International Financial Commission
The International Economic Control of Greece from 1989 to 1978 was the supervision of the public economy of the Kingdom of Greece (from here on: "Greece") which was imposed by European powers, who had lent Greece in autumn of 1897, when the country bankrupted four years earlier. The goal was the payment of the country's debts to its creditors. The control was exercised by a six person commission, the International Economic Commission (official name, in French: Commission Internationale Financière de la Grèce), which resided permanently in Greece for 81 years.
Background and precedent international practice
Between 1857 and 1859, UK, France and Russia created the International Financial Commission of Inquiry, a commission whose goal was reporting Greece's capability of repaying the debt of 1833. This commission, by intervention of Russia, did not have the role of controlling the economy and ensuring payments; it was restricted to an advisory role. The results from the work of this commission was the payment of an instalment amounting to 900,000 French francs in 1860.
Ottoman Tunisia bankrupted in 1869 in a similar economic situation. In order to collect its debts, the Commission Financière Internationale was established in the country by its creditors: France, UK and the Kingdom of Italy. This committee was responsible for the management of state finances to ensure the repayment of Tunisian debts.
Ottoman Empire defaulted similarly in 1876. In 1881 it agreed by the Decree of Muharrem to the creation of the Council of the Administration for the Ottoman Public Debt (CAOPD), a debt collecting organization with 5,000 employees. It had more than twenty offices in the provinces of the empire, ranging from Yemen to Thessaloniki, with complete freedom in deciding the debt collection manner, and attributed the debts to the creditor countries[1].
Bankruptcy of Greece and defeat in the Greco-Turkish War of 1897
In 1893, the government of Greek Prime Minister Charilaos Trikoupis] declared bankruptcy. Partial control was imposed by the country's creditors, which was typical and not substantial, without having the power to interfere in the Greek public finances.
The situation changed when Greece clashed with Turkey during the Greco-Turkish War of 1897. Greece was in a dismal position, with its armed forces unable to stop the advance of the Turkish army, which had captured Thessaly and part of Central Greece. The country was forced to accept defeat in the Peace Agreement of September 20, 1897. The agreement put forward the condition that Greece had to pay Turkey the sum of 4,000,000 Turkish liras, as immediate was reparation. The government of Alexandros Zaimis was forced to negotiate additional loans with the country's creditors, with the disadvantageous precedent of bankruptcy. The negotiations led to the imposition of the International Economic Control for the economic restructuring of Greece and the subsequent guarantee that the country would be able to pay back its loans, old and new.
Lending terms
The negotiations with the creditors' representatives (UK, France, Austria, Germany, Russia and Italy)[2] started in October 1897 and resulted in the instatement of Law ΒΦΙΘ/23-2-1898[3], according to which the International Economic Commission was established and subsequently renamed.
The agreement provided for the following:[4]
1. Issuing a war reparations loan and an "economic loan". A guaranteed loan of 151,300,000 French francs was given to Greece by the Great Powers. The loan was used to pay 93,900,000 francs to the Ottoman Empire as war reparations, the current state debt of 31,400,000 francs, the 1897 deficit of 22,500,000 francs and the loan issuing expenses of 3,500,000 francs.
2. Mortgaging tax incomes to repay the loans. To do that, the Commision acquired regular sources of income and assessed the state agencies for their efficiency and their tax collecting ability. The Commission collected the incomes from the monopolies of salt, oil, matches, playing cards, cigarette papers and Naxos emery, the tobacco tax, the stamp duties and the Piraeus customs office's duties.
3. Debt restructuring.
Sources
- Το ιστορικό του "δυστυχώς, επτωχεύσαμεν", Newspaper Rizospastis, Sunday, December 8, 1996.
- Η επιβολή του Διεθνούς Οικονομικού Ελέγχου, Newspaper Rizospastis, Sunday, December 8, 1996.
- Διεθνής Οικονομικός Έλεγχος: 112 χρόνια από την (προηγούμενη) επιβολή του!, Giannis Siatras, eurocapital.gr, February 11, 2010.
- Από τη χρεοκοπία του 1893 στο Διεθνή Οικονομικό Ελεγχο, Apostolos Diamantis, Kyriakati Eleftherotypia, Sunday, May 2, 2010.
- Ο Διεθνής Οικονομικός Έλεγχος του 1898 (η Ιστορία επαναλαμβάνεται;), tvxs, April 25, 2010.
Additional reading
- Dette publique de la Grèce: historique, lois, décrets, conventions, règlements, protocoles, etc, Greece. Commission financière internationale, Sakellarios, 1905.
References
- ^ Ali Coşkun Tunçer. "How Did Creditors Enforce Sovereign Debt Contracts? International Financial Control during the Classical Gold Standard Era" (PDF). LSE, Economic History Thesis Workshop. pp. 3–4. Retrieved November 20, 2011.
- ^ Νικολέττα Τσιτσανούδη (06-10-2011). "Η πτώχευση του 1893 και ο Διεθνής Οικονομικός Έλεγχος". larissanet.gr. Retrieved November 20, 2011.
{{cite web}}: Check date values in:|date=(help) - ^ "ΦΕΚ A 28/1898 Περί Διεθνούς Ελέγχου, Νόμος ΒΦΙΘ". Εθνικό Τυπογραφείο. Retrieved November 20, 2011.
- ^ Μιχάλης Ψαλιδόπουλος (08.07.2011). "Από την πτώχευση του 1893 στο Γουδί". www.kathimerini.com.cy. Retrieved November 12, 2011.
{{cite web}}: Check date values in:|date=(help)
External links
- International Financial Commission (Greece), Your Archives (part of the Internet services of the British National Archives).