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Greece calls in the lawyers again: New PSI claim filed at ICSID

Posted on: 2 October 2015
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All opinions are those of the blog post author and do not represent Westminster Law School or the University of Westminster.

It seems one cannot live without lawyers. As anxiety over the legality of the Greek Private Sector Involvement (PSI) deal was abating, Cyprus Popular Bank (Laiki) filed an investment arbitration claim at the International Centre for the Settlement of Investment Disputes (ICSID) against Greece, claiming billions of euros in compensation for losses suffered in the 2012 Greek bond haircut. Laiki is a known enthusiast for Investor State Dispute Settlement (ISDS) and is involved in another action against Greece, this time for the provision (or lack thereof) of Emergency Liquidity Assistance (ELA) to its Greek subsidiaries during the events of 2012 that led to the resolution of Cyprus’ two biggest banks.

The PSI deal, forming the core of this action, has been a key component of the Greek Bailouts and is equally blamed and celebrated for moving the burden of any potential sovereign default from private hands onto public coffers. The PSI deal worked by offering to swap in early 2012 Greek bonds with new ones of a lesser value, a reduction of 53.5%. Why would anyone, however, voluntarily agree to accept such a significant haircut? Bondholders were offered this choice after Greece enacted retrospective legislation inserting what are known as Collective Action Clauses (CACs) in the bond contracts. Such clauses provide that if the majority of bondholders in any given bond issue vote in favour of accepting the offer, then all bondholders are obligated to participate. CACs in other words make bonds similar to shares in corporations: if the majority of shareholders vote for a resolution, an objecting minority cannot block it. A significant number of bondholders roped into this deal through the operation of CACs sought legal redress arguing that their investments had been forcefully expropriated.

One group protesting the PSI haircut consisted of 7000 small-holders, who joined a class suit against Greece arguing expropriation under the Greek Constitution and violations of Human Rights provisions under the European Convention of Human Rights. These arguments were tested in the Greek Council of State in March 2013. The court found for the Greek government arguing that losses were due to the activation of CACs, not by the state act that retrospectively inserted the CACs and found no violations of Article 1 of the Protocol to the ECHR.

A second challenge to the PSI came at ICSID from a Slovakian bank. Poštová Banka and it Cypriot subsidiary Istrokapital argued that, under the Greece-Slovak Republic and the Cyprus-Greece bilateral investment treaties, they were entitled to compensation for losses they suffered due to the PSI, amounting roughly to half the invested amount of €504m. The Poštová claim was the first challenge under Bilateral Investment Treaties (BITs) and is similar to the new case brought on behalf of Laiki. The objective of an investment treaty, Poštová argued, was for the signatories to create favourable conditions for investments. As the Treaty offered standards of protection and a mechanism for dispute resolution when those standards were violated, ICSID was the appropriate forum to discuss any claims arising out of PSI. BITs are aimed at encouraging foreign investment and for that reason make a series of binding promises to investors. They may, as a result, offer a more varied menu of options to someone wishing to sue, than mere reliance on domestic constitutional and human rights provisions. ISDS clauses in BITs have faced criticism for offering a parallel legal system that exists beyond the reach of domestic courts. Concerns has been especially pronounced in the context of the Transatlantic Trade and Investment Partnership (TTIP) negotiations. Greece prevailed at ICSID as the Tribunal found that for a variety of technical reasons it did not have jurisdiction to hear the Poštová claim. This finding ended the process without an examination of the substantive claims.

Is the Greek PSI deal in danger after this latest challenge? The short answer is yes. It is unlikely that the advisors of Laiki would have brought a claim if they thought that their client will have the same difficulty on jurisdictional grounds that led to failure in Poštová. While Greece won two challenges on the PSI, one in domestic courts and one in ICSID, the Argentine precedent is not a good omen. The Abaclat case, where a number of Italian bondholders sued Argentina, is illustrative of the sort of action that is becoming more common in the Greek context. While the case is still pending, we have a decision on jurisdiction accepting that the claim comes within BIT provisions and can proceed for consideration on the substantive grounds. Is this the sort of answer one should expect in the new case against Greece? Poštová lost on jurisdiction because of the exact wording of the BIT it was relying on. Investors from one of the other states Greece holds BITs with may have better luck. Bondholder BIT arbitrations remain a danger for Greece.

Dr. Ioannis Glinavos: i.glinavos@westminster.ac.uk

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Greek Students at the University of Westminster – Emergency Response

Posted on: 1 July 2015
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Dear Students,

This is a personal message to our Greek students. As of 29.6.15 Greek issued bank cards do not work abroad (for transactions or ATM withdrawals) due to the imposition of Capital Controls.

If you are a University of Westminster student, currently in London and you are experiencing a cash problem (for instance you have no UK bank account and have been relying on a Greek bank card), please get in touch with me so we can coordinate the provision of assistance.

I wish you all the best in this difficult time for Greece.

All the best

Ioannis Glinavos

Conference on the Economic Crisis at the Law School (17.09.15)

Posted on: 27 May 2015
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Westminster Law School will organise a one-day conference on the economic crisis, to be held in London in September 2015. The aim of the conference is to gather high quality research on the impacts of legal reforms in response to the crisis on economic rights. The aim of this enquiry is to delineate the boundary between individual freedoms and social objectives in seeking legal answers to the challenges of global and regional economic governance.


We invite submissions from academics and practitioners on all aspects of economic related rights in European and International Law. Papers covering the following topics are particularly welcome:


  • The Sovereign Debt Crisis
  • Investor actions in national and international courts and tribunals
  • The impact of increased EU competences on national economies
  • The evolving powers of the European Central Bank and the Federal Reserve
  • Austerity and conditionality


Interested authors should submit an extended, detailed abstract in PDF format to Dr Ioannis Glinavos i.glinavos@westminster.ac.uk by 1 August 2015. The authors of accepted papers will be informed by email by 15 August 2015. Accepted papers will be considered for publication in a special issue of the Manchester Journal of International Economic Law.






conference promo


Money out of thin air, or maybe not: Greece, the ECB and ELA

Posted on: 8 April 2015
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All opinions are those of the blog post author and do not represent Westminster Law School or the University of Westminster.

I have discussed before how the ECB has gone about systematically shutting down funding avenues for the Greek government by first dis-allowing state bonds from being submitted as collateral for bank borrowing, and then keeping ELA under a short leash (see here). This has been widely condemned as being politically motivated, aiming to put pressure on Tsipras’ government to cave to the demands of the Eurogroup, as the Troika Bailout remains the only adequate source of government funding. I have argued (see here) how this squeeze can well lead to default and/or Grexit.

These actions of the ECB have created internal tensions between the monetary policy arm and the banking supervision team. Benoît Cœuré, Member of the Executive Board of the ECB, said in an interview with Arthur Beesley for the Irish Times on 12 January (published on 16 January 2015, see here) that the ECB has a rule that any government collateral can be accepted under monetary policy operations either only if its credit is rated well enough or, if it’s not well rated enough, if the country is under an EU/IMF programme. And this is not new. This has been ECB policy since 2010. Second the ECB has made it clear that the so-called Securities Market Programme portfolio of Greek bonds bought by the ECB cannot be restructured because that would be equivalent to granting an overdraft to the country and that would be contrary to article 123 of the treaty.

It is fine to say that the Greek state cannot finance itself through the back door, by getting its commercial banks to borrow from the ECB to lend to the government (see here). However, it is quite another to try and prevent this from happening through ELA lending that passes via the NCB with the argument that commercial banks are endangering themselves by pilling on too much state debt (with the ECB implying that the sovereign is of questionable stability). What the ECB has done, after stopping accepting Greek bonds as collateral, is to drip feed ELA through the BoG while at the same time trying to prevent the Greek banks from buying any more state bonds (see here). The ELA is meant to go to commercial banks to help with liquidity at a time where deposits are bleeding away in a slow motion bank run (which gets worse as time goes by and no agreement with the ‘ex’ Troika is reached).

Thus far the story is known. The latest news (March 2015) touch a different aspect of bank recapitalisation, that of ECB funding for state-guaranteed bonds. This is another kettle of fish than the sovereign bonds (discussed above) that the ECB no longer accepts as collateral for Greece. While the ECB had prevented commercial banks from depositing sovereign bonds as collateral to borrow direct from the ECB, it continued to directly accept commercial bank bonds guaranteed by the Greek state. This is no more. The Governing Council of the European Central Bank (ECB) has adopted Decision ECB/2013/6, which prevents, as of 1 March 2015, the use as collateral in Eurosystem monetary policy operations of uncovered government-guaranteed bank bonds that have been issued by the counterparty itself or an entity closely linked to that counterparty. As of that date, the Eurosystem will also no longer accept covered bonds issued by the counterparty where the asset pool contains uncovered government-guaranteed bank bonds also issued by that counterparty or an entity closely linked to that counterparty. This Decision, which aims to ensure the equal treatment of counterparties in Eurosystem monetary policy operations (supposedly!) and simplify the relevant legal provisions, follows the measures implemented on 3 July 2012, which limited counterparties’ use of uncovered government-guaranteed bank bonds that they themselves have issued. This decision has been implemented by means of the recasting of Guideline ECB/2012/18. In the interests of clarity and simplicity, the recast Guideline ECB/2013/4 now also includes the provisions of other existing legal acts on temporary measures (namely Decisions ECB/2011/4, ECB/2011/10, ECB/2012/32 and ECB/2012/34).

This little known practice (now unavailable for Greek banks) worked as follows, in the words of Varoufakis himself (see here): Bank X would lend money to…itself. It would do this by issuing a bond which it did not intend to sell. So, why issue such a phantom bond? Why write an IOU and give it to one’s self? The answer is: In order to hand this phantom bond over to the European Central Bank as collateral in exchange for a cash loan. Normally, of course, the ECB would never accept such a phantom bond as collateral. Accepting it would have been to accept a loan it gave to Bank X as collateral for the said loan. It would have been an assault on the meaning of collateral and a gross violation of the ECB’s rulebook. So, bank X, knowing this, took its phantom bond first to the Greek government and had it guarantee it. With the government’s guarantee stamped on it, the ECB then accepted Bank X’s phantom bond and handed over the cash. Why? Because the Greek taxpayer had, in the meantime, unknowingly provided the collateral for Bank X’s loan.

Some European governments (Greece included) had launched schemes guaranteeing bonds issued by credit institutions shortly after the outbreak of the financial crisis in order to support their banking systems. Nevertheless, this market development suggests that the introduction of the eligibility of own-use government-guaranteed bonds accompanying the suspension of the minimum credit rating has also allowed a substantial fraction of these increasingly issued bonds to find their way into reverse transactions for refinancing credits with the ECB. Government guarantees are of importance because of two reasons. Firstly, government guarantees for risky assets pose a risk for taxpayers in case of bank default. Secondly, government guarantees can influence the valuation of the collateral as well as its credit rating, and thereby its refinancing conditions. In February 2009, the ECB extended the acceptance of own-use assets to all those guaranteed by governments. In principle, this made it possible to securitize assets into bonds, which are retained, thus never assessed by the market or a rating agency, and can still be used as collateral for refinancing credits due to the government guarantee. Moreover, the conditions in terms of valuation haircuts would be appealing if the rating of the guaranteeing government is higher than that of the issuer. (see here for details)

Why is all this important? The reason is that this latest change restricts Greek commercial banks to the ELA for liquidity support. This puts the burden on the BoG and allows the ECB to restrict its exposure to the Greek banking sector (and possible losses in case of sovereign and banking collapse). As the NYT recently argued (see here) to tap the ELA credit line, currently at €71 billion (more than half the deposits outstanding in Greece), Greek banks need to provide collateral to the Greek central bank. As was the case in Cyprus during its banking crisis, when a financial system implodes, finding acceptable collateral to swap for desperately needed loans can be difficult. The solution had been (as described above) for the banks to manufacture and issue billions of euros of short-term bonds, which — because they carry the guarantee of the Greek government — can be used as collateral to secure much-needed cash from the BoG via ELA. As long as the bank’s problem is access to short-term funds and not solvency, such machinations can work. In the last year or so, Greek banks have issued more than €50 billion worth of these securities at artificially high interest rates (the higher the rate, the more valuable the collateral becomes in securing loans). There appeared to be no restriction on the banks using these bonds to tap credit from their own central banks, and they have done so. The most recent case occurred recently, when Piraeus, Greece’s largest bank, issued a €4.5 billion note at 6 percent, which matures in July 2015. Bringing this rather dodgy practice under the ELA means that there is now a limit to this funding avenue and less room for manoeuvre for the Greek government.

Dr. Ioannis Glinavos: i.glinavos@westminster.ac.uk

“German Ordoliberalism” and the politics of the (a)political ECB

Posted on: 18 March 2015
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All opinions are those of the blog post author and do not represent Westminster Law School or the University of Westminster.

The European Central Bank (ECB) has come under a lot of fire recently for its decision to stop accepting Greek bonds as collateral (see here) and for restricting Emergency Liquidity Assistance to the Greek banking sector (see here) to measly amounts (assessed on a weekly basis).  On March 12 the ECB had raised the ELA limit by €600 mn to €69.4 bn. While this sounds impressive, the increase is minimal. These moves by the ECB are seen as politically motivated and Draghi has been accused of being Schaeuble’s partner (despite the very public differences between the two on other issues) in putting pressure on Greece to reach a deal with the Eurogroup. Is the ECB acting independently, and what do we understand by ‘institutional independence’?

Article 130 (ex Article 108 TEC)

When exercising the powers and carrying out the tasks and duties conferred upon them by the Treaties and the Statute of the ESCB and of the ECB, neither the European Central Bank, nor a national central bank, nor any member of their decision-making bodies shall seek or take instructions from Union institutions, bodies, offices or agencies, from any government of a Member State or from any other body. The Union institutions, bodies, offices or agencies and the governments of the Member States undertake to respect this principle and not to seek to influence the members of the decision-making bodies of the European Central Bank or of the national central banks in the performance of their tasks.

The ECB prides itself in not seeking or taking instructions from European Union institutions or bodies, from any government of an EU member state or from any other body in determining its price stability policies. I have previously complained about the ‘apolitical’ mandate of the ECB saying that considering the effect on the economy that the setting of interest rates has (to pick one of the most benign functions of the ECB), some degree of political input into the Bank’s decision- making would be at least desirable, if not required. It is no wonder that the institutional independence of the ECB does not improve public perceptions of the EU as a democratically deficient structure. If Draghi is being political now then, is this a good thing? Not if the Bank’s political action now is taken under the cover of ‘apolitical’ neoliberalism, aiming to push orthodoxy on a Greek government that has a popular mandate to reject it.

What follows is a summary of the legal basis for ECB independence prepared by my PhD student Pamela Nika (see here). It helps put things in perspective.

The ECB is able to act independently in making regulations or any other decisions, which fall within the scope of the tasks entrusted to the ESCB under the Treaty and its Statute, free of the influence of the Community institutions or national governments, without the obligation to seek assistance (See Article 34, ESCB Statute). This has direct links to the Bank’s history. The ECB was created in a period when the idea of independence for the central banking authority was developing rapidly in the international arena. There was a broad consensus that the independence would protect a currency from government influence and promote price stability and low inflation. The independent status of the ECB was guaranteed even before its creation, being now included in both EC Treaty and Statute of ESCB, rather than just secondary legislation.

I have discussed Institutional independence and its consequences in my work before (see here). It refers broadly to the ability of the monetary authority to act independently, as a separate (from the other government institutions) legal entity. Within the ESCB, both members of ECB and NCBs should be acting in accordance to their own responsibilities, regardless any governments’ or Community interference. Moreover, the members of ECB and NCBs are not obliged, while performing their tasks, to seek for assistance within the Committee or the respective governments (Article 108, EC Treaty; similarly, the issue is highlighted by Article 7, ESCB Statute). Thus, the ECB is able to act independently in making regulations or any other decisions, which fall within the scope of the tasks entrusted to the ESCB under the Treaty and its Statute. The ECB should act free of the Community institutions or national governments influence, with no commitment in consulting them. It is noteworthy that each EMU joining member was obliged to ratify in national law the independent status of their corresponding NCBs (Articles 108, 109 and 121, EC Treaty).

The ECB enjoys functional independence. This involves the vital powers and tools that should be assigned to the monetary authority in order to enable the accomplishment of its main goal: the price stability. In particular, the Eurosystem is empowered with the authority of composing and implementing monetary policy exclusively, and is the responsible body for the banknote issuance. Moreover, the ECB holds exclusive power in controlling the share capital and foreign reserve assets if they fall within the scope of the ESCB Statute (Article 30.1, ESCB Statute). The ECB power is limited in granting loans or other facilities to the participating member-countries (Article 101, EC Treaty). As a consequence, ECB tactics and actions cannot be influenced of important creditors-members of Eurozone associations and arrangements.

The regulatory powers assigned to the ECB by the Community Law as an added tool in pursuing its goals, place the ECB at the same line with the other Community Institutions’ regulatory competences, by providing the ECB with the power to impose binding and non-binding legal acts, with the status of secondary Community Law. Furthermore, another instrument attached to the powers of the Eurosystem is the ability to impose the appropriate sanctions in cases of non-compliance (Article 19, ESCB Statute). The ECB is also financially independent. This relates to the ability of central banks to cover and organize the funding of their operations and activities. The monetary income gained from the activity of Eurozone should be divided among all of the NCBs of the system; hence, it cannot be influenced by any governmental interference (Article 32, ESCB Statute).

It is important to remember that the actions adopted by the ECB are eligible for review of their legality by the Court of Justice in case they do not fall within the scope of ECB’s power, misapply, or violate the provisions of the Treaty (Article 230, EC Treaty and Article 35.1, ESCB Statute). In other words, in terms of the legality of its actions, ECB is treated identically the same as the Commission and the other Community institutions and it is subject to the general principle of Community law. This that has been confirmed by the Court of Justice of in its judgment in Commission v European Central Bank (OLAF) (C-11/00) [2003] E.C.R. I-7147  that “the ECB, pursuant to the EC Treaty, falls squarely within the Community framework”.

Tsipras has been arguing that Greece’s problems can only be resolved by a political decision and he is right. At times of severe economic crisis and recession, selecting types of self-regulation over political control can be a particularly politically dangerous route to follow. As suggested above, using the example of the ECB, central bank independence ensures that monetary policy is determined solely by ‘economic’ concerns. This ensures the pursuit of policies deemed good for the ‘investment climate’. It also, however, dis-empowers governments; they are less able to control the economy or to pursue expansionary economic policies necessary to achieve wider social objectives. The current ‘political’ turn of the ECB is not being recognised, because it is hidden behind the veil of orthodoxy. This orthodoxy however is German ordoliberalism, pushed across the Eurozone despite the democratically expressed wishes of its people (like the Greeks). The pursuit of neoliberalism, or ordoliberalism in this case, is not apolitical. It is politics of the wrong kind and should be resisted. The ECB needs to consider the politics of Europe, not the politics of Germany.

Dr. Ioannis Glinavos: i.glinavos@westminster.ac.uk

Institutional independence or the death of democracy?

Posted on: 24 February 2015
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All opinions are those of the blog post author and do not represent Westminster Law School or the University of Westminster.

A discussion on Twitter on the Euro being a political decision and the aims of the ECB started by @europeansunited as a response to comments by Valéry Giscard d’Estaing that Greece should exit the Euro, has reminded me of an analysis of institutional independence I included in my 2013 book. It is worth remembering that in discussing regulatory reform we must recognise that the regulation of the economy is not just a matter for law and economics. Regulatory interventions, or the lack thereof, can have severe consequences on the political economy of a state and changing popular perceptions of the functions of law can have direct effects on the democratic legitimacy of institutions. The substitution of state regulation by independent regulators is an example of the negative effects of de-politicisation on perceptions of legitimacy. Independent, non-state regulators are meant to achieve the aims of market support without abandoning the still dominant perception of the market as primarily self-regulating. The creation of allegedly non-political, independent institutions however means institutions isolated from the political and by extension democratic process. The ECB for example prides itself in not seeking or taking instructions from European Unon institutions or bodies, from any government of an EU Member State or from any other body, in determining its price stability policies. Considering however the effect on the economy that the setting of interest rates has, some degree of political input in the Bank’s decision making would be at least desirable, if not required. It is no wonder that the institutional independence of the ECB does not improve public perceptions of the EU as a democratically deficient structure.

A times of severe economic crisis and recession, selecting types of self-regulation over political control can be a particularly politically dangerous route to follow. As suggested above, using the example of the ECB, central bank independence ensures that monetary policy is determined solely by ‘economic’ concerns. This ensures the pursuit of policies deemed good for the ‘investment climate’. It also, however, dis-empowers governments; they are less able to control the economy or to pursue expansionary economic policies necessary to achieve wider social objectives. When elected representatives are unwilling or unable to deal with fundamental economic issues, there can often seem to be little difference between democratic and authoritarian government. De-politicisation creates a legitimacy vacuum which can damage people’s belief in democracy. Is it really beyond explanation that the Greeks, faced with the longest depression the world has ever seen, abandon traditional politics in favour of extreme, even fascist alternatives? Further reforms aimed at addressing these problems often create a new set of difficulties, not least because they usually seek to build on structures which are little respected. This risks a downward spiral that affects legal and institutional structures alike. If the traditional parties of power have become transmission mechanisms for policies demanded by international lenders, would you vote for someone so anti-systemic so as to be against democracy itself? In 2012 in two successive elections 7% of Greeks voted for the neo-nazi group ‘Golden Dawn’. Have we come to a point where the institutional structures of financialised capitalism point to an abandonment of democracy? What is one to make of German Finance Minister Wolfgang Schäuble’s pronouncements that the Greek Bailout Programme targets are to be respected despite the express wishes of the Greek people as marked on 25.1.15?

One consequence of the de-politicisation of economic decision is to make many citizens today quietly contemptuous of democracy. Either one considers that others are not competent to be consulted as to how a country should be run, or one thinks that whatever people think is irrelevant, as the political system is captured by an ‘establishment’ that renders democratic processes a sham. This nihilism is a very dangerous aspect of our times. Being disinterested in democracy is a threat to the survival of the only workable idea of government we have left today. After having tried different versions of authoritarianism, from paternalist dictatorship to self-interested oligarchy, the world seems -by a process of elimination- to be left with liberal democracy. This has been claimed to signify a so-called ‘end of history’ according to authors like Francis Fukuyama. While talk of an end to history is of course non-nonsensical, the question nevertheless remains: is there an alternative to democratic capitalism available? The opposing doctrine of course is not theocratic dictatorship as implied by easy to digest, yet empirically false claims of a clash of civilisations, but an evolution of liberal democracy along a different path. Such path cannot open however unless we are willing to re-examine how we got here and whether we want to use our democratic institutions to determine where we want to get to. Does Syriza in Greece and the efforts of Prof. Varoufakis point the way?

Dr. Ioannis Glinavos: i.glinavos@westminster.ac.uk


Another year, another bonus season

Posted on: 30 January 2015
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All opinions are those of the blog post author and do not represent Westminster Law School or the University of Westminster.


High payments, usually in the form of end-of-year bonuses, have created an unprecedented gulf between the average earnings of employees and the remuneration of top-tier executives. This is true for the financial industry and beyond it. For example, while the Chief Executive Officer (CEO) of General Motors took home roughly 66 times the earnings of his average employee in 1968, the CEO of Wal-Mart earns today 900 times as much (Judt 2010:14).  This bonus culture has been identified as a contributing factor to the 2008 financial crisis. It is said to have distorted the incentives of those working in the financial sector by rewarding short-term success without penalising failure. Ominously, it appears to have survived the economic and political turmoil of the intervening years: the bonus culture is still with us (Perry-Kessaris 2012:195).

The colossal mismatch between performance and rewards in the financial services industry is illustrated by the controversy surrounding the 2007 sale by Goldman Sachs to its clients of a product known as Abacus. This collateralised debt obligation (CDO) was allegedly built to fail so that its creator, investment firm Paulson and Co., could collect on a related insurance policy. Goldman is accused of knowing, but not disclosing to its clients, that the product had been designed to be ‘shorted’ in this way and was duly charged with fraud by the US Securities and Exchange Commission (SEC) in 2010. The firm settled for a $300 million fine and $250 million restitution payment to its clients (SEC 16.4.10 and 15.7.10). The following year, Goldman set aside $15.3bn for its January bonus pool, and declared itself to be exercising ‘restraint’ (The Guardian 19.1.2011). This ‘cautious’ attitude apparently persisted. Reuters reported recently (30.12.14) that Goldman toped the London banker pay league based on 2013 data. This research showed that £3.4 billion was paid out to 2,600 top bankers at 13 banks, suggesting bankers earn almost 50 times the average annual pay in Britain.

Policy makers finally decided to take some action in this area. In February 2013 in a meeting of officials from the 27 countries of the EU with MEPs and the European commission, it was agreed to cap bankers’ bonuses broadly at a year’s salary, with the proviso that the bonus could be doubled subject to majority shareholder approval. This of course caused significant consternation to the British delegation which (habitually) was in Brussels aiming to safeguard the interests of the City. This agreement was then approved by the EU finance minister’s meeting on 5 March 2013. Only a few days earlier Swiss voters had overwhelmingly backed proposals to impose some of the world’s strictest controls on executive pay, supporting plans to give shareholders a veto on compensation and ban big pay-outs for new and departing executives (Glinavos 2013:160). The British government had challenged the introduction of such caps in the Capital Requirements Directive (CRD IV) in the ECJ arguing that the EU overstepped its remit by legislating on bankers’ bonuses and imposed the law in a rushed way without any assessment of its impact. The UK dropped its objection however when the Advocate General’s opinion went against it (Case C-507/13).

Do recent policy trends suggest the beginning of the end to extravagant bonuses? The bonus culture is not, contrary to so much commentary on the matter, the unexpected by-product of some new, distinctive version of capitalism. A commitment to a right to wealth -no matter how extreme- is central to capitalism, and it is realised through legal concepts such as private property rights. Bonus schemes therefore are not aberrations, but an inevitable consequence of the philosophical bases of laissez-faire capitalism. If bonuses and their excesses however are part and parcel of a modern economy, should we accept arguments that extraordinary rewards must not be regulated because they are necessary to incentivise bankers to do their jobs? This could be viewed as a jurisprudential question closely linked to the hot debate on inequality, recently re-popularised by the ascension to fame of Thomas Pikkety and his book Capital in the 21st Century. Cohen had argued that in a society that fulfils Rawls’s ‘difference principle’, the poor are only as well off as the selfishness of the rich allows them to be (Cohen 1991:320). Is this vision of society -where the super-rich refuse to improve the lot of the less fortunate unless they receive kickbacks for doing so- one that to which we aspire? Are we always to prefer to conceptualise of social relationships as bargains, rather than as relations of community? Such questions are sure to produce a lively debate as we are entering an election year, both in the UK and elsewhere in Europe (crucially Greece).

An interesting new year is ahead.

Dr. Ioannis Glinavos      i.glinavos@westminster.ac.uk



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