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Greek Debt Committee Just Declared All Debt To The Troika "Illegal, Illegitimate, And Odious"
It was in April when we got a stark reminder of a post we first penned in April of 2011, describing Odious Debt, and why we thought sooner or later this legal term would become applicable for Greece, because two months ago Greek Zoi Konstantopoulou, speaker of the Greek parliament and a SYRIZA member, said she had established a new "Truth Committee on Public Debt" whose purposes was to "investigate how much of the debt is “illegal” with a view to writing it off."
Moments ago, this committee released its preliminary findings, and here is the conclusion from the full report presented below:
All the evidence we present in this report shows that Greece not only does not have the ability to pay this debt, but also should not pay this debt first and foremost because the debt emerging from the Troika’s arrangements is a direct infringement on the fundamental human rights of the residents of Greece. Hence, we came to the conclusion that Greece should not pay this debt because it is illegal, illegitimate, and odious.
As we predicted over four years ago, Greece has effectively just declared that it will no longer have to default on its IMF (or any other debt - note that the dreaded "Troika" word finally makes an appearance after it was officially banned) simply because that debt was not legal to begin with, i.e. it was "odious."
If so, this has just thrown a very unique wrench in the spokes of not only the Greek debt negotiations, but all other peripheral European nations' Greek negotiations, who will promptly demand that their debt be, likewise, declared odious, and made null and void, thus washing their hands of servicing it again.
And another question: when Greece says the debt was illegal and it no longer has to make the June 30 payment, what will be the Troika's response: confiscate Greek assets a la Argentina, declare involutnary default, sue it in the Hague?
Good luck.
From the full just released report by the Hellenic Parliament commission:
Hellenic Parliament’s Debt Truth Committee Preliminary Findings - Executive Summary of the report
In June 2015 Greece stands at a crossroad of choosing between furthering the failed macroeconomic adjustment programmes imposed by the creditors or making a real change to break the chains of debt. Five years since the economic adjustment programmes began, the country remains deeply cemented in an economic, social, democratic and ecological crisis. The black box of debt has remained closed, and until now no authority, Greek or international, has sought to bring to light the truth about how and why Greece was subjected to the Troika regime. The debt, in whose name nothing has been spared, remains the rule through which neoliberal adjustment is imposed, and the deepest and longest recession experienced in Europe during peacetime.
There is an immediate need and social responsibility to address a range of legal, social and economic issues that demand proper consideration. In response, the Hellenic Parliament established the Truth Committee on Public Debt in April 2015, mandating the investigation into the creation and growth of public debt, the way and reasons for which debt was contracted, and the impact that the conditionalities attached to the loans have had on the economy and the population. The Truth Committee has a mandate to raise awareness of issues pertaining to the Greek debt, both domestically and internationally, and to formulate arguments and options concerning the cancellation of the debt.
The research of the Committee presented in this preliminary report sheds light on the fact that the entire adjustment programme, to which Greece has been subjugated, was and remains a politically orientated programme. The technical exercise surrounding macroeconomic variables and debt projections, figures directly relating to people’s lives and livelihoods, has enabled discussions around the debt to remain at a technical level mainly revolving around the argument that the policies imposed on Greece will improve its capacity to pay the debt back. The facts presented in this report challenge this argument.
All the evidence we present in this report shows that Greece not only does not have the ability to pay this debt, but also should not pay this debt first and foremost because the debt emerging from the Troika’s arrangements is a direct infringement on the fundamental human rights of the residents of Greece. Hence, we came to the conclusion that Greece should not pay this debt because it is illegal, illegitimate, and odious.
It has also come to the understanding of the Committee that the unsustainability of the Greek public debt was evident from the outset to the international creditors, the Greek authorities, and the corporate media. Yet, the Greek authorities, together with some other governments in the EU, conspired against the restructuring of public debt in 2010 in order to protect financial institutions. The corporate media hid the truth from the public by depicting a situation in which the bailout was argued to benefit Greece, whilst spinning a narrative intended to portray the population as deservers of their own wrongdoings.
Bailout funds provided in both programmes of 2010 and 2012 have been externally managed through complicated schemes, preventing any fiscal autonomy. The use of the bailout money is strictly dictated by the creditors, and so, it is revealing that less than 10% of these funds have been destined to the government’s current expenditure.
This preliminary report presents a primary mapping out of the key problems and issues associated with the public debt, and notes key legal violations associated with the contracting of the debt; it also traces out the legal foundations, on which unilateral suspension of the debt payments can be based. The findings are presented in nine chapters structured as follows:
Chapter 1, Debt before the Troika, analyses the growth of the Greek public debt since the 1980s. It concludes that the increase in debt was not due to excessive public spending, which in fact remained lower than the public spending of other Eurozone countries, but rather due to the payment of extremely high rates of interest to creditors, excessive and unjustified military spending, loss of tax revenues due to illicit capital outflows, state recapitalization of private banks, and the international imbalances created via the flaws in the design of the Monetary Union itself.
Adopting the euro led to a drastic increase of private debt in Greece to which major European private banks as well as the Greek banks were exposed. A growing banking crisis contributed to the Greek sovereign debt crisis. George Papandreou’s government helped to present the elements of a banking crisis as a sovereign debt crisis in 2009 by emphasizing and boosting the public deficit and debt.
Chapter 2, Evolution of Greek public debt during 2010-2015, concludes that the first loan agreement of 2010, aimed primarily to rescue the Greek and other European private banks, and to allow the banks to reduce their exposure to Greek government bonds.
Chapter 3, Greek public debt by creditor in 2015, presents the contentious nature of Greece’s current debt, delineating the loans’ key characteristics, which are further analysed in Chapter 8.
Chapter 4, Debt System Mechanism in Greece reveals the mechanisms devised by the agreements that were implemented since May 2010. They created a substantial amount of new debt to bilateral creditors and the European Financial Stability Fund (EFSF), whilst generating abusive costs thus deepening the crisis further. The mechanisms disclose how the majority of borrowed funds were transferred directly to financial institutions. Rather than benefitting Greece, they have accelerated the privatization process, through the use of financial instruments.
Chapter 5, Conditionalities against sustainability, presents how the creditors imposed intrusive conditionalities attached to the loan agreements, which led directly to the economic unviability and unsustainability of debt. These conditionalities, on which the creditors still insist, have not only contributed to lower GDP as well as higher public borrowing, hence a higher public debt/GDP making Greece’s debt more unsustainable, but also engineered dramatic changes in the society, and caused a humanitarian crisis. The Greek public debt can be considered as totally unsustainable at present.
Chapter 6, Impact of the “bailout programmes” on human rights, concludes that the measures implemented under the “bailout programmes” have directly affected living conditions of the people and violated human rights, which Greece and its partners are obliged to respect, protect and promote under domestic, regional and international law. The drastic adjustments, imposed on the Greek economy and society as a whole, have brought about a rapid deterioration of living standards, and remain incompatible with social justice, social cohesion, democracy and human rights.
Chapter 7, Legal issues surrounding the MOU and Loan Agreements, argues there has been a breach of human rights obligations on the part of Greece itself and the lenders, that is the Euro Area (Lender) Member States, the European Commission, the European Central Bank, and theInternational Monetary Fund, who imposed these measures on Greece. All these actors failed to assess the human rights violations as an outcome of the policies they obliged Greece to pursue, and also directly violated the Greek constitution by effectively stripping Greece of most of its sovereign rights. The agreements contain abusive clauses, effectively coercing Greece to surrender significant aspects of its sovereignty. This is imprinted in the choice of the English law as governing law for those agreements, which facilitated the circumvention of the Greek Constitution and international human rights obligations. Conflicts with human rights and customary obligations, several indications of contracting parties acting in bad faith, which together with the unconscionable character of the agreements, render these agreements invalid.
Chapter 8, Assessment of the Debts as regards illegtimacy, odiousness, illegality, and unsustainability, provides an assessment of the Greek public debt according to the definitions regarding illegitimate, odious, illegal, and unsustainable debt adopted by the Committee.
Chapter 8 concludes that the Greek public debt as of June 2015 is unsustainable, since Greece is currently unable to service its debt without seriously impairing its capacity to fulfill its basic human rights obligations. Furthermore, for each creditor, the report provides evidence of indicative cases of illegal, illegitimate and odious debts.
Debt to the IMF should be considered illegal since its concession breached the IMF’s own statutes, and its conditions breached the Greek Constitution, international customary law, and treaties to which Greece is a party. It is also illegitimate, since conditions included policy prescriptions that infringed human rights obligations. Finally, it is odious since the IMF knew that the imposed measures were undemocratic, ineffective, and would lead to serious violations of socio-economic rights.
Debts to the ECB should be considered illegal since the ECB over-stepped its mandate by imposing the application of macroeconomic adjustment programs (e.g. labour market deregulation) via its participation in the Troïka. Debts to the ECB are also illegitimate and odious, since the principal raison d’etre of the Securities Market Programme (SMP) was to serve the interests of the financial institutions, allowing the major European and Greek private banks to dispose of their Greek bonds.
The EFSF engages in cash-less loans which should be considered illegal because Article 122(2) of the Treaty on the Functioning of the European Union (TFEU) was violated, and further they breach several socio-economic rights and civil liberties. Moreover, the EFSF Framework Agreement 2010 and the Master Financial Assistance Agreement of 2012 contain several abusive clauses revealing clear misconduct on the part of the lender. The EFSF also acts against democratic principles, rendering these particular debts illegitimate and odious.
The bilateral loans should be considered illegal since they violate the procedure provided by the Greek constitution. The loans involved clear misconduct by the lenders, and had conditions that contravened law or public policy. Both EU law and international law were breached in order to sideline human rights in the design of the macroeconomic programmes. The bilateral loans are furthermore illegitimate, since they were not used for the benefit of the population, but merely enabled the private creditors of Greece to be bailed out. Finally, the bilateral loans are odious since the lender states and the European Commission knew of potential violations, but in 2010 and 2012 avoided to assess the human rights impacts of the macroeconomic adjustment and fiscal consolidation that were the conditions for the loans.
The debt to private creditors should be considered illegal because private banks conducted themselves irresponsibly before the Troika came into being, failing to observe due diligence, while some private creditors such as hedge funds also acted in bad faith. Parts of the debts to private banks and hedge funds are illegitimate for the same reasons that they are illegal; furthermore, Greek banks were illegitimately recapitalized by tax-payers. Debts to private banks and hedge funds are odious, since major private creditors were aware that these debts were not incurred in the best interests of the population but rather for their own benefit.
The report comes to a close with some practical considerations. Chapter 9, Legal foundations for repudiation and suspension of the Greek sovereign debt, presents the options concerning the cancellation of debt, and especially the conditions under which a sovereign state can exercise the right to unilateral act of repudiation or suspension of the payment of debt under international law.
Several legal arguments permit a State to unilaterally repudiate its illegal, odious, and illegitimate debt. In the Greek case, such a unilateral act may be based on the following arguments: the bad faith of the creditors that pushed Greece to violate national law and international obligations related to human rights; preeminence of human rights over agreements such as those signed by previous governments with creditors or the Troika; coercion; unfair terms flagrantly violating Greek sovereignty and violating the Constitution; and finally, the right recognized in international law for a State to take countermeasures against illegal acts by its creditors , which purposefully damage its fiscal sovereignty, oblige it to assume odious, illegal and illegitimate debt, violate economic self-determination and fundamental human rights. As far as unsustainable debt is concerned, every state is legally entitled to invoke necessity in exceptional situations in order to safeguard those essential interests threatened by a grave and imminent peril. In such a situation, the State may be dispensed from the fulfilment of those international obligations that augment the peril, as is the case with outstanding loan contracts. Finally, states have the right to declare themselves unilaterally insolvent where the servicing of their debt is unsustainable, in which case they commit no wrongful act and hence bear no liability.
People’s dignity is worth more than illegal, illegitimate, odious and unsustainable debt
Having concluded a preliminary investigation, the Committee considers that Greece has been and still is the victim of an attack premeditated and organized by the International Monetary Fund, the European Central Bank, and the European Commission. This violent, illegal, and immoral mission aimed exclusively at shifting private debt onto the public sector.
Making this preliminary report available to the Greek authorities and the Greek people, the Committee considers to have fulfilled the first part of its mission as defined in the decision of the President of Parliament of 4 April 2015. The Committee hopes that the report will be a useful tool for those who want to exit the destructive logic of austerity and stand up for what is endangered today: human rights, democracy, peoples’ dignity, and the future of generations to come.
In response to those who impose unjust measures, the Greek people might invoke what Thucydides mentioned about the constitution of the Athenian people: "As for the name, it is called a democracy, for the administration is run with a view to the interests of the many, not of the few” (Pericles’ Funeral Oration, in the speech from Thucydides’ History of the Peloponnesian War).
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They have no right bailing out private banks and institutions with public money that is complete bullshit!
A bad investment is a bad investment. You win some and you lose some. That'ss life.
If these banks do not lose then they will not change and make better investment decisions.
Greek Debt Committee Just Declared All Debt To The Troika "Illegal, Illegitimate, And Odious"
And in a follow-up statement, the Greek Debt Committee added that "The Troika is ugly, and its mother dresses it funny."
Greece self-identifies with solvency.
The people of Greece have paid their debt many times over and are still paying the interest on the interest.
I think the one thing we can all agree on is the fact that the EMU is a total disaster
Trillions in dumbing the world down and along comes some little wise guy...
I'll just leave this here, too.
https://www.youtube.com/watch?v=Zvl9N9GdraQ
Illegal means and corner cutting got Greece into this mess-It was not legal to even lend Greece money...given their circumstances-but the bankers were greedy and wanted another interest-income stream into their pockets and so here we are. It looks like Greece has finally drawn a line in the sand. Good for them! Now about that Lehman event this weekend...it was like the bankers who knowing lent people with no means of income, to take on house loans-IT WAS THIER FAULT when the bubble popped, and many defaulted.
Chapter 7 pretty much sums up the PPT!
Where did all the debt money go to? Where is it now? Did the money build or create anything?
Nope. No wealth creation whatsoever. The money apparently didnt even reach greece.
Sooooo . . . it seems obvious that the next step is for Tsipras to formally repudiate the debt and refuse further payments.
The question is, will he get away with it? Or will the overfunded military that IMF refused to allow him to cut, suddenly move into the Presidential Palace and declare martial law, like it did in 1967? Germany can't move in directly without setting off too many memories of the Nazis. The EU lacks a common military arm, and NATO is the creature of the U.S., which like Germany can't be seen to interfere directly. Likely Tsipras' meeting with Putin over the oil pipelines, includes some kind of assurances of support in the event of direct U.S. intervention. So if it's going to be done, the Banksters will have to work through the Greek military.
Anybody know anything much about the Chief of the Hellenic General Staff, Michail Kostarakos? He appears to have multiple ties to the EU and the U.S., and as his father fought in the Greek Civil War we must assume he fought against the Communists.
If there were a coup, Greece would be promptly out of the EU as well as the euro. The EU masters might want to retain Greece but the public outcry across Europe would be too strong to resist. Probably also be forced out of NATO.
That would put the Greek military in a really difficult situation within Greece. They would have a basket case economy, no support of any kind from Europe, an inability to run the economy effectively so little support from the Greek people, and the certainty of being tried and gaoled once Greece returned to democracy.
Their only hope would be to turn to Russia/China for support, but that would be precisely what the coup was intended to prevent.
If the Greek Parliment implements a no pay rule based upon the above, whether it really comes to fruition or not, the first shot has been fired across the bow of the EU and the IMF. The related dominoe effect is going to kick in if it does come to fruition. We may be witnessing the beginning of a European bond implosion.
And my thoughts come to what the people have forgotten, in general. The power of compounding interest.
The banks never forget! If they can make it through this coming Tsunami!
EXIT
DEFAULT
INDEPENDENCE
Perhaps "default" isn't the correct term. Anything fiat, fake, fraud, fiction, fantasy, fractional-reserve and created out of nothing... IS NOTHING.
For humans to tolerate human predators doing business as fiat, fake, fraud, fiction, fantasy "organization" who can create and trade nothing for something has to be one of the most insane (of a great many extremely insane) notions of mankind.
END FIAT.
... otherwise ...
MANKIND WILL END.
-----
The IMF and ECB are fiction, the so-called government of Greece is fiction, Greece is fiction, and all banks and financial are fictions, and what they lend is fiction.
It is all fiction... except the humans who play these stupid games.
Everyone who wasn't part of the process should wash their hands of it all, and never interact with anyone who claims to be or represent any fiction. Then they can start living a real life.
Well said Honest Ann. Its all a big fiction/fraud.
That would be great! End FIAT... Except, there is no other kind of money. All money is fiat. Money is a symbol. Not a physical entity
Gold is money.
Silver is money.
Any valuable physical good can be money.
And none are fiat because they're real and have value.
Right on cue. Collapse starts in July. Police state total control in the United States by November.
To quote the Sri Yoginanda Berra, the wisest and most sublime of Eastern Phiosophers:
"It ain't over till it's over"
I thought George W Bush said that right after SCOTUS decided Gore v Bush in his favor and stopped the Florida recount.
At issue is whether solvency should be defined in the traditional common-sense way, in terms of the ability of income to carry one’s current obligations, or a purely balance-sheet approach taken by creditors seeking to extract payment by stripping assets. This is Greece’s position. Is it merely a liquidity problem if the government is told to sell off $50 billion in prime tourist sites, ports, water systems and other public assets in order to pay foreign creditors?
At issue is language regarding the legal rights of creditors vis-à-vis debtors. The United States has long had a body of law regarding this issue. A few years ago, for instance, the real estate speculator Sam Zell bought the Chicago Tribune in a debt-leveraged buyout. The newspaper soon went broke, wiping out the employees’ stock ownership plan (ESOP). They sued under the fraudulent conveyance law, which says that if a creditor makes a loan without knowing how the debtor can pay in the normal course of business, the loan is assumed to have been made with the intent of foreclosing on property, and is deemed fraudulent.
This law dates from colonial times, when British speculators eyed rich New York farmland. Their ploy was to extend loans to farmers, and then call in the loans when the farmer’s ability to pay was low, before the crop was harvested. This was indeed a liquidity problem – which financial opportunists turned into an asset grab. Some lenders, to be sure, created a genuine insolvency problem by making loans beyond the ability of the farmers to pay, and then would foreclose on their land. The colonies nullified such loans. Fraudulent conveyance laws have been kept on the books since the United States won its independence from Britain.
[But in 2005, the Bush administration rewrote the bankruptcy law.
There used to be an aspect of “fraudulent conveyance,” which meant that if a firm transferred assets to a secured creditor within six months before its bankruptcy filing, the receiver was required by law to give those assets back. It’s called a clawback.
But this revision of the bankruptcy law changed that. The law now specifically says that the receiver is not to claw back the assets. So what was considered a fraudulent conveyance prior to 2005 is now legal. -FNC]
From Michael Hudson: "Rolling Back the Progressive Era" June 14, 2011
I wish my state had ballsy leadership. *sniff*
I wish the TEA PARTY had a nutsack half as big as Syriza and the lousy Greek Parliament.
yeah, but i bet the original money wasnt so odious when you borrowed it and partied with it. greece was is and will always be a country of deadbeats.
The Greeks used that money to buy subprime mortgage bonds from GS. You know what those are?
The worlds biggest deadbeats is US with its un-payable, but printable debt. It were Greek elites that rob Greece blind with JPM criminal schemes that made them billions. Greeks were not asked before they were robbed , did you?
Are there many readers here who don't feel that we are living in the most dangerous and war like times since the Cuban Missile Crisis and the unprovoked invasion of Vietnam?
As is pointed out elsewhere at zh, America's lily-white, manicured and ring-bedizened hands are not easy to spot in the main squares of Syria, Libya, and Ukraine.
The genuine opposition, whose numbers are overwhelmed by the bought and paid for lackeys of the CIA who drink from the river of America's $18 trillion Debt and $18 trillion Printage of the last 6 years, won't find out that their "partners" are the scum of Langley until their revolution is successful and they don't have a place at the table.
This is going on in Venezuela, Brazil and Argentina. More recently in Macedonia or Montenegro or both.
Things are ugly. More equipment has been moved into the military bases of the Eastern members of NATO, than Russia and Nazi Germany threw at each other in '44 and '45 (citation needed).
There is no neutrality now, Sides must be taken. Every country must
attach itself to, or give assistance to, one of two opposing sides.
Now comes Greece, whose Debt Committee declared the money owed to the Troika
"Illegal, Illegitimate, And Odious".It' is prolly safe to assume that Greece is not only in Russia's camp, but under the vast wings of China as well.
Pawn takes Knight.
Your move, Mr Limp Wristed Negro Warrior.
Finally, actual democracy happening somewhere.
they're going Icelandic! Finally..now the popcorn please.
They just put out their Declaration of Independence v2.0
Toto (opolis) just pulled back the curtain.
Greece is now gonna have to prove that they're serious about this, by arresting and trying former Govt. honchos, as well as some Banksters!
Does it make cents if you can't repay your mortgage, you force your Neighbor to repay it. And if he can't repay it you make it Legal to steal money from everybody in the Neighborhood to repay it.
No not if you put it that way it doesn't. But if you read the complaint which they'll probably take to the Hague - the IMF and the EU violated their own legal charters to keep Greece (using your analogy) in the ARMs mortgage that kept going up each month when Greece wanted to change to a fix-rate mortgage or sell the home (get out of debt at a lower rate) and start over. But those private banks and government banks just had to keep lending at ARates and then wanted the Greek people (who didn't want the House debt) to pay up. The banks have already taken everything from the Greek people in that they've been in a recession for the past 4 years. The Greek people don't have the money to pay what Germany, the IMF and the EU want them to pay. They don't have jobs. And everytime the Greek people hear that Germany has given them money they get angry b/c they haven't received a penny. Its the bank's bondholders that have received the money - including Germany's banks so they're basically paying themselves yet adding it to Greek's tab.
@BuddyEffed - I went to the Wayback page of ZeroHedge and read that article "Observations of an Engineer" and then I went to the day page it was posted on 2011_Nov_11 and read the headlines: They were talking about a 10 sigma day, Austria being downgraded, the EUR/US being at 1.30 and GS/MS 69'ing their positions, as well as European Banks dumping 300 million worth of bonds to someone.
Now I read those headlines - especially that last one, and I think pfft. 300 million euro's in bonds? Heck, that's a drop in the bucket to the QE the IMF and the EU are doing now. Guess in 2011 it was a big deal but in today's land of putting the bonds on the books while paying for it with newly printed money just seems so quaint. I mean the notion that in 2011 someone was actually WORRIED about who might be holding the bonds seems laughable w/these guys in power who never want the party to end and won't let it end if they have to use extra-legal measures to do it (according to the complaint).
No wonder Greece calls BS on the whole of them.
http://web.archive.org/web/20111112074159/http://www.zerohedge.com/news/...
http://web.archive.org/web/20111112073046/http://www.zerohedge.com/
Greece is now spelled "ICELAND"
It was a bail out of banks, not Greece - perhaps those beneficiary banks should pay the debt?
Offset country debt from what the Bank for International Settlements owes us (more than 2 quadrillions) https://https://s3.amazonaws.com/khudes/treaty+of+versailles+offer+of+sale+2+quadrillion1.pdfhttps://s3.amazonaws.com/khudes/treaty+of+versailles+offer+of+sale+2+quadrillion1.pdf
When they actually pass a law to that effect, then I'll believe it.
I hope they do. Fuck the bankers, fuck the EU, fuck the IMF.
"the Committee considers that Greece has been and still is the victim of an attack premeditated and organized by the International Monetary Fund, the European Central Bank, and the European Commission. This violent, illegal, and immoral mission aimed exclusively at shifting private debt onto the public sector."
Pity they didn't take it one more logical step, and declare the Greek people to be under attack by the global financial Elites. Because that's what it is. We are ALL experiencing an ongoing violent armed assault and robbery, by those Elites.
Violent self defence is entirely appropriate.
This report makes it clear that interest rates were too high, Greek was forced to spend money on the military, Greece didn't get more than 3% of the money borrowed, balance going to bailout banks and Goldman and other banks bought and sold and shorted Greek debt in the background. The entire criminal affair could not have happened without knowledge of the previous governments. Therefore, I believe that arrests of Greek government officials are in order as well as arrests of EU officials.
Silly rabbits....socialism sucks.
Hilarious! One bunch of marxists stiffing another bunch of marxists. Unfettered Capitalism must be the cause.