Last week the Greek prime minister, Alexis Tsipras, met with Angela Merkel to discuss the looming debt repayments that his country will be unable to meet without urgent funding from its creditors. Greece’s majority left-wing coalition government is on the verge of resorting to ransacking the funds for the country’s pensions and public salaries in order to meet the payments due on 9th April.
Whether Greece should be granted an extension on its payment schedule seems like a question of morals to many, but Germany is looking very hard at the maths.
We often hear of the figures Greece owes the Eurozone. People have asked why, after such enormous financial intervention, the country remains troubled and uncooperative, unwilling to sell off its assets. Yet, we might care to ask how much of the money was actually received in Greece? How much money went to the poor in Athens? Jubilee Debt Coalition, a London-based group of organisations who campaign for the dismantling of unjust national debt repayments, has revealed troubling figures regarding the Greek bailout sum.
It argues that Greece is well within its right to ask for more lenience from Germany, who will make the ultimate call on extra loans or extensions. The group claims that of the billions the country received in bailout funds since 2010, only a mere 10% of that has found its way into public spending.
In 2010, Greece was in the red just shy of $310bn, lent to the country by reckless bankers and through the ever-deferring financial shuffling of the European finance markets. The ‘troika’ of the IMF, EU Commission and European Central Bank came to the rescue with a €252bn bailout.
However, there were a few matters to be settled before the people of Greece could feel the pinch loosening. Firstly, €34.5bn went straight to softening up the private sector to accept the 2012 debt restructuring. A further €48.2bn was spent bailing out the Greek banks following the restructuring, though even here considerable sums were dealt out to foreign private lenders. Finally a whopping €149.2bn begun the payment of original debts and interest from reckless lenders. Only €20.1bn reached the Greek people.
Today the Greek government remains in debt to the tune of €317bn, substantially more than was owed five years ago. However, now 78% of this debt is owed to the European and international public institutions, the IMF being the most considerable.
It’s a double blow for Greece. The bailout money it seems was never headed for the Greek people but rather to the European financial sector, making sure that the fragile and rusty cogs were kept oiled for just a little longer. The second blow comes in the translocation of the debt from the private sector to the public sector. Before, a few institutions owed money. Now, the whole population does. Does that seem fair?
It may seem conspiratorial, but that would be to forget the genuine sense of responsibility to rebuild and restructure the European financial system in the wake of the 2008 crash. More cynically, one might say it is the inevitable hitch of being locked in a monetary union.
All the players want, and need, this to work. Yet the unprecedented nature of the scale of the debt has resulted in ample room for human error. The ignorance involved at a political level from all sides is extraordinary, but, as always, it is the people who will pay. The Germans didn’t know that when money was being lent to Greece they were responsible. Alternativ für Deutschland, Germany’s conservative Eurosceptic party, has brought up the issue that every tax payer in Germany is on the hook if the loans aren’t repaid.
If Greece defaults, the German government, as the biggest contributor to the bailout, will have to face a hefty 27% share of that loss. The pain of which will be felt by the German people.