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Greece, Ireland, Portugal: Why are the agreements signed with the "Troika" (EU, ECB and IMF) hateful?

Greece, Ireland, Portugal: Why are the agreements signed with the

By Renaud Vivien and Eric Toussaint

There is no doubt that the conditionalities imposed by the Troika manifestly violate the Charter of the United Nations. The governments of Greece, Ireland and Portugal should break the agreements with the Troika, immediately suspend the repayment of their debt and launch audits with citizen participation that must determine the illegitimate part of the debt, which must be unconditionally canceled and complementary and essential measures must be taken since the cancellation of illegitimate debts, although necessary, is not enough if the logic of the system remains intact.


Greece, Ireland and Portugal are the first three countries in the eurozone to suffer the direct protection of their creditors, by accepting "aid" plans granted by the "Troika", made up of the European Commission, the European Central Bank (ECB) and the International Monetary Fund (IMF). But these agreements, which generate new debts and impose unprecedented austerity measures on the populations, can be questioned on the basis of international law. Indeed, these agreements are "odious" and therefore illegal. As the odious debt doctrine underlines, "State debts must be contracted and the funds that come from them used for the needs and interests of the State." (1) And, of course, the Troika's credits are conditioned to austerity measures that violate international law, preventing these states from emerging from the crisis.

Any agreed loan that has as a counterpart the application of policies that violate human rights is hateful.

As the special rapporteur Mohammed Bedjaoui states in his draft article on succession in matters of State debts for the Vienna Convention of 1983: “When viewed from the point of view of the international community, odious debt can be understood as any debt contracted for purposes not in conformity with contemporary international law, and especially with the principles of international law incorporated in the Charter of the United Nations ”. (2)

There is no doubt that the conditionalities imposed by the Troika (massive layoffs in the public function, dismantling of social protection and public services, reduction of social budgets, increase in indirect taxes such as VAT, reduction of the minimum wage etc.) manifestly violate the Charter of the United Nations. Indeed, among the obligations contained in the Charter is found, especially, in Articles 55 and 56, “the raising of the standard of living, full employment and conditions of progress and development in the economic and social order […], universal and effective respect for human rights and fundamental freedoms for all, without distinction of race, sex, language or religion ”. Therefore, the austerity measures and the debts contracted in the framework of these agreements with the Troika are null and void, since everything that is contrary to the UN Charter is considered unwritten. (3)

Beyond the violation of economic, social and cultural rights caused by the application of these antisocial measures, there is the right of peoples to dispose of themselves, enshrined in Article 1-2 of the UN Charter and in the two Covenants of 1966 on human rights, which is mocked by the Troika. According to article 1, common to both Covenants: “All peoples have the right to dispose of themselves. By virtue of this right, they freely determine their political status and freely ensure their economic, social and cultural development. To achieve their ends, all peoples can freely dispose of their wealth and natural resources, without prejudice to the obligations that derive from international economic cooperation, based on the principle of mutual interest, and international law. In no case may a people be deprived of its own means of subsistence. "

Certainly, the interference of the Troika in the internal affairs of those States, with contempt for democracy, is flagrant. Those creditors made it clear that the elections in Ireland and Portugal should not call into question the application of those agreements. Let us cite, for example, the article in the French newspaper Le Figaro of April 9, 2011, which deals with the measures imposed on Portugal by the finance ministers of the eurozone and the European Union, on the occasion of a meeting held in Budapest before of the legislative elections in Portugal: «The preparation (of the austerity plan) should begin immediately, responding to an agreement between the parties in mid-May, and allows the implementation, without delay, of the adjustment program from the same moment of the formation of the new government ”[…]“ the ministers made it very clear to Portugal that they do not want to have to deal with the counterparts to aid, whatever the outcome of the elections ”. (4) In the case of Greece, the austerity program signed with the Troika was imposed in 2010, even without ratification by Parliament, without taking into account that this is an obligation of the Greek Constitution (article 36, paragraph 2). (5)

The Troika's contempt for the sovereignty of these three States (Greece, Ireland and Portugal) was possible, in particular, due to their financial situation of morass, having been the first victims of the crisis in the eurozone, although they certainly will not be the last . According to this reality, it is very difficult to defend the validity of these agreements arguing the freedom of consent. In law, when one of the parties to a contract is not able to exercise autonomy of will, the contract is null and void. How can this principle be applied to the present case? Not being able to borrow in the long-term financial markets, since the interests claimed by these oscillated between 12 and 17%, depending on the case, the governments of these three countries had to go to the Troika, which took advantage of your quality of lender of last resort. Manipulating the desperate situation of the Greek, Irish and Portuguese authorities, the Troika decided to impose plans that have had and will have a negative effect on the economic health of these countries, given the pro-cyclical nature of the measures adopted (that is, that reinforce the factors that generate the decline in economic activity).

The massive privatizations in the essential sectors of the economy (transport, energy, postal services, etc.) imposed by the Troika allow foreign private companies to take their control, and consequently affect the sovereignty of those States and the rights of the peoples. to freely dispose of their wealth and natural resources. Although a State has the right, through an agreement, to transfer a part of its sovereignty to a foreign entity, such transfer must not, except in the case of violation of international law, compromise the economic independence of the State, which is an essential element of their political independence. (6)

Through its conditionalities, the Troika not only violated international law, it also became complicit in the violation of the national rights of these States. In Greece, mainly, we are witnessing a real legal coup d'état. As an example: various legal provisions of Law 3845/2010, which sets in motion the austerity program, violate the Constitution, especially by abolishing the legal minimum wage. The abandonment of the sovereignty of the Greek State is even more serious due to the clause of the agreement with the Troika that provides for the applicability of Anglo-Saxon law and the jurisdiction of the Court of Justice of the European Union (CJEU), in case of litigation. In this way, the State renounces a fundamental prerogative of sovereignty that is the territorial competence of its national courts. At the same time, the Greek law that sets in motion the austerity program, requires that the arbitration awards (which have constitutional value) that had granted salary increases for the years 2010 and 2011 be invalid and unenforceable. In summary, as the jurists G. Katrougalos and G. Pavlidis write, “State sovereignty is limited in a very similar way to the international financial control imposed on the country in 1897, as a consequence of the bankruptcy (1893) and especially of the defeat Greek in the Turkish-Greek War '.

Any loan whose cause is illicit and immoral is odious.


The legal basis derived from the illicit and immoral cause to question the validity of the contracts is found in numerous national civil and commercial laws. And it brings us directly to a problem that brings to light the doctrine of odious debt: Who benefits from these loans? In the case of the agreements signed with Greece, Ireland and Portugal, it is clear that the European private banks, which lent to these countries in a totally irresponsible way, are the beneficiaries even though they bear a great responsibility in the debt crisis. Indeed, the rescue of private banks by the public powers as a result of the outbreak of the financial crisis in 2007, led to the explosion of debt in these States. In this sense, the cause of the agreements signed with the Troika can at least be classified as "immoral" and speak of "an enrichment without cause" (a general principle of international law according to article 38 of the Statute of the International Tribunal of Justice (7)) for the benefit of private banks.

The enrichment without cause of the private banks is even more serious due to the enormous benefit they obtain at the expense of the public powers, due to the difference between the interest of more than 4% that they charge to the States, issuers of securities at 3 or 6 months, and the 1% interest that the ECB charged them until April 2011 for the money it lent them. As of that date, said interest increased to 1.25% and then to 1.50%. (8) One can also speak of enrichment without cause (that is, abusive and illegal enrichment) with respect to States such as Germany, France and Austria, which obtained loans, requested to the market, at 2%, which in turn granted as loans to Greece at an interest of between 5 and 5.5%, while Ireland was 6%. And we can say the same about the IMF, to which its members lend at very low interest, while their loans to Greece, Ireland and Portugal are at significantly higher interest.

The measures announced by the European authorities on July 21, 2011 constitute a clear and clear confession of "enrichment without cause" for which they are responsible and of the malicious nature of their policy. Finally, they announced their intention to reduce the interest rates required for Greece, Ireland and Portugal by 2 to 3 points. They proclaimed that they would lower interest rates to about 3.5% for loans of 15 to 30 years, inclusive, and then recognized that the interest rates they had demanded were prohibitive. And they do so in the face of the obvious disaster in which they contributed to the sinking of these countries, and in the face of the obvious strong contagion to other countries.

What is the interest of Ireland, Greece and Portugal in signing agreements with the Troika? None, other than that they provide a small breath of financial oxygen, but that will serve the repayment of your creditors. Over the medium and long term, these rigorous plans will even worsen the situation since a "snowball" effect has been unleashed. It is evident, the weight of the interests on the new debts increases while the measures dictated by the Troika have the consequence of reducing the economic activity since they diminish the global demand, by affecting the living conditions of the populations. The IMF's behavior can then be considered fraudulent, because the gap between its discourse and reality is abysmal. Indeed, according to Article 1 of its Statutes, the IMF aims to “facilitate the expansion and harmonious growth of international trade and thus contribute to the establishment and maintenance of high levels of employment and real income and to the development of countries. productive resources of all Member States, main objectives of economic policy. ' (9) And even more: 'to give confidence to the Member States by placing the Fund's resources, on a temporary basis, at their disposal, through adequate guarantees, thus offering them the possibility of correcting imbalances in their balance of payments without resorting to harmful measures with respect to national or international prosperity. ' (10) It can also be confirmed that the action of the European Commission and the ECB also constitutes fraud to the detriment of the corresponding countries.

The measures dictated by the IMF, the ECB and the European Commission also lead to enclose these countries in the infernal logic of indebtedness, since they will have to continue borrowing in order to pay them back. So they have a ten, fifteen or twenty year period of austerity and increased debt ahead of them. (11) The OECD study on Greek debt, published on August 2, 2011, (12) states in particular that public debt, which in 2010 was 140% of Gross Domestic Product (GDP), should decrease to 100% of GDP in… 2035.

Faced with such a situation, governments, if they want to respect the interest of the population, should be interested in breaking the agreements with the Troika, immediately suspending the repayment of their debt (with interest freezing) and launching audits with participation citizen. These audits must determine the illegitimate part of the debt, which must be unconditionally canceled. The stock of public debt should, similarly, be reduced by measures at the expense of those who have benefited from it. Legal proceedings must be brought against those responsible for the damage caused. Obviously, complementary and essential measures must be taken, such as the transfer of banks to the public sector, a radical fiscal reform, the socialization of privatized sectors during the neoliberal era, etc. (13) Since the cancellation of illegitimate debts, while necessary, is not enough if the logic of the system remains intact.

August 12, 2011

Renaud vivien, a lawyer, is a member of the CADTM Belgium Law working group (www.cadtm.org).

Eric Toussaint, Doctor of Political Science, is President of CADTM Belgium. They are co-authors of the collective book The debt or Life, Icaria Editorial,

Committee for the Abolition of Third World Debt - CADTM (www.cadtm.org)

Notes:

(1) Alexander Nahum Sack, Les effets des transformations des États sur leurs dettes publiques et autres obligations financières, Recueil Sirey, 1927

(2) Mohammed Bedjaoui, "Neuvième rapport sur la succession dans les matières autres autres que les traités", A / CN.4 / 301et Add.l, p. 73.

(3) Monique et Roland Weyl, Sortir le droit international du placard, PubliCETIM n ° 32, CETIM, November 2008.

(4) http://www.lefigaro.fr/… See: Virginie de Romanet, «Le Portugal: dernière victime en date du modèle néoibéral» 2011, http: //www.cadtm.org…

(5) Georgios Katrougalos et Georgios Pavlidis, "La Constitution nationale face à une situation de détresse financière: leçon tirée de la crise grecque (2009-2011)".

(6) http://unesdoc.unesco.org/…

(7) It is also provided for in various national civil codes, such as the Spanish civil code (in articles 1,895 and following) and in French (in articles 1,376 and following)

(8) Let us remember that the Maastricht Treaty prohibits the European Central Bank from lending directly to States.

(9) See IMF Statutes at http://www.imf.org/…

(10) Underlined by the authors.

(11) Eric Toussaint, «Poisoned aids in the European menu», 2011 http://www.cadtm.org/…

(12) http://www.oecd.org/…

(13) "See Eight urgent proposals for another Europe" http: //www.cadtm.org…


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