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April 3, 2013
April 3, 2013

Interview with Éric Toussaint

Source: El Público  Categories: Dialogues, On the crisis
This article is also available in: esel
Interview with Éric Toussaint

Éric Toussaint is the president of the Committee for the Abolition of Third World Debt

Toussaint: “Any debt generated by the bank bailout is to be considered illegitimate”

Público: In the face of the current sovereign debt crisis, you propose an audit and a refusal to pay the illegitimate debt. ¿Which part of the debt should be considered as such?

Toussaint: It is a simple task, there are very clear criteria. In the case of Greece more than half of the debt is with the Troika, 170 billion euros. It is totally illegitimate and should be declared invalid because it was imposed by agencies not representing the Greek citizens. Not even the memoranda have been treated democratically in the Parliament; they were approved under the blackmail of the International Monetary Fund (IMF) without the possibility of amending its clauses. They are conditions that violate the economic and social rights of the population. Portugal and Ireland also follow this scheme.

In the Spanish case there has not yet been a memorandum, but all debt generated by the bank bailout must be considered illegitimate. It may be a legal decision because the government made it, but it is not legitimate because it forces the citizens to assume the debts generated by the housing bubble and the banking crisis.

Público: In the World Social Forum held in Tunisia, the issue of the debt is one of the main debates concerning the condition of the country after the Arab Spring. What features does the Tunisian debt have?

Toussaint: It was contracted by a dictatorial regime and, thus, not only is it illegitimate but it is also odious. It is an external public debt with creditors that are both countries and the IMF and private creditors that have been complicit with Ben Ali. Therefore, the popular mobilisation that is taking place these days should make the government see that they have to repudiate the payment.

Público: From a broader level, what strategies are these creditors following in Arab countries like Egypt or Libya where the dictators have been overthrown?

Toussaint: The strategy of the IMF and other institutions is to provide support to these governments in order to ensure payment. They grant loans in order to engage the new governments in agreements reinforcing the exported neoliberal model that involves imposing precarious labour market in these countries. They adopt a revolutionary discourse, claiming that they support democratic processes and fund the governments to accept and embrace these adjustment plans. Islamist forces, like Ennahda in Tunisia and the Muslim Brotherhood in Egypt, are extremely neoliberal. They will not jeopardise the economic model in which transnational corporations earn.

Público: What changes have occurred in the global market system so that the centre of the debt has shifted from the Third World to countries of the European South?

Toussaint: There is an important difference between the situation in the 80s and 90s, when the epicentre of the debt crisis was in the South, and the current situation which has moved to Europe since 2008 as the result of the explosion of private debt created by the banking crisis and subsequently transformed into public debt.
The fundamental difference is that, as of 2003 y 2004, there was a rise in the prices of the raw materials exported by southern countries such as China, which allowed them to increase their national reserves. Several of them got rid of the debt by prepaying with the accumulated reserves produced by oil.

In the north we had an explosion of private debt caused by the bankruptcy of large banks such as Lehman Brothers combined with the explosion of the housing bubble, which led to a tremendous crisis in the north. It was a crisis that led to a private debt that, through bank bailouts, was transferred to the States. European governments decided to socialise the losses of the banking sector.

Público: With the increase of public debt in Europe and the consequent implementation of austerity plans to reduce the deficit, what awaits the European South in the coming years?

Toussaint: We will face a deepening of the economic crisis. The consequences are more devastating in the so-called PIIGS (Portugal, Ireland, Italy, Greece and Spain), but there is no doubt that stronger countries such as France, Germany and Belgium are also in extremely serious condition.

There are still ten or fifteen years of crisis, as the government policies yield to private interests and are not adequate to reverse this situation. The current policy of public spending cuts, wage freezes and social services will have a strong effect in terms of reducing rents.

Público: Are the Latin American countries that refused to pay the debt, such as Ecuador and Argentina, a role model for Europe?

Toussaint: It is essential that citizens from social movements attempt to perform audits of the debt from below. It is important as a tool for organising in grassroots level and for a massive campaign to change the perception of people, since the banks, the international institutions and the media they control construct the false idea that the deficit is a consequence of wasteful social spending and excessive welfare state. A citizen audit is not limited to an analysis, but serves to cause mobilisation that would demand the cancelation of payments of illegitimate debt.

An example is Ecuador, where for years popular movements were conducting audits from the below and later managed that a government, that of Correa, conduct an audit and suspend payment of illegitimate debt.

I think in our situation in Europe the priority is the citizen audit. If a government like Rajoy’s, Merkel’s or Samaras’ conducted an audit they would only legitimise the full payment. And this example could be implemented in Greece if SYRIZA won the election. The government could suspend payments, audit the debt and decide which part to repudiate.

Público What scenario would open up in Greece if they refused to pay the debt?

Toussaint: It is entirely possible for a left wing government in Europe to carry out this task if the adequate political means are used. These would be to suspend payments in combination with the suspension of the Troika memoranda, controls on capital movement, the socialisation of private banking, a strong tax reform so that the haves pay, prosecution of tax fraud and reduction of citizenship tax like the VAT.

As for the euro, the European Commission would decide whether to expel or not. Meanwhile, we should encourage agricultural production, light industry and job creation by the government. This would have a positive effect because the example would be set for the rest of Europe and its citizens would see that it is impossible to disobey.

Therefore, the historical responsibility of SYRIZA is great. If the government does not take this kind of action, the people who voted with a perspective of change would despair, with a crisis that would continue to hurt the majority, and at that time organisations like Golden Dawn would have a direct path to conquer a broad part of the population and there would be a fascist-type process in Greece. It is the worst case scenario, but should not be ruled out.


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