Is the third Greek Memoranda of Understanding and Loan Agreement of August 2015 odious?. Truth Committee on Public Debt in Greek or Hellenic Parliament and criticism on results

Author:Spyridon Repousis
Position:University of Nicosia, Nicosia, Cyprus
Pages:220-230
SUMMARY

Purpose The purpose of this study is to examine the odious debt concept in Greece. In Greece, the odious debt concept received high attention during recent financial crisis and Greek or Hellenic Parliament decided to establish a Special Committee. Design/methodology/approach The Greek Parliament Truth Committee on Public Debt investigated the public debt in Greece, and the main findings are: increase of debt was related to the growth in interest payments,... (see full summary)

 
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Is the third Greek Memoranda
of Understanding and Loan
Agreement of August 2015 odious?
Truth Committee on Public Debt
in Greek or Hellenic Parliament
and criticism on results
Spyridon Repousis
University of Nicosia, Nicosia, Cyprus
Abstract
Purpose The purpose of this study is to examine the odious debt concept in Greece. In Greece, the odious
debt concept received high attention during recent nancial crisis and Greek or Hellenic Parliament decided to
establish a Special Committee.
Design/methodology/approach The Greek Parliament Truth Committee on Public Debt investigated
the public debt in Greece, and the main ndings are: increase of debt was related to the growth in interest
payments, high public spending in defence expenditures associated with corruption scandals, falsication of
public decit and debt statistical data and illicit capital outows and adopting the euro led to a drastic increase
in private debt.
Findings Based on above the third Memoranda of Understanding (MoU) and the August 2015 loan
agreement, according to Greek Parliament Truth Committee on Public Debt are illegal, illegitimate and odious
because they fail to recognize the odious character of Greece’s existing debt, and the nature of the instruments
by which this debt was nanced from 2010 until early 2015. The Third MoU and the August 2015 loan
agreement violate the fundamental human rights of the Greek people (both civil and political as well as
socio-economic rights) as set out in the Greek Constitution and under international law (treaty-based and
customary).
Research limitations/implications On the other side of results, Greece was a democratic regime during
the time it contracted the vast majority of its loans and membership into the Eurozone, which benetted country by
gaining the highly low interest rates that euro currency involved. Also, substantial borrowing for Greece spent
directly on the people via social welfare and public sector wages and infrastructure development.
Practical implications Therefore, Greece, instead of the odious debt doctrine, should resort to other
debt solutions such as simple debt repayment, restructuring or “haircut” of the debt (principal and
interest) or declare bankruptcy without invoking the odious debt doctrine. Although this recourse avoids
the dangerous precedent-setting risks of the odious debt doctrine, it also involves numerous other
complexities and policy problems because with default, the banking system would collapse.
Originality/value It is the rst study examining the topic of odious public debt in Greece.
Keywords Greece, Odious debt
Paper type Research paper
1. Odious debt concept and the truth committee on public debt in Greek or
Hellenic Parliament
The modern concept of odious debts was rst articulated in the post-First World War context
by Alexander Nahun Sack in his 1927 book The Effects of State Transformations on their
Public Debts and Other Financial Obligations.
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/1368-5201.htm
JMLC
20,3
220
Journalof Money Laundering
Control
Vol.20 No. 3, 2017
pp.220-230
©Emerald Publishing Limited
1368-5201
DOI 10.1108/JMLC-11-2015-0051

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