June 20, 2011
As the eurozone debt crises has spun out of control over the past months I have often recalled my own personal crisis in which I was the creditor and took a severe haircut. Apologies for the long post: the best bit is in the final paragraph.
When I moved to Brussels in 2004, I rented out my modest flat in a less than salubrious Parisian suburb to a Lebanese businessman and his family. I had been reluctant to select someone without a fixed income, but on meeting Mohammed – I always called him by his surname, but for the purposes of this account will refer to him by his given name – I recognised a father determined to ensure the wellbeing of his wife and four children and judged that worth more than a few payslips.
I originally demanded that, in addition to the standard deposit, 6 months’ rent be held in escrow. However, after over a year of tenancy with no payment issues, I was happy to release this sum for him to invest in a new venture. It wasn’t until the summer 2006 war in Lebanon that problems arose. Not only did his businesses suffer in the bombing, but his brother was badly injured. As his family were not Hezbollah supporters, neither insurance payouts nor medical care were forthcoming. I was therefore understanding when he missed a couple of payments. In any case I foresaw seeking the termination of the lease; I was in the process of purchasing a property in Brussels and wanted to sell up in Paris.
The following year things started to go badly wrong for Mohammed. His recently-opened restaurant was closed down on account of a chimney issue: it appears the landlord had acted unscrupulously. His health failed and he found it impossible to rent another apartment. He was stuck in a flat he could no longer afford: from then on he only ever managed to pay about half the rent. I was stuck with an occupied property I couldn’t sell and less income to offset against the mortgage I had taken out in Brussels.
The local authorities were no help: with lengthy waiting lists for council housing, they are happy to let the private sector pick up their bills for as long as possible. So I entrusted the case to a lawyer. To cut a long, tedious, stressful and expensive story short (many friends have gallantly suffered the unabridged version), this process took nearly three years and confirmed my suspicion that French courts tend to rank landlords alongside entrepreneurs as criminal profiteers. In fact the system in place to defend the little guy just increases people’s reluctance to give him a chance. Finally, in summer 2010, long before the bailiffs were finally due to make their move, Mohammed moved out of his own accord, returning with his family to Lebanon.
Now what has this to do with the eurozone crisis? It taught me a lot about the issues of debt and humanity that are achingly relevant to the current situation.
I’m no saint: I often tired of Mohammed’s serial excuses and once, infuriated by a surfeit of “Insha’Allah”s, furiously suggested he ask the local mosque to take him in. However we genuinely liked each other: on the day our case was heard in the small claims court in Seine Saint-Denis (I would recommend a morning there to anyone desirous of discovering the truly parlous state of society), the judge, clerk and my lawyer were somewhat thrown by my helping him sort his papers and his leaping (verbally, he could barely walk) to defend my right to a speedy resolution. Fundamentally the two of us recognised we were both victims of an arrangement that had come unstuck. Ring any bells?
At the end he owed me considerably north of €30K and I sold the flat for at least €40K less than it could have fetched in 2007 before the market retreated and the dilapidations of 6 people living in a two-bedroomed apartment had taken their toll. I occasionally think wistfully about how nice it would be to have such sums set aside for my daughters’ education, but in fact, as I was earning well for most of this period, the lack of rent had little impact. Whereas the monthly income for Mohammed’s entire family was revealed in court as around €1400, all in benefits. Another tinkle?
Nevertheless, losing what is rightfully yours grates, especially when you find yourself paying someone else’s hefty water bills. I had to find a way to feel comfortable with the situation. I reasoned that even if I hadn’t had any choice in the matter, I had enabled Mohammed to keep his family together and for his youngest daughter to finish school. It may have served my interests well, as the basis for his unforced departure out of respect for my increasingly desperate to need to sell, but my desire to help Mohammed maintain his dignity throughout quite simply made me feel better. When I finally reclaimed the flat, this was in essence what he thanked me for as he tearfully recounted his shame in having incurred such a debt and promised to honour his obligation as soon as it proved possible. I’m not holding my breath, but it was a small sacrifice to pretend otherwise and give him the gift of believing in his aspiration. A recent letter from him indicates he still puts great store in foreseeing a satisfactory resolution, possibly as much for his own pride as for my comfort.
I have been told that such protestations are not worth much from someone of Mohammed’s ilk, that he strung me along as far as he could and that I should not consider his voluntary exit from the premises as indicative of anything more than that the timing suited him. I might be deluding myself in giving him the benefit of the doubt, but I lose nothing and gain much in considering him an honourable man. There is a lesson in there somewhere.
Just like my projections of a profitable property arrangement, the eurozone hopes of convergence have been dashed. If I had rented through an agency and found an ostensibly more reliable tenant, I could still have ended up in a similar situation. Would better enforcement of the Stability and Growth pact or more intrusive Eurostat inspections have assuredly enabled a better outcome?
Mohammed couldn’t pay and there was no tribunal that could force him to. The Greeks can’t pay and the proposed regime does not look likely to help. I had to assume my loss and move on. It seems the creditor countries will have to do the same. I managed to do it with good grace, I have a friend in Lebanon and can smile when I think of him. The EU should perhaps recall it was put in place to bind the wounds of conflict, not generate more bad blood. I tell myself it’s only money. We perhaps need to remember it’s just a currency.
Mohammed just called me from Lebanon. Had I received his letter? Did I understand that things were still difficult? He is about to undergo heart surgery, but has told his children they have to honour the debt.
When the human spirit can be so strong in such frail circumstances, there is hope.