The position marks a departure for Syriza which had previously made the unilateral writing off of a large chunk of Greece’s public debt one of its central policy platforms. However Mr Stathakis stressed that he believes that current troika policies will fail and the only way for Greece’s debt to become sustainable is through restructuring.
From the beginning of the crisis many in Greece, particularly on the left, maintained that the majority of Greece’s debt was odious: in other words it was the product of borrowing by corrupt politicians without democratic oversight and legitimacy. As a result the Greek people were within their rights to unilaterally declare the debt non-payable. This view was popularised at the time by the documentary Debtocracy, which drew a number of historical parallels with indebtedness of other countries:
Syriza in particular appears to have been swayed by this line of argument seeing it as a way for Greece to get out from under its crushing debt burden without the need for massive bailout loan agreements with foreign lenders. At last summer’s party conference, (technically a founding congress as Syriza, from a coalition of smaller parties, transformed into single political party) Syriza made writing off a large chunk of Greece’s public debt one of its main political priorities.
However despite an independent commission being set up by leftist politicians and academics to establish the exact level of Greece’s odious debt, a precise figure has never been given.
Now Mr Stathakis’s comments indicate that the level of the debt that can be legally written off is far less than the party and its supporters may have hoped. According to the Cretan parliamentarian the debt that can be classed as odious is largely that which has arisen from defense procurement programs managed by corrupt politicians and civil servants which amounts to roughly 5% of Greece’s total public debt, estimated to reach 340 billion at the end of this year (174.8% of GDP). The remaining 95%, be it due to expenditures for the 2004 Olympic Games, large public infrastructure works etc, is ‘traditional’ and must be repaid in full given that, “there is no legal process to challenge this.”
He also added that Greece must seek to stay in the euro.
At the same time however, Mr Stathakis stated that as it currently stands, Greece’s debt is not sustainable and that methods must be found to lighten the burden, such as a moratorium on interest payments until the country returns to economic growth.
“This situation results in the debt being unsustainable because from now until 2020, on average 9 billion per year [required to service the debt] must be found from budget surpluses and from privatizations, something which is impossible for Greece and for which there is no historical precedent. Additionally over this period funds need to be found to stimulate an economic recovery which under these conditions will be impossible.”
When asked whether Syriza will be capable of implementing its programme in the suffocating climate of austerity in the eurozone, Mr Stathakis responded that policies are not set in stone.
Mr Stathakis’s comments are being seen as part of an attempt by the party to dial back Greek voters’ hopes of a quick solution to the debt problem should Syriza come to power, while at the same time signalling to the country’s lenders that Syriza will continue to push for a restructuring of the debt. Mr Stathakis indicated in the interview that he believes that for Greece’s debt to become sustainable, the overall burden will have to reduced by 30 to 40%.