Council of State rules PSI constitutional

It has been a very divisive issue in the Greek society, causing havoc and frustration among thousands of bondholders. After the Private Sector Involvement (PSI) was implemented in the fall of 2010, people with state bonds became furious, realizing they would lose much of their savings.

It's been almost three years since the “haircut” and bondholders have taken their grief and demands to government officials, the President of the Republic, Greek courts, even the European Court in Luxemburg, attempting to get some compensations.

Unfortunately for them, the Council of State ruled today that the PSI was constitutional, because it was for the good of the public interest. The ruling came after an appeal by 7,000 public bond bearers, representing both persons and organizations.

The majority of the judges ruled that the law enforcing the bonds haircut was not instituted “in an arbitrary manner by the lawmaker, on the contrary, it was in accordance with international exchange manners, as they are evolving”.

The judges accept the fact that the loss of bondholders' property is “particularly grave”, but they say “it's not proven that it was either inappropriate, unnecessary, or excessive”, to be “ruled forbiden” according to requirements of the constitution.

They further note that according to evidence given to them, the value of the new titles substituting the old bonds, though lower than the original title value, their price is moving upwards.

This is the final ruling on the issue, since the Council of State is the highest court in the land on constitutional matters. The bondholders have yet to react, though they are expected to be less than satisfied. Whether they will plead their case to the European Court, the only one higher than the Council of State, is unclear. Either way, this was the ultimate negative outcome for their cause.