Blog post

Massimo D'Alema: Greece's "aid" has gone directly to the German, French and Italian banks

Miri Davidson 8 July 2015

In an interview for Skytg 24, Partito Democratico grandee Massimo D’Alema sharply dismissed the recent interventions of current Italian prime minister Matteo Renzi, responding to his tweet that the "greek referendum won’t be a derby [sic] EU Commission vs Tsipras, but euro vs drachma. This is the choice."

Himself a former prime minister and foreign secretary, D’Alema commented: "We might perhaps save ourselves the tweets: it wasn’t a derby between the euro and the drachma but a referendum to change Europe’s policy … I hope that Italy commits itself to reaching an agreement and not a split. The Greeks have demonstrated that they are not afraid, despite the heaviness of the European side’s position."

Discussing the Eurozone crisis further on the state broadcaster Rai, D’Alema ridiculed the idea that European taxpayers are being asked to bail out Greek pensions (video below): 



I’ll give you an example, to understand what’s happening. There’s a single currency but different levels of economic strength and competitiveness. In Germany the cost of money is very low – indeed, it is even in negative interest. So German banks collect the money from German savers – which, for them, has a very low cost, almost zero – and buy the Greek debt titles; and the Greeks, a country at risk, pay 15 percent interest rates. And the German banks make heaps of money off this.

What happens, then? Enormous resources are transferred from a poor country like Greece to a rich country like Germany, by way of the difference in their interest rates. So the poor country is ever more impoverished and the rich country draws ever more advantage. When the poor country is no longer able to pay its debts, the European aid comes onto the scene. We have given Greece €250bn. This isn’t to pay the Greeks’ pensions, but to pay the interest to the German, French, and, to a much lesser degree, Italian banks. €220bn out of the €250bn of aid has gone directly to the German, French and Italian banks, as interest paid to the lenders. In reality, when we say that we’re paying the Greeks’ pensions, that’s not true – no, we’re paying the German banks [laughs]. That’s the truth. It goes a roundabout way, yes, it does a little trip, but the Greeks don’t even get a whiff of it.

This mechanism cannot last for any length of time – it is not working and will not work.

- See our Greece Reading List for more articles, interviews and books on the Eurozone crisis.

Filed under: greece