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International Financial Control

The International Financial Control (Greek: Διεθνής Οικονομικός Έλεγχος) was the supervision of the public finances of 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 Financial Commission (official name, in French: Commission Internationale Financière de la Grèce).

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 the intervention of Russia, did not have the role of controlling the economy and ensuring payments; it was restricted to an advisory role. The result 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 Italy. This committee was responsible for the management of state finances to ensure the repayment of Tunisian debts.

The Ottoman Empire defaulted similarly in 1875 and on 20 December 1881, with the Decree of Muharrem agreed to the creation of the Ottoman Public Debt Administration (OPDA), a debt collecting organization with 5,000 employees. OPDA had more than twenty offices in the provinces of the empire, 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.[2] Partial control, which was typical and insubstantial, was imposed by the country's creditors without having the power to interfere in the Greek public finances.[2] The Greek government, over half of whose revenue went in 1893 to service loans, was in addition beset by clientelism. Several years of fruitless negotiations followed. The first modern Olympic Games (held in 1896) increased state expenses.[2]

The situation changed when Greece clashed with Turkey during the Greco-Turkish War of 1897. Greece was in a difficult 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 on 4 December 1897, with the Treaty of Constantinople. The treaty put forward the condition that Greece had to pay Turkey the sum of 4,000,000 Ottoman liras, as immediate war 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 Financial Control for the financial 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-Hungary, German Empire, Russia and Italy)[3] started in October 1897 and resulted in the instatement of Law 2519/23-2-1898,[4] according to which the International Financial Commission was established and subsequently renamed.

The agreement provided for the following:[5]

  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 Commission 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 impounded duties from the Port of Piraeus.[6]
  3. Debt restructuring.

20th century

The IFC remained in Athens until 1936. According to some observers, the experience was not wholly negative for public administration, as it allowed the state to increase revenues, and reduced the outflow and misappropriation of capital.[2]

See also

Sources

  • "Το ιστορικό του "δυστυχώς, επτωχεύσαμεν"" [The history of "unfortunately, we bankrupted"] (in Greek). Greece: Rizospastis. 8 December 1996. p. 12. Retrieved 26 May 2015.
  • "Η επιβολή του Διεθνούς Οικονομικού Ελέγχου" [The imposition of the International Financial Control] (in Greek). Greece: Rizospastis. 6 December 1996. p. 12. Retrieved 26 May 2015.
  • Siatras, Giannis (11 February 2010). "Διεθνής Οικονομικός Έλεγχος: 112 χρόνια από την (προηγούμενη) επιβολή του!" [International Financial Control: 112 years from its (last) imposition!] (in Greek). Greece: eurocapital.gr. Retrieved 26 May 2015.
  • Diamantis, Apostolos (2 May 2010). "Από τη χρεοκοπία του 1893 στο Διεθνή Οικονομικό Ελεγχο" [From the bankruptcy of 1893 to the International Financial Control] (in Greek). Greece: Eleftherotypia. Retrieved 26 May 2015.
  • "Ο Διεθνής Οικονομικός Έλεγχος του 1898 (η Ιστορία επαναλαμβάνεται;)" [The Financial Economic Control of 1898 (History repeats itself?)] (in Greek). Greece: tvxs. 28 July 2011. Retrieved 26 May 2015.
  • Waibel, M., Echoes of History: The International Financial Commission in Greece in C Paulus (Ed), "Sovereign Default – Do We Need a Legal Procedure?" (C.H. Beck/Hart: May 2014)

Further reading

References

  1. ^ Tuncer, Ali Coşkun. (PDF). LSE, Economic History Thesis Workshop. pp. 3–4. Archived from the original (PDF) on 26 May 2015. Retrieved 20 November 2011.
  2. ^ a b c d lemonde.fr: "Quand la France et l’Allemagne mirent la Grèce sous tutelle… en 1898", 16 July 2015
  3. ^ Tsitsanoudi, Nikoletta (6 October 2011). "Η πτώχευση του 1893 και ο Διεθνής Οικονομικός Έλεγχος" [The bankruptcy of 1893 and the International Financial Control] (in Greek). larissanet.gr. Retrieved 20 November 2011.
  4. ^ "ΦΕΚ A 28/1898 Περί Διεθνούς Ελέγχου, Νόμος ΒΦΙΘ΄" [Government Gazette Issue A 28/1898: "About International Control, Law 2519"] (in Greek). Hellenic National Printing Office. 26 February 1898. Retrieved 20 November 2011.
  5. ^ Psalidopoulos, Michalis (8 July 2011). "Από την πτώχευση του 1893 στο Γουδί". www.kathimerini.com.cy (in Greek). Cyprus: Kathimerini. Retrieved 12 November 2011. (Subscription required.)
  6. ^ telegraph.co.uk: "Greece is being treated like a hostile occupied state", 13 July 2015

External links

  • International Financial Commission (Greece), Your Archives (part of the Internet services of the British National Archives).

international, financial, control, greek, Διεθνής, Οικονομικός, Έλεγχος, supervision, public, finances, greece, which, imposed, european, powers, lent, greece, autumn, 1897, when, country, bankrupted, four, years, earlier, goal, payment, country, debts, credit. The International Financial Control Greek Die8nhs Oikonomikos Elegxos was the supervision of the public finances of 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 Financial Commission official name in French Commission Internationale Financiere de la Grece Contents 1 Background and precedent international practice 2 Bankruptcy of Greece and defeat in the Greco Turkish War of 1897 3 Lending terms 4 20th century 5 See also 6 Sources 7 Further reading 8 References 9 External linksBackground and precedent international practice EditBetween 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 the intervention of Russia did not have the role of controlling the economy and ensuring payments it was restricted to an advisory role The result 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 Financiere Internationale was established in the country by its creditors France UK and Italy This committee was responsible for the management of state finances to ensure the repayment of Tunisian debts The Ottoman Empire defaulted similarly in 1875 and on 20 December 1881 with the Decree of Muharrem agreed to the creation of the Ottoman Public Debt Administration OPDA a debt collecting organization with 5 000 employees OPDA had more than twenty offices in the provinces of the empire 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 EditIn 1893 the government of Greek Prime Minister Charilaos Trikoupis declared bankruptcy 2 Partial control which was typical and insubstantial was imposed by the country s creditors without having the power to interfere in the Greek public finances 2 The Greek government over half of whose revenue went in 1893 to service loans was in addition beset by clientelism Several years of fruitless negotiations followed The first modern Olympic Games held in 1896 increased state expenses 2 The situation changed when Greece clashed with Turkey during the Greco Turkish War of 1897 Greece was in a difficult 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 on 4 December 1897 with the Treaty of Constantinople The treaty put forward the condition that Greece had to pay Turkey the sum of 4 000 000 Ottoman liras as immediate war 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 Financial Control for the financial restructuring of Greece and the subsequent guarantee that the country would be able to pay back its loans old and new Lending terms EditThe negotiations with the creditors representatives UK France Austria Hungary German Empire Russia and Italy 3 started in October 1897 and resulted in the instatement of Law 2519 23 2 1898 4 according to which the International Financial Commission was established and subsequently renamed The agreement provided for the following 5 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 Mortgaging tax incomes to repay the loans To do that the Commission 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 impounded duties from the Port of Piraeus 6 Debt restructuring 20th century EditThe IFC remained in Athens until 1936 According to some observers the experience was not wholly negative for public administration as it allowed the state to increase revenues and reduced the outflow and misappropriation of capital 2 See also EditCaisse de la Dette in the Khedivate of Egypt Ottoman Public Debt Administration in the Ottoman Empire Moroccan Debt Administration in the Sultanate of MoroccoSources Edit To istoriko toy dystyxws eptwxeysamen The history of unfortunately we bankrupted in Greek Greece Rizospastis 8 December 1996 p 12 Retrieved 26 May 2015 H epibolh toy Die8noys Oikonomikoy Elegxoy The imposition of the International Financial Control in Greek Greece Rizospastis 6 December 1996 p 12 Retrieved 26 May 2015 Siatras Giannis 11 February 2010 Die8nhs Oikonomikos Elegxos 112 xronia apo thn prohgoymenh epibolh toy International Financial Control 112 years from its last imposition in Greek Greece eurocapital gr Retrieved 26 May 2015 Diamantis Apostolos 2 May 2010 Apo th xreokopia toy 1893 sto Die8nh Oikonomiko Elegxo From the bankruptcy of 1893 to the International Financial Control in Greek Greece Eleftherotypia Retrieved 26 May 2015 O Die8nhs Oikonomikos Elegxos toy 1898 h Istoria epanalambanetai The Financial Economic Control of 1898 History repeats itself in Greek Greece tvxs 28 July 2011 Retrieved 26 May 2015 Waibel M Echoes of History The International Financial Commission in Greece in C Paulus Ed Sovereign Default Do We Need a Legal Procedure C H Beck Hart May 2014 Further reading EditGreece Commission financiere internationale 1905 Dette publique de la Grece historique lois decrets conventions reglements protocoles etc in French Sakellarios Schonharl Korinna European Investment in Greece in the Nineteenth Century A Behavioural Approach to Financial History London and New York 2021 pp 296 330 https www routledge com European Investment in Greece in the Nineteenth Century A Behavioural Approach Schonharl p book 9780367252106 References Edit Tuncer Ali Coskun 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 Archived from the original PDF on 26 May 2015 Retrieved 20 November 2011 a b c d lemonde fr Quand la France et l Allemagne mirent la Grece sous tutelle en 1898 16 July 2015 Tsitsanoudi Nikoletta 6 October 2011 H ptwxeysh toy 1893 kai o Die8nhs Oikonomikos Elegxos The bankruptcy of 1893 and the International Financial Control in Greek larissanet gr Retrieved 20 November 2011 FEK A 28 1898 Peri Die8noys Elegxoy Nomos BFI8 Government Gazette Issue A 28 1898 About International Control Law 2519 in Greek Hellenic National Printing Office 26 February 1898 Retrieved 20 November 2011 Psalidopoulos Michalis 8 July 2011 Apo thn ptwxeysh toy 1893 sto Goydi www kathimerini com cy in Greek Cyprus Kathimerini Retrieved 12 November 2011 Subscription required telegraph co uk Greece is being treated like a hostile occupied state 13 July 2015External links EditInternational Financial Commission Greece Your Archives part of the Internet services of the British National Archives Retrieved from https en wikipedia org w index php title International Financial Control amp oldid 1136546079, wikipedia, wiki, book, books, library,

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