Can Greece Pay its Debts with Fool’s Gold?

The struggle to save the ancient Skouries forest in northeastern Greece “is more than a conventional standoff between the forces of development and environmental protection,” Bloomberg Business observed recently. In fact, the Canadian company Eldorado Gold’s plan to build a huge open-pit gold and copper mine there has become a symbol for not only environmental destruction, but also abuse of power, inequality, and unjust profits in the midst of Greece’s biggest economic crisis since the Second World War.

Imposed after the financial bailout overseen by the Troika (the EU, the International Monetary Fund, and the European Central Bank), Greece’s brutal austerity measures—including labour market deregulation, large-scale privatizations, cuts in government spending, and tax increases—have led to a humanitarian crisis. This was not an accident, but rather the predictable outcome of a European political and economic system that generates financial and social losses at the expense of the public, while protecting private profits. “Fool’s Gold,” a new report by the Netherlands-based SOMO, the Centre of Research on Multinational Corporations, with contributions from MiningWatch Canada, examines the story of Eldorado in Greece in that context.

Eldorado Gold’s Skouries project requires the clearing of a large swath of forest and extensive groundwater pumping, and according to independent scientific studies, mining operations threaten to damage the air, water, and soil with a poisonous mixture of heavy metals and other pollutants. Unsurprisingly, there has been massive resistance from local communities in the region, ranging from the lodging of complaints to large demonstrations that have been heavily criminalized by the Greek state and met with systemic police brutality.


The oil, gas, and mining sector has long relied on aggressive tax planning. Research from the Publish What You Pay network has found that after the US state of Delaware, the Netherlands is the top tax jurisdiction for the 10 biggest extractive companies in the world—and in general, it is one of the preferred tax havens for foreign companies operating in Greece. Eldorado Gold uses Dutch mailbox companies to finance mining operations in Romania, Greece, and Turkey. (In addition, corporations from Greece, Italy, Portugal, and Spain have increasingly structured their investments through the Netherlands and other EU tax havens since 2007, most likely to avoid corporate income tax increases introduced in response to the economic crisis.)

With the exception of a single subsidiary, none of the Dutch companies used by Eldorado Gold has any actual employees, while boasting combined assets of almost €2 billion. This tax structure has saved Eldorado Gold—and cost the Greek government— €700,000 in withholding taxes over five years, and the company has ramped up its financing from Dutch mailbox companies over the past two years, avoiding €1.7 million in corporate income taxes.

Eldorado Gold also receives Canadian and Greek public financing in a number of different forms. In both countries, warnings about the project’s disastrous environmental and social impacts have been ignored; no in-depth economic analyses have been conducted in the public interest, and both governments have failed to take into account the concerns of impacted communities.

Skouries protest

Meanwhile, one in four people in Greece is currently out of work, with youth unemployment—among those who have remained in the country—standing at 60%. The rate of child poverty has nearly doubled since 2008, rising from 23% to 40.5% today. The medical journal The Lancet describes the lack of health services from spending cuts, unaffordable insurance due to rising unemployment, and the rapidly growing incidences of suicide, mental illness, and treatable infectious disease across Greece as a “public health tragedy.”

This humanitarian crisis has been worsened by foreign companies like Eldorado Gold that avoid paying taxes in Greece, effectively wiping out profits generated in the country that could help pay for essential public services. (Tax evasion has been recognised by the Troika, and in particular by the IMF, as a significant problem.) In addition, more than 75% of Troika funds from the two economic adjustment programs imposed on Greece in 2010 and 2012, intended to “help” the country manage the crisis, went straight back into the European financial sector.

In Greece, this status quo has recently been shaken by the overwhelming victory of the anti-austerity party Syriza. In Spain, 150,000 people gathered in Madrid’s Puerta del Sol square for a rally led by the one-year-old left-wing party Podemos (“We Can”), which stands a real chance of winning in this year’s general elections. The mandate given by the public to these new political parties is clear: stop austerity measures and redistribute wealth from the rich to the poor. This demand provides us with a unique window of opportunity to reshape political responses to the European debt crisis and to develop alternatives that promote social and economic justice.

On a daily basis, movements, academics, and communities are building those alternatives. For more information, see the following organizations and campaigns:

› TroikaWatch

› Greek debt auditing campaign

› Global campaign to end corporate impunity

› Blockupy (Dutch)

› Blockupy (German)

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This post is based on “Fool’s Gold,” a report by SOMO, the Centre of Research on Multinational Corporations, with contributions from MiningWatch Canada. The full report can be found here, and you can explore an accessible version of the story of Eldorado Gold in Greece (accompanied by graphics) here.

Photograph by Orhan Tsolak. It depicts waste pickers in the northern Greek port city of Thessaloniki.

SOMO is an independent, not-for-profit research and network organisation working on social, ecological and economic issues related to sustainable development. Since 1973, the organisation investigates multinational corporations and the consequences of their activities for people and the environment around the world.