“In my 18 years (at the World Bank) I ve never seen a legal framework such as (the one imposed on Greece)”

During the heated committee session on the new greek “bailout”, held just a few hours after Greek MPs were shown the new loan aggreement and just a day before they had to vote on it, Elena Panaritis, PASOK MP voiced her outrage at the conditions imposed on Greece. She should know one thing or two about conditions. Panaritis was an institutional economist at the World Bank for 18 years, forcing similar programs upon countries such as Fujimori's Peru. Clearly struggling in Greek, she voiced her anger that Greece is giving up so much sovereignty by allowing the EFSF to decide which courts it will resort to.

Greek Parliament, Committe on economic affairs, Saturday February 11th 

Elena Panaritis:

“The least I can say Mr president is I m confused. Which dilemma are we here to discuss?Either default or rescue? If reading these papers since this morning you consider this a rescue, please explain it to me.

This memorandum continues with fiscal measures proven by the previous memorandum to be the answer to the wrong diagnosis. The crisis was diagnosed as a liquidity crisis and not as a structural crisis pertaining to the solvency of the country's productive base. For this reason, every three months, when the troika came to check progress, they found problems and there were always new measures, new laws in order to release the new tranche. How do we know today that in three months the numbers will be right, since this program does not contain half a structural measure. Not the slightest table referring to structural reforms. Where is the cutting of red tape, where is the simplification of laws, where are the mergers?  Please help me find them, the pages and the numbers are too many, help me find them and I m open to admitting my mistake. But up until now, I don’t see the slightest structural reform.


We will not get out of the crisis if we continue just with fiscal measures. Just the opposite. So the dilemma I really see now is between default now or default in three months. Let’s make this a little more interesting. All these papers, with this legal framework I have never seen before in the 18 years I had been doing this job, -Mr minister, I m here 2,5 years and nobody asked me for an opinion in these matters, I was working to produce analyses like these for 18 years- it is unheard of that disputes will be settled under English law. My colleagues in parliament are told that this does not matter, that it although bonds will be under English law, disputes will be settled in Greece. Wrong, absolutely wrong. Disputes will be settled at the Luxembourg courts, or wherever the EFSF sees fit. Parallel, it is absolutely clear, in three words, in a very small paragraph.


You brought me here to help the country innovate, how can you ask me tomorrow evening or monday to sign up on this? I really don’t understand what will happen when we say yes to this. Today we should say: we either default now, under our own volition, or we default in three months- when we will be unable to default, because they ll take us to court. If we have lost our dignity now, you shall see how much dignity we ll have then, when they ll be shoving us in front of the Luxembourg courts and wherever else, just because the EFSF decided so.Then we ll say, ok we ‘ll offer the productive base of the country as guarantee- so here s the guarantee demanded by Finland.


It is possible that what I m saying now is 150% wrong. If so I want a written statement from our government that we are not giving away sovereignty. Could all this talk about the minimum salary, about the 13th and 14th salary, the social housing be just a way to obfuscate the real issue? Why did you give us this thing only this morning at 2.30? So that we do not see this issue in there?


In order to find the missing 325 million, I ll propose the following. Since the economy of this country lies in tatters and it has the biggest economic problems of any other European country after WWII, I would ask for Greece the same deal that Germany got. Germany, who was behind both the first and the second world war. I would like for Greece to stop being the country with the 5th largest defence spending in the world.Since we are all showing so much solidarity with each other, Europe should guarantee our borders for the next 10 15 years, so that this part of spending goes to null. We cannot be in the edge of the EU and pay 7% of GDP for defence. Nato, the US, all of us guaranteed Germany’s defence in 1945.


One other question. Which gentleman will sign this paper as legal advisor? A signature of legal advisor is required. Who is the legal advisor of the greek state who will sign that it s ok to adjudicate disputes in the courts of another country?   Last thing. Has any part of this memorandum been written in Greece? Excuse me, it s the first time I am so outraged. There is “Paris” and “Brussels” written under all these papers. We ve learned how to read and we ve read it. Please answer those questions.” 

 

Despite the revealing outburst, the next evening, while hundreds of thousands were protesting in Athens, suffocating from tear gas smoke, while riots raged and fires burned, Panaritis voted in favour of the measures she so aptly criticized. She tweeted that she received writen assurances from the greek government on the primacy of Greek law. And in a interview with NPR she added “We don't really know how a default looks like in Greece. Personally, I have lived through defaults, and that was one of the reasons that I was voting yes.”

How convincing is all this? Are we no longer facing “a choice between default now and default in three months?” Has the loan agreement no longer been written in “Paris and Brussels”? Are “written assurances from the Greek government” more valid than provisions of the loan aggreement? Have our lenders insisted on bonds governed under English law for nothing? Why did they bother, then?

In a few years, from the safety of her new office in Washington D.C. Ms Panaritis may wish to explain to any Greek willing to listen what transpired between this resounding speech against the bailout and her vote in favour of it the very next day.

 

by @theliveproject, Saturday feb 18th, 2012