The Greek Debt is Unpayable: Interview with Bernard Cassen

En Español: La deuda griega es impagable: Entrevista a Bernard Cassen

Translation by Alex Cachinero-Gorman

Le Monde diplomatique journalist and author of En finir avec l´eurolibéralisme (“Putting and end to Euroliberalism”), as well as numerous other books on European politics and economy, talks about the dark future of Greece and the Eurozone.

Bernard Cassen was the director-general of Le Monde diplomatique from 1996 to 2008, a period in which the journalistic collective stood out for having a decisive part in the rise of new social movements. In 1998, he was one of the founders of the Association for the Taxation of Financial Transactions and for Citizens’ Action (ATTAC), which, reviving an idea of the economist James Tobin, proposed taxing exchange transactions, thereby raising money to fight poverty. In 2000, Cassen opened the doors of its small office in Paris in order to design (alongside other civil society organizations) the World Social Forum (WSF), which thanks to his suggestion was held for the first time in Porto Alegre. Cassen is still honorary president of ATTAC, but the organization has since expanded its field of activity in order to raise consciousness about the power the financial sphere exercises over all aspects of political, economic, social, and cultural life.

Lucas Palero: Since 2008, the governments of the United States and Europe have been talking about reforming the architecture of the financial system. What happened to the implementation of these reforms?

Bernard Cassen: There haven’t been reforms, and the decisions made in the belly of the G-20 are not carried out. The banking system, with a slight change of tune, works just as before. At one point it was thought that, since states had injected a huge amount of money into the banks, the money would have come with conditions. But that was not the case. They loaned huge amounts of money and the banks replenished their funds—they got on just the same. There was a chance there to set new rules for the game, but that chance was lost. So, there haven’t been reforms. There are discourses about reforms. We will see what happens with the next G-20; Sarkozy has tossed around the idea of a type of Tobin tax, as we in ATTAC have been saying for thirteen years now.

LP: In fact, he pushed the proposal during his last meeting with Angela Merkel.

BC: I don’t think it’s going to lead anywhere, because there is no support for it in the European Union. England is totally against it (1). The French and German bankers are going to say that if a fee is a levied on financial transactions, they’ll leave France and Germany and set up shop in Singapore.

LP: Financial capital would move from one country to another…

BC: It’s a big problem, but there are technical solutions: currency control, or visas for the entering and exiting of capital, as has been done in other countries. In China, for example, you can’t invest without a permit. You simply can’t convert currency however you’d like. So there are technical solutions, but they totally contradict all of the liberal dogmas that we’ve been taught, which say that there are no alternatives. Free circulation of capital and free trade are the two fundamental pillars of neoliberalism—so establishing a form of foreign exchange control is considered lèse-majesté. The horror! As if you were asking the Pope to set the table for the Devil.

LP: How did we get to this point, where the most important political decisions depend on the state of public debt?

BC: Amidst all the disparate elements of the crisis, there was one moment in which each country implemented a launch plan by injecting public funds, raising the public debt. Japan, for example, reached some 220% of its GDP. But to apply for a loan, the markets say, “the problem is the public debt,” because that casts doubt on the debt service’s ability to make payments. Even within the Eurozone, economies are totally different, like Germany’s and Greece’s, or Portugal’s. Since they are in the same monetary zone, one would imagine that financial markets would give Germany and Greece loans of the same stature. For ten years this was the case, but markets have investors in mind, and they know that you can’t compare the different levels of competition. Common sense would indicate that confronting the Greek crisis would entail leaving the Euro, devaluating currency, and eventually re-integrating into the Eurozone. But that is not possible, because the debt is still running up in Euros. Now, public debt is the fundamental issue and the Greeks are taking loans at 15% or 16%. Everyone knows that the debt is unpayable. At some point in time—and it could happen very quickly, before the end of the year—Greece will default. The problem is: what happens to your debt once you depart from the Euro? Part of it will have to be canceled.

LP: It would be a kind of debt re-structuring, like in Argentina?

BC: Yes, that’s one thing that’s being thought of. Re-structuring also means canceling a part of it, no? The problem is who is going to pay it—if it’s going to be the banks or citizens. There’s no problem in restructuring, but who’s going to benefit? This situation is the worst since the birth of the Euro, and the future of the Eurozone is truly in danger. Because it doesn’t make sense to have a single monetary policy determined by the European Central Bank, when in actual fact competition, demography, and a whole series of factors are very different from one country to the next. When the Central Bank makes the decisions on monetary policy, it is in the interest of certain states and almost always corresponds to the interests of Germany. Thus, it is hard for some European rulers to admit that today the Euro is a failure, because they have invested themselves in it so much by saying that the Euro was the symbol of Europe—which is, politically speaking, difficult to walk away from. But they are going to be forced to do so, as they are going to be forced to renounce free trade and the free circulation of capital. For us, it is a victory.

Lucas Palero is a journalist. He lives in Mendoza, Argentina.

(1) On September 28th, 2011 the speech of the President of the European Commission, supporting the introduction of the European Transaction Tax, provoked an immediate reaction of the U.K. government and the Confederation of British Industry.