into the past we need to analyze the contracts that Greece went into to finance the Olympic Games. The Games were initially too cost somewhat less than one billion Euros. That was the sum that was officially announced in 1997 as Greece won the bid to hold the games for 2004. The real costs, however, amounted to about 20 billion Euros. The Greek authorities took on considerably more dept in order to satisfy suppliers, particularly, the firm Siemens and its subsidiary Siemens Hellas, which enormously increased the price for its supplies. And in order to get Greek authorities to accept the increased prices Siemens Hellas bribed Greek officials to the order of 1000 million Euros, that’s a billion Euros that went to bribe the socialist party PASOK, as well as to the rightist party “New Democracy”. This would be a third example of debt which was incurred in an illegitimate manner, because the debt resulted through bribing of officials by companies such as Siemens. Another example one should mention is the debt incurred through the purchase of arms. Greece is the country inside Europe with the second highest outlays for defence measured in gross domestic product. The number one is the USA. And the two most important providers of weapons to Greece are France and Germany. And pressure is exerted onto the Greek government to uphold these huge defence expenditures, which in no way can be justified. These are three examples – one can deliver more – that in my opinion a close examination would conclude that the Greek debt should radically be reduced or simply cancelled altogether. There are a number of examples of sovereign countries that have refused to pay back illegitimate debt. Such as the case of Ecuador that between the years of 2007/2008 did a debt audit and as a result of the audit suspended 70 percent of its payment, particularly debt owed to Wall Street. That was an important victory for the government of Ecuador which was able to cancel two thirds of its debt this way, amounting to about 7 billion dollars – a large amount for a small country. Concerning the question as to whether or not such a debt cancelling in the case of Greece would lead to a serious bank crisis, one should remember that the private banks themselves, since the crisis of 2007/2008, have written off 1600 billion in toxic papers from their books. This shows that one can cancel such dubious claims in order to clean up the balances of a bank’s books. If one can cancel 1600 billion Euros – and there will certainly be more hundreds of million written off, because no one knows how much of these toxic papers are still on the books of these banks – I see no reason why one cannot cancel hundreds of millions of illegitimate debt from states like Greece, Ireland or Portugal. It is in fact urgently necessarily that the bankers whose irresponsible credit policies caused the crisis pay for its solution. We cannot see why the citizens of Greece, Portugal, and Ireland and in a broader sense the European Union should pay the bill for the banks that they themselves are responsible for. We have to fully reconsider the manner in which public debt is dealt with. The European Central Bank, for example, refuses to directly lend money to states that need money. Instead they lend money to private banks that then buy government bonds from Greece, Portugal, Spain and so forth at huge interest rates. Necessary would be – and this after debt forgiveness – that the central bank in critical situations would at reasonable rates lend directly to the states themselves – naturally not in every case and in an arbitrary manner, but in times of real crisis. At present the central bank lends money to the private banks at 1,25 percent. The private banks in turn are asking 6 percent for Greek, Irish and Portuguese short term government bonds and 12 percent for 20 year bonds. The private banks are thus making scandalous and unacceptable profits. One has to see at what conditions credit is given to states and that in the future credit is given directly through the central bank. This means, in particular, to resist the will of Angela Merkel’s government that does not want the central bank to lend money directly to the states.