Former Finance Minister, Yanis Varoufakis, Economics Professor James Galbraith, and Martin Guzman, a scholar at Columbia University on sovereignty bankruptcy are among the 19 signatories of an open letter calling for rules that would have avoided the pitfalls of the Geek crisis and could have also have prevent Brussels from forcing Athens to accept harsh austerity without any substantial debt relief.
“The Greek crisis has made clear that individual states acting alone cannot negotiate reasonable conditions for the restructuring of their debt within the current political framework, even though these debts are often unsustainable over the long term. Throughout its negotiations with creditor institutions, Greece faced a stubborn refusal to consider any debt restructuring, even though this refusal stood in contradiction to the IMF’s own recommendations”, they said.
The economists demand that Britain and the EU back a proposal to the United Nations that aims to protect heavily indebted countries, including Argentina and Greece, from predatory hedge funds.
They stated that “establishing a legal framework for debt restructuring, allowing each state to solve its debt problems without risking financial collapse or the loss of its sovereignty, is a matter of great urgency in promoting financial stability”.
They scholars concluded that 'The Greek drama that unfolded over the summer makes clear that there is no time left to dither. This summer’s sham negotiations have caused many Europeans to retreat into nationalism and express defiance towards international institutions. However, Europeans must reaffirm that democratic rights, rather than the dictates of the market, are at the heart of international governance. We therefore call all European states to vote in favor of this resolution”.
The open letter can be accessed here.