International Bailouts Saved EU Banks, Not Austerity-Weary Greeks

International bailouts since 2010 meant to save the Greek economy – which came with punishing austerity measures – have been used to pay European Union banks, with only 5 percent of 220 billion euros ($251.51 billion) going to state coffers to help a beleaguered society, a German study has found.

The analysis by the European School of Management and Technology (ESMT) in Berlin – Germany is the biggest contributor to the rescue packages but insisted on crushing conditions in return – said 95 percent of the money went toward saving the banks, leaving Greece’s workers, elderly and pensioners to pay the price while tax cheats, the rich and politicians escaped.

“Europe and the International Monetary Fund have in previous years mainly saved the banks and other private creditors,” concluded the report, published in the German newspaper Handelsblatt.

The college’s Director, Jorg Rocholl told the financial newspaper that “the bailout packages mainly saved the European banks,” and had done virtually nothing to help Greeks buried under big pay cuts, tax hikes, slashed pensions and worker firings.

The business school’s study found that 86.9 billion euros ($99.35 billion) was used for the repayment of old debts, 52.3 billion ($59.79 billion) for the payment of interest and 37.3 billion euros ($42.64 billion) for the recapitalization of Greek banks, which are still in a precarious position because of a mountain of bad loans caused by austerity even as they chase debtors, except for the former ruling New Democracy Conservatives and PASOK Socialists who aren’t paying back 250 million euros ($285.81 million) they borrowed.

The economists who took part in the study have analyzed each loan separately to established where the money ended up, and concluded that just 9.7 billion euros ($11.09 billion – less than 5 percent – actually found its way into the Greek budget for the benefit of citizens.

“This is something that everyone suspected, but few people actually knew. That has now been confirmed by the study: For six years Europe has tried in vain to put an end to the crisis in Greece through loans, and keeps demanding ever harder measures and reforms. The cause of the failure obviously lies less on the side of the Greek government and more on the planning of the bailout programs,” the German daily reported.

Greek Prime Minister and Radical Left SYRIZA leader Alexis Tsipras won office last year – and again in a second snap election – on the back of promises to reverse austerity and defy the lenders and banks but caved in and accepted a third bailout of 86 billion euros ($98.32 billion) that came with more Draconian measures punishing Greek society, especially pensioners who he vowed to save.

The then-Troika of the European Union, International Monetary Fund, European Central Bank put up the first two bailouts and was joined by the European Stability Mechanism in the third, most of which has been held back since July, 2015 when Tsipras agreed to the rescue package but has been fighting attached reforms since.

Cyprus Finance Minister Harris Georgiades, who helped oversee a 10-billion euro ($11.43 billion) loan from the same creditors – who demanded and got confiscation of almost half the amount of bank depositors over 100,000 euros ($114,320) said Greece has to submit but should raise taxes as Tsipras said he would do in a bid not to whack the elderly again.

Speaking to another German daily, Suddeutsche Zeitung, Georgiades though said that Greece’s creditors should not make any new demands on Athens, such as insistence on another 3.6 billion euros ($4.12 billion) in contingency austerity to go along with 5.4 billion euros ($6.17 billion) Tsipras accepted in return for the critical third bailout.

“I don’t think another increase in taxation would lead Greece anywhere,” said Georgiades, who agreed to higher taxes in his country though.