The ‘Illegitimacy' of Foreign Loans: Greece, the Great Powers, and Foreign Debt in the 19th Century, and Their Effect on Modern Perceptions of State Debt in Greece

This paper examines the origins of the Greek foreign debt and its perception by the Greek government and public in the 19^th century. It examines the role the Great Powers played with regards to Greek borrowing, their influence and frequent economic as well as political interference, and how such actions were perceived in Greece by governments as well as by the wider public. From the very inception of the Modern Greek State to the end of the century, the Great Powers, and especially Great Britain and France, were intimately involved with Greek politics but their involvement and interference in Greek finances is often ignored. The nationalist aspirations of the Greek state in the 19^th century necessitated sustained budget deficits and foreign borrowing that led to increased foreign influence and interference. Greek governments were acutely aware of their dependence and the cost of this influence and bitterly resented it. The Greek state frequently attempted to default on its debt and suspend foreign debt payments but was rarely successful either as a result of foreign pressure, direct intervention, or economic collapse. The paper argues that this confrontation between foreign creditors supported by their governments, and the Greek state colored Greek public perceptions regarding foreign debt in a manner that was rarely seen elsewhere in Europe and explores how such experiences continue to color Greek attitudes towards foreign debt today in the context of the current crisis.