By Christoforos Kasdaglis
What we are living through has happened before. It’s just that our memories are often selective and short. While we remember well the achievements of Alexander the Great, of Pericles and of Socrates thousands of years ago, of the doings of international finance just a century-and-a-half ago, in our own backyard, we appear to know nothing.
I was reading the monumental work of Stratis Tsirkas, Cavafy and His Time. And while I was in search of other things in the book, I was stunned to discover Tsirkas suddenly giving a full account of Egypt’s bankruptcy during the second half of the 19th century, which appears to be a carbon copy of Greece’s current experience.
1863: “Ismail Pasha succeeds Said Pasha to assume the position of Khedive of Egypt. Egypt, while still subservient to the Ottoman Empire, has already set a course for independence and autonomous development. This trajectory will be halted in its infancy by excessive borrowing from European banks.”
As we would say today, the Egyptians had a rude awakening.
1875: “Ismail… was hell bent on shaking up Cairo, constructing improvised boulevards, mimicking the pomp and inanities of Europe, transposing all of the processes which flattered his ambition or taste without caring if this excess was exhausting Egypt, if this mindless waste would lead to destruction!” – Barrere, the French Consul in Cairo.”
It appears that the Egyptians as well, (or at least the elite) were living beyond their means, i.e. on borrowed money.
“However the greed and frivolousness of Ismail and the villainous doings of the European financiers were so interlinked in causing the decay which eventually brought Egypt to her knees, that whoever seeks to separate them and to focus only on the role played by Ismail, is flagrantly abusing the historical truth.”
We also see this phenomenon today in the following form: the structural problems of the local economy was the flipside of its dependence on European capital.
“Of the 68 million pounds sterling which Egypt came to owe foreign lenders in 1875 on top of its variable internal debts, the true amount which had actually gone into its coffers was less than 44 million. The difference was pocketed by varιοus intermediaries and their agents, on commissions, fees and other fantastical costs.”
That today is called the ‘odious’ part of the debt.
November 25 1875. The sale of shares in the Suez Canal Company to the English: “So 176,602 shares out of a total of 400,000, which represented Egypt’s rights over the Suez Canal Company were purchased on the 25th of November,1875 by the English Prime Minister Disraeli for 4 million pounds which were supplied by the Rothschilds of England. These shares had cost Egypt 10 million pounds in cash, and who knows how much more in the forced labour of a hundred thousand serfs and the lives of tens of thousand of them, who left their bones there, stricken by hunger, thirst and fevers.”
Today we would talk of the urgent need for privatizations.
“If the European and Levantine beneficiaries of Ismail's largesse profit from his crazed borrowing, if the prerequisite for their happiness is for the state budget to never be balanced, if Ismail himself and the other princes buy and sell the titles to loans on the market – Europe’s big capital has other plans. Silently, methodically, it is pushing Egypt and its ruler to bankruptcy and destitution.
That is called the Europeans turning a blind eye for decades to fiscal deficits and the structural problems of the country while their banks flood it with supposedly cheap capital.
“While Ismail agrees with French creditors to establish a Debt Fund with four foreign auditors – Baring was the Brit, the Earl of Cromer, Goschen arrived in Egypt having been elected by two thousand shareholders of the company Fruhling and Goschen to discuss a ‘new plan for financial restructuring’. He brings in his wake the Frenchman Zuber and together they propose to the Khedive to reorganize his Ministry, taking on board one French and one English adviser. It is the first attempt of foreigners to infiltrate the Egyptian government. Egypt would come under the control of Europe, it would cease to be independent.
The ‘Debt Fund’ is what we call today the ‘Financial Stability Fund’. And lo and behold the troika of the day, only it had four members instead of three. And a loss of sovereignty never did any one (lender) any harm.
“… while ostensibly it oversaw the introduction of good governance in Egypt, in practice it wasn’t anything but a major financial maneuver to put up the prices of Egyptian securities and allow the interested parties to offload them onto the backs of the poor.”
Back then, as today, it was called offloading. Some things never change.
“At that point for Egypt to get out of the situation it should have stopped paying interest, for the debts to be restructured and restricted to their true dimensions, to put an end to Ismail’s luxuries and waste and for the state system to be reformed. But this wasn’t the purpose of the ‘European ministry’. As we saw, at any cost the interest had to paid in order to keep the price of bonds high. Of nine and a half million pounds which was the general revenue, seven and a half went to the foreign bondholders, in interest and paying off the debt.
In the age of the Memoranda and the IMF, we would call it the priority of making debt payments at the expense of the country’s internal needs, as well as the refusal to reduce or restructure the debt in order for the country to not lose its reliability on international markets.
So all this happened in nearby Egypt in the second half of the 19th century, as Tsirkas chronicled with surgical precision on the occasion of Cavafy winning the 1958 (state-sponsored no less) prize. Half a century later, however, Greek society has no idea about the crime.
And one final diamond from the book for fun. Persistent in his search for Cavafy’s sources for his well-known poem ‘Thermopyle’, Tsirkas uncovers a theatrical production of the play ‘Leonidas’s Victory,’ by Babis Anninou, which was performed in June 1901 in Athens, at a time when Cavafy was in Athens on leave. In one scene of the play, there is the following incredible verse, “You see, there are no banks here that take the people’s money and then, in the blink of an eye, have their shares evaporate to nothing.”
See what you can learn from reading poetry?