Today, 7 July 2015, a calamity is facing Greece. With a debt mountain of € 320 Billion owed to various countries and banks in Europe, since 2010 the EU-IMF has provided bailout funds of € 240 Billion to Greece. In recent weeks, Greece has defaulted on its debt re-payment to the IMF to the tune of € 1.5 Billion. Without a new bailout deal, July 20 could see a default on a € 3.5 Billion repayment to the European Central Bank (ECB) which could have devastating effects on Greece and Europe in general.
I remember when I first went to Greece in 2009. I was the coach for a team of scientists and engineers who were students of the International Space University, France and had signed themselves up for the unthinkable task of facing top law students from European institutions in an international space law moot court competition in a case concerning the deployment and the use of force in low earth orbit of Outer Space! (They placed 2nd in Europe to everyone’s amazement!) We were in Athens and of course the first thing I did was go to the Parthenon to see the glorious restored, landmark temple ruins with iconic Doric columns built from 447 BC. My dad had told me to visit the Greek Islands to get the full taste and beauty of this historical haven…As I was only there a few days for work, I didn’t really see much more of Greece or really get to know its people till I participated as a Masters student at McGill University, Canada in another space law moot competition (in a case concerning environmental contamination and harmful interference in space activities) where my team mate was a well-educated, intelligent and proud Greek lady. As the current crisis emerged and Greece was a firm topic of the news media, she recently finished her PhD and made the decidedly brave decision to head back to Greece.
On Sunday July 5th 2015, Greece held a referendum to determine whether new bailout conditions from Europe were acceptable to the Greek people. With an overwhelming 63% turnout, 61.3% of Greeks voted “no” to the terms of the bailout, primarily rejecting proposed additional pension cuts and tax increases. When I look at my social media newsfeeds, I think of my team mate as I read arm chair commentaries about the Greek decision. Far beyond me to comment on the ramifications of this decision but what struck me is the idea that lack of education in part led to the decision and that to “say No” to what it sees as unfavourable terms is a bad decision for Greece!
Firstly, to disclose my prior feelings on democracy. I have always had this side bar idea that dictatorship works well in some countries because democracy fails when the populace is not educated enough to weigh options objectively and make rational choices…but then I remembered in so called “advanced” countries of the world, current history shows us people are rarely rational and rarely objective but are self-interested and think of their suffering during times of crisis. Despite that the actual history of Athens in the period of its democratic government is marked by numerous failures, mistakes, and misdeeds, there is little real debate that Cleisthenes of Athens, who came into power at 510 BC, was also known as father of Democracy. Thus, how can commentators justify the comment that lack of education made the Greeks stand up against what some see as unfair and bullish tactics from the “big guys”? To this end a European country is now facing the plight of many developing countries the world over proving that “bad stuff”, mis-management and plundering doesn’t just happen in Africa!
Some commentators are saying that despite Germany’s tough stance on the issue, debt relief could be Greece’s reward for standing up to Europe. Nigerian’s know a thing or two about debt relief, following seven years of efforts that culminated in the 2005 debt relief deal with the Paris Club. Despite a Greek population of 11 million with a € 320 Billion debt profile as against Nigeria’s 150-170 million population with a current debt profile of $68 billion, there could be some lessons learned from the Nigerian experience.
In 2005, with a debt burden of over $30billion and arrears of $6 billion, well beyond the total revenue of Nigeria for one year, Nigeria was crippled by debt bondage. Initially borrowing $10 billion, interest and penalties meant that they had paid $35 billion over 20 years and still were left with $30 billion to pay and had been paying only $1 billion instead of $2 billion annually. It seemed like the more they paid, the more they owed! Sure, Nigeria had gotten there on its own as a result of bad governance, abuse of office, weak control, monitoring and evaluation etc., but the “rich and wise” watch, benefit and then wait for you to come begging! The Government, through the voice of President Obasanjo and Finance Minister Okonjo-Iweala however successfully made the case for debt relief by resolving to the following:
– Working hard to break with the past, Identifying new voices and leaders;
– Rejecting business as usual;
– Voting for new values of accountability, transparency, fair competition and social justice;
– Economic reform and development strategy through a home grown but globally endorsed program.
Most importantly they demonstrated that Nigeria was indeed in bondage and the repayments were taking money from development, making the country vulnerable and costing creditors more that debts in the future. As the international community agreed and Nigerian’s revelled in the news that there would now be extra money, opponents argued that the agreement was only “in principle” if Nigeria fulfilled certain conditions including to immediately:
– Pay the $6 billion arrears;
– Get approval from the IMF boards for reforms and submit to monitoring; and
– Buy back the remaining debt at a “discounted market rate”.
In the end they paid back a whopping $12 billion up front to get $18 billion debt relief!
Today, while there are cries that we are inching our way back to debt, the current Government asserts that this debt is sustainable as loans are concessionary with low interest rates and long moratorium. However, rather than remaining in the vicious cycle of spending the country’s reserves by just paying off debts, in July 2010 the Government set up a Sovereign Wealth Fund (SWF) as an investment vehicle with three funds established to:
1) Create a savings based for Nigerians (Future Generations Fund);
2) Enhance the development of Infrastructure (Infrastructure Fund); and
3) Provide stabilization support in times of economic stress (Stabilization Fund).
As part of the legal team behind the Nigerian Sovereign Investment Authority Act of 2011 that established the power to develop the funds, I followed in earnest the controversy around the seed funding for the fund and the necessity, or lack of, of an Infrastructure Fund. With respect to the latter, the debate is that on the one had an Infrastructure Fund has an overlapping effect with other Government programs and on the other hand, infrastructure development is so fundamental to growth that it cannot be overlooked even if other programs are supposedly dealing with same. Three years later, as of December 2014, the Nigerian SWF has been ranked 2nd out of 51 global SWF’s under the SWF Institute Transparency Index, primarily as a result of its commitment to the Santiago
Principles on Independence, Openness and Transparency in operations. By 2014, revenue grew 267% from 1.96 Billion Naira to 7.26 Billion Naira. However, despite its heavy focus on Return on Investment, the Authority is also developing a social infrastructure strategy that focuses on rural healthcare, education and environmental protection, where impact is the primary consideration. While this is not the classic objective of a SWF, along with general infrastructure development, there appear to be some initiatives that are making some progress for Nigeria, since we started thinking seriously about getting out of debt bondage and becoming savers and investors.
Despite that I have essentially skipped all the blaming and fault that can be placed on Greece for its current situation, there are two concluding comments that I have with respect to the critique that lack of education or information informed the Greek referendum decision. Firstly, the people who inevitably will be “helping” Greece are self-interested. Yes we can stall corruption by keeping money away from those who want to waste it and putting hard conditions on them but this situation is primarily to the benefit of the new infrastructure set up whoever or wherever that might be. Greece too must act in its interest to negotiate terms and ensure they get a deal that is sustainable and does not have them in bondage forever. Today, no one current method or one radical solution can work 100% effectively by its self to change society, its views and its structures. The important thing therefore, is to educate society that change is within its power. Despite its appearance, the law, institutions and power politics has not fixed and frozen what one can hope to achieve. Civic action has immense emancipatory potential and if society acknowledges that it has been conditioned to think that so long as basic rights are protected, there can be no change, it can also acknowledge that individually if we increase our efforts, then society can be transformed through a subjective commitment to an objectified understanding of the demand. Finally, in moving forward we must not fail to alert ourselves to thinkers such as Jaques Derrida, Antonio Negri and Michael Hardt, who explained the need to understand and show reverence and acknowledgment to the past and our heritage and that our society has already shaped us to the extent that potentially any new ideas we have may come from that society that we are trying to change. In essence, to watch out that the initial ideas from the original empire may be strong enough to creep in to our new consciousness such that what we think are new ideas are jut old ideas explained in a different way.