‘As a patriot, no. It’s bad for your people.’
About the Book
But the true story of what happened is almost entirely unknown– not least because so much of the EU’s real business takes place behind closed doors.
Preface
Shortly after the ruthless suppression of Greece’s rebellion in 2015, also known as the Greek Spring or the Athens Spring, the left- wing party Podemos lost its momentum in Spain; no doubt many potential voters feared a fate similar to ours at the hands of a ferocious EU. Having observed the EU’s callous disregard for democracy in Greece, many supporters of the Labour Party in Britain then went on to vote for Brexit. Brexit boosted Donald Trump. Donald Trump’s triumph blew fresh wind into the sails of xenophobic nationalists throughout Europe and the world. Vladimir Putin must be rubbing his eyes in disbelief at the way the West has been undermining itself so fabulously.
Part One: Winters of our discontent
‘There are two kinds of politicians,’ he said: ‘insiders and outsiders. The outsiders prioritize their freedom to speak their version of the truth. The price of their freedom is that they are ignored by the insiders, who make the important decisions. The insiders, for their part, follow a sacrosanct rule: never turn against other insiders and never talk to outsiders about what insiders say or do. Their reward? Access to inside information and a chance, though no guarantee, of influencing powerful people and outcomes.’ With that Summers arrived at his question. ‘So, Yanis,’ he said, ‘which of the two are you?’
These images are, however, delusions. If our sharply diminished circumstances can be blamed on a conspiracy, then it is one whose members do not even know that they are part of it. That which feels to many like a conspiracy of the powerful is simply the emergent property of any network of super black boxes.
Secondly, and this is the genius of Wikileaks, if we can get inside the network, like Theseus entering the labyrinth, and disrupt the information flow; if we can put the fear of uncontrollable information leaking in the mind of as many of its members as possible, then the unaccountable, malfunctioning networks of power will collapse under their own weight and irrelevance.
The following chapters relate the networks’ violent reaction to my stubborn refusal to trade Greece’s emancipation for a privileged spot inside one of their black boxes.
It all boiled down to one small doodle on a piece of paper– whether I was prepared to sign on the dotted line of a fresh bailout loan agreement that would push Greece further into its labyrinthine jail of debt.
The reason why my signature mattered so much was that, curiously, it is not presidents or prime ministers of fallen countries that sign bailout loan agreements with the IMF or with the European Union. That poisoned privilege falls to the hapless finance minister. It is why it was crucial to Greece’s creditors that I be bent to their will, that I should be co- opted or, failing that, crushed and replaced by a more pliant successor.
This, in a nutshell, is the story of how I came about. For Yiorgos is my father, and Eleni, who ended up a leading member of the 1970s feminist movement, was my mother. Blessed with this history, signing on the dotted line in return for the mercy shown to insiders was never on the cards for me. Would Larry Summers have understood? I don’t think so.
By early 2010, some five years before I took office, the Greek state was bankrupt. A few months later the European Union, the International Monetary Fund and the Greek government organized the world’s greatest bankruptcy cover- up. How do you cover up a bankruptcy? By throwing good money after bad. And who financed this cover- up? Common people, ‘outsiders’ from all over the globe.
The rescue deal, as the cover- up was euphemistically known, was signed and sealed in early May 2010.
But that is not relevant. As a leading insider, her top priority was the preservation of the insiders’ political capital and the minimization of any challenge to their collective authority.
It was the (French and German) banks, stupid!
After a few weeks they figured out their fib: they would portray the second bailout of their banks as an act of solidarity with the profligate and lazy Greeks, who while unworthy and intolerable were still members of the European family and would therefore have to be rescued.
This was the beauty of the Greek bailout, at least for France and Germany: it dumped most of the burden of bailing out the French and German banks onto taxpayers from nations even poorer than Greece, such as Portugal and Slovakia. They, together with unsuspecting taxpayers from the IMF’s co- funders such as Brazil and Indonesia, would be forced to wire money to the Paris and Frankfurt banks.
Socialists, Margaret Thatcher liked to say, are bound to make a mess of finance because at some point they run out of other people’s money. 7
All that changed menacingly in early 2009 once the bottom fell out of the French and German banks as a result of having stuffed their boots with toxic American derivatives rendered worthless by Wall Street’s cave- in.
Upton Sinclair once said, ‘It is difficult to get a man to understand something when his salary depends upon his not understanding it.’
On 26 April, in an article headed EUROPE’S LAST TANGO I likened our government’s efforts to secure a bailout to those of successive Argentinian governments which strove to preserve, through large dollar loans from the IMF, the peso’s one- to- one link with the US dollar just long enough for the rich and the corporations to liquidate their Argentinian properties, convert the proceeds into dollars and wire them to Wall Street– before leaving the economy and currency to collapse and the accumulated dollar debt to crush the hapless Argentinian masses.
One of the great mysteries of life, at least of my life, is how susceptible good people are to this awful logic. In fact, personal finances are a terrible basis for understanding public finance,
Unfortunately for them, they chose the wrong theme: the eurozone crisis. Having taken the stage in front of a large audience anticipating a cockfight, we quickly discovered that we agreed on almost everything.
Once the show was over, I headed straight for the car park, got on my motorcycle and rode home, certain that I would never be invited onto ERT’s programmes again. Indeed, on the orders of the press minister (whose mere title fills any liberal heart with unease) I was unofficially blacklisted. 16 Four years later, exactly the same sin– insisting on debt restructuring– would lead Europe’s top dogs to demand my removal from Greece’s finance ministry and the Eurogroup. Who says Europe’s establishment is not consistent?
The reason the establishment found me infuriating was that I had a degree of success in applying cold logic to the problem and thus de- moralizing the debate on Greek debt, utilizing arguments that transcended the divisions between Left and Right and resonated powerfully with segments of both.
Since 1843, when King Otto was forced to back down, almost every demonstration or rally in Athens has begun, passed through or ended up at Syntagma Square, in front of Parliament House. Indeed, it is the site where I, along with millions of other Greeks of my generation, joined my first demonstration in the early 1970s, tasted the delights of CS gas and cut my political teeth.
To default on your creditors, to declare bankruptcy formally, is a terrible thing, but it has an upside: your debt shrinks and you get the chance to work hard again, pull yourself up by your bootstraps and regain the trust of potential investors. This is, for example, how General Motors recovered after 2009, indeed how Germany returned to the land of the living in the 1950s by means of substantial debt relief. But no, Greece was destined to make history. Under the terms of its second bailout in 2012 the new government would declare the largest non- payment in world history while simultaneously remaining in debtors’ prison courtesy of the largest loan in world history.
The world- beating € 100 billion debt default haircut hit Greece’s powerless pensioners, its professional associations and small- time bondholders– who would be forced to kiss goodbye to the money the state owed them– while a world- record extend- and- pretend loan of € 130 billion was pushed down the nation’s throat, almost none of which would go to the Greek state per se. Instead, a large chunk of that money went to Greek bankers (to overcompensate them for money they had lost on the haircut government bonds), a second chunk went to Greece’s foreign private lenders (as an incitement to make them accept the haircut), and the third chunk went to service the EU’s and the IMF’s loans from the first bailout agreement. 20
What made Bailoutistan 2.0 a regime more sinister than its previous incarnation were three new institutions that, by sidelining parliament, damaged democratic sovereignty. These were a mechanism for bailing out the bankers, a new form of governance for the state’s revenues and customs, and a department to organize, in the creditors’ interests, fire sales of the family silver– in other words, privatization Greek- programme style. A quick look at these offers a valuable beginner’s guide to Bailoutistan 2.0.
Catherine the Great once said that if you cannot be a good example, then you will just have to be a horrible warning.
Danae’s seventeen- year- old son had recently spread his wings and was observing the customary rites of an Athenian teenager on a Saturday evening: going out with friends to discuss the meaning of everything until late in the night, usually at cafés at Psyrri, a neighbourhood a stone’s throw from the ancient agora. Athens is the safest of cities, and Psyrri even more so, but like any parent we welcomed the sound of the front door.
During the first segment the interviewer came out all guns blazing, each question laced with pernicious allegations, giving me time to utter no more than four or five words before I was hit with the next. During the commercial break he approached me to whisper into my ear, ‘Minister, I’m very sorry about this but you know our dire situation these days. Aris’s bank is our only source of advertising.’ I told him I understood. After that the interview proceeded at a more relaxed pace that allowed me a chance to be heard.
Over the previous two years I had become used to meeting worried politicians from across the political spectrum– with the exception of communist party cadres, who live in a permanent bubble of self- confirming belief.
the government would offer them a deal they could not refuse: buy shares in Greece’s bankrupt banks now, and if their price rises in the future you will be guaranteed more shares at the original low price, while if they fall your losses will be generously absorbed by the Greek taxpayer. What financier could resist?
A new joke did the rounds in which parents threatened to bequeath to their offspring all their property if they didn’t behave.
The only way Berlin could avoid such a confession was to arrange a third bailout loan, keeping Greece in debtors’ prison but officially not in default. But as each bailout required the sacrifice of a Greek prime minister (Papandreou for the first, Samaras for the second) and a fresh government to push it through parliament, they would try either to win Alexis over to their side or to create such chaos that his government fell, allowing for its replacement with a compliant technocratic administration, just as they had had in 2012.
You need to remain unburdened by our party’s tortuous collective decision- making.’
And as Danae said after my subsequent return to Austin, I was exploitable because I was expendable: ‘If you bring back a decent deal, they will claim the credit. If not, you will get the blame.’
I recalled an old joke: two golfers exchange their life stories as they move from one hole to the next. The first one confesses that he made his fortune when his ailing factory burned down and he was able to claim the insurance. The second golfer then confesses that he also made it big when his own business was destroyed by a flood, netting him a nice cheque from the insurance company. The first golfer looks puzzled. ‘But how did you start the flood?’ he asks.
At one point I received a call from Syriza HQ telling me that as a parliamentary candidate the law required me to open a special bank account in which to deposit all contributions to my campaign and from which to draw all campaign- related expenses. I opened the account, since it was mandatory, but deposited precisely nothing in it as I neither sought nor received any contributions, had no staff and spent precisely zero on promotional material. My only campaigning device was a Greek- language blog I created myself, using a free blogging platform, as an addendum to my existing English- language blog. That was it.
A few days later, ten days before the election, Glenn and I were sipping coffee at a café very close to Stournaras’s Bank of Greece. He came clean, confessing to having played a leading role in designing not just the Greek bailout but the eurozone’s bailout- funding institutions on a retainer from, among others, the German finance ministry.
‘What we did to Greece in 2011 and 2012 was appalling,’ he admitted.
‘Your idea of GDP- indexed bonds is good,’ he told me, ‘and I think I can help you refine it. It will be my way of making amends for the long- term damage that we, and people like me, did to Greece.’
When I told him that the issue ran a lot deeper than debt and bonds, that it pertained to our parliament’s sovereignty and raised the question of whether democracy was a luxury to be denied citizens of an indebted state, he replied,
Alexis responded by asking him how old he is. The banker replied: sixty- five. Alexis then said: If you overthrow me, I am young enough to rise again. You are not!
In 2014 the economic collapse had produced a similar state of affairs. The sorry reason for our current account surplus was that the deepening recession had crippled imports, while exports of goods were flat despite the massive reduction in labour costs. 8 A cause for mourning had been spun as a reason to celebrate.
This is why the people of Greece voted for Syriza, an acronym for the Alliance of the Radical Left. They had not suddenly fallen in love with the radical left, which had hitherto languished on the margins of power. They had no interest in jeopardizing any nascent recovery. They had no ambition to confront Brussels, Berlin, Paris, Frankfurt and Washington. They did not even mind making more sacrifices or tightening their belts further if this would work. No, they voted for us because they had had enough of making sacrifices that achieved nothing, enough of measures that sank them deeper in indignity, insolvency and despair while others celebrated their recovery. That is why we received the votes not just of radicals and factory workers, taxi drivers and farmers, but of decent conservatives, struggling business people, right- wing patriots and monks– from everyone in fact concerned, like Lambros the homeless man who had made such an impression on me, for those people who had not yet fallen into the hole waiting to consume them.
I decided I liked Sagias. He knew that he was tainted by decades of consorting with the oligarchy and did not care to hide it, but I was more inclined to trust people who had known and worked for the establishment than young zealots, who are prone to becoming its born- again servants. His honesty, the way he personalized his reasons for coming on board, his warnings about Dragasakis and the Syriza evangelists, along with the art on his apartment walls, made me feel at ease with him.
Its presence gave me solace and a sense of freedom. But like all freedoms, it came at a price: the more astute of my adversaries recognized this freedom in me and detested me for it.
‘Sounds OK. But will Euclid accept? When we spoke a few hours ago he swore at me and I responded in kind.’
‘You’ll get used to it, Eleni,’ I said to one of them. ‘Yes, Minister,’ she replied mockingly.
Part Two: Invincible spring
The sentry outside Maximos was aghast. ‘Are you going out alone, Minister?’ he asked.
I turned to a distinction of great importance, one that left- wingers and Keynesians often fail to highlight: that between parsimony and austerity. ‘We are in favour of parsimony,’ I said, surprising many in the audience.
Greeks did splendidly when we lived austere lives, when we spent less than we earned, when we channelled our savings to the education of our children, when we were proud that we were not in debt… But an austere life is one thing and Ponzi austerity is quite another. Over the past years we have had a phoney austerity that cuts the low incomes of the weak while adding mountains of new debt to existing mountain ranges of unpayable debt. We shall end this practice, beginning at home, within this ministry, where parsimony will edge austerity out.
At any rate, their dismissal, literal and metaphorical, exemplified the policy of victimizing the depression’s victims in order to teach the Greek citizenry that it was to blame for the nation’s implosion. By sacking them, the previous government was demonstrating the cleaners’ guilt. By rehiring them I was committing a sin worse even than championing parsimony at the expense of austerity.
‘You do not know me, Mr Varoufakis, but I felt the urge to call you to congratulate you on your election and to lend all the support I can give. My name is Bernie Sanders, and I am a senator from Vermont. Mutual friends have given me your number and I hope you do not mind the intrusion.’
Soon after, Obama made an extraordinarily helpful public statement: ‘You cannot keep on squeezing countries that are in the midst of depression,’ he told CNN’s Fareed Zakaria, adding, ‘At some point there has to be a growth strategy in order for them to pay off their debts to eliminate some of their deficits.’
Time to put friendly Americans out of my mind and convert my mental list of domestic priorities into the following day’s concrete agenda: meet officials to be briefed on the state’s official funding situation; appoint secretarial staff and a press officer; convene meetings with the tax office to implement our strategy to tackle tax evasion; establish close partnerships with my deputies in charge of tax policy and budget management; liberate the ministry’s macroeconomists and statisticians from the imperatives of the troika and set them to the task not of obfuscating reality but of getting its measure as accurately as possible. Lastly, there was the sensitive task of putting together a small team to begin work on the parallel payments system.
While I was suspicious of his connections to Dragasakis, George won me over– not least because he was a published novelist. No one who publishes novels while serving in Greece’s finance ministry deserves to be mistrusted, I thought.
I had met Wassily in 1978 as a first- year undergraduate at Essex University. Our first encounter was on a basketball court. Playing for opposite sides, we clashed for the ball, exchanged words that are reproducible neither in print nor in polite society, and had to be restrained by fellow players.
Greece’s tax office provides one of the most fascinating examples of neocolonial rule in modern times. As Greece’s finance minister, the tax department was under my jurisdiction and nominal control, so if a tax evasion scandal broke I would be held responsible for it in parliament and in the eyes of the public. Yet I had zero authority over the activities of the department. I lacked the right to censure, fire or replace its head, and I was not even consulted on how the department was run– all this in a country world famous for tax evasion and for the tax immunity of its oligarchs. In addition, the statistical authority whose computations of the government’s budget and balance were used to determine whether the fiscal targets agreed with its creditors had been met or not also answered not to me but to the troika. In a nutshell, I was responsible for, but not equipped to administer, the nation’s taxes, banks, property and statistics.
I urged him to see it from the perspective of the people on the ground. For years now groups of technocrats dispatched by the IMF, the European Commission and the European Central Bank had arrived at Athens airport, from which they had been driven at high speed under police escort in a convoy of Mercedes- Benzes to the various ministries, where they had proceeded to interrogate elected ministers and dictate to them policies that affected the lives of millions. Even if these policies had been wonderful, they would have been resented. ‘We must find another way to work together,’ I said, one that would allow our people to embrace whatever policies he and I agree upon. At the very least, Greece’s elected ministers should not be expected to conduct their business with anyone other than their elected equals; technocrats could prepare the ground, establish the facts and the figures, but should not conduct the ministerial negotiations.
He responded flippantly that Europe already had a permanent debt conference– the Eurogroup! I smiled at his answer, making a mental note to use it myself if an opportune moment presented itself.
When the translation finished, he angrily removed his earpiece and leaned over to whisper in my ear, ‘You just killed the troika!’
‘Wow!’ I answered. ‘This is an unearned compliment.’
The streets of Athens would never be the same for me after that press conference. Taxi drivers, suited gentlemen, old women, schoolchildren, policemen, conservative family men, nationalists and far- Left recalcitrants alike– a whole society whose sense of pride and dignity had been offended by the previous governments’ servitude to the troika and its political bosses– would stop me in the street to offer thanks for that brief moment. A bus driver even stopped his bus in the middle of the road to get out and shake my hand.
The declaration of war against the oligarchy had been made before the election. In an interview with Paul Mason on the UK’s Channel 4 News I had declared, ‘We are going to destroy the basis upon which they have built for decade after decade a system, a network that viciously sucks the energy and the economic power from everybody else in society.’
But as our government sought to establish a new relationship of trust between state and citizenry, there would be an opportunity to make amends anonymously and at minimum cost. I would announce that for the next fortnight a new portal would be open on the ministry’s website on which anyone could register any previously undeclared income for the period 2000– 14. Only 15 per cent of this sum would be required in tax arrears, payable via web banking or debit card. In return for payment, the taxpayer would receive an electronic receipt guaranteeing immunity from prosecution for previous non- disclosure. 17
The merit of the scheme was its simplicity. We would not be asking people to repatriate money from foreign banks or even to declare where they were keeping it, whether in Switzerland or under the mattress. By offering instead a low tax rate with zero penalties or bureaucracy, I expected to replenish the empty state coffers with a great deal of money, buying my ministry time and freedom.
Similarly, I had it on good authority that an oil cartel bigwig was exporting € 300 million worth of refined petrol to Bulgaria, but Bulgaria was reporting imports of no more than € 100 million. ‘What is happening to the remaining € 200 million?’ I asked my informant. ‘It is poured into some ditch in no- man’s land between Greece and Bulgaria,’ was his sarcastic answer. By that he meant that tanker trucks left Greece with fully documented exported petrol but then re- entered via some illicit dirt road without crossing the Bulgarian border. The petrol was then sold in Greece sans VAT and fuel tax.
Mulling over the previous day, thinking ahead to my trip abroad, T.S. Eliot’s line came to mind: ‘If you aren’t in over your head, how do you know how tall you are?’
For years I had recited to my students Adam Smith’s famous lines ‘It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self- love, and never talk to them of our own necessities but of their advantages.’
Similarly, it would be a waste of breath to appeal to the creditors’ humanity, to claim that Greece had been unfairly treated or to invoke some moral right to debt relief. These people knew perfectly well how the Greeks had been treated and they cared not one bit. My task was to win a war not a debating society argument. To do so I had to address myself to the creditors’ own advantages.
When I finished it, I called Xenia, my eleven- year- old daughter who lives in Sydney. ‘Dad,’ she said before I even got the chance to say hi, ‘do you realize that you have ruined my life?’ Apparently paparazzi had camped outside her school waiting to snap a shot of the Greek finance minister’s daughter. I did my best to soothe her, to no avail. ‘Why can’t you just resign? Life is unbearable,’ she insisted.
Nevertheless, prior to my enlistment Syriza’s position on public debt had been nothing more than a crude demand for an unqualified write- down. With half the party still demanding a unilateral haircut of most of the debt, most not even privy to the idea of a debt swap,
‘Not to worry, Minister,’ said the ambassador as he was dropping me off at my hotel. ‘I shall run home and fetch a coat that I think will fit you.’ Half an hour later he returned bearing a longish leather overcoat. Even I could see that it was not exactly ministerial, but I must admit I thought it rather swanky and offbeat (and it certainly enhanced my opinion of Greece’s ambassador to the French Republic). Moreover it had two major advantages: it fitted me and it was warm. Little realizing that two days later the coat would become famous, I gratefully accepted it.
Before he became a commissioner at the EU, Moscovici was France’s finance minister.
When Pierre responded, I could hardly believe my ears: he offered nothing less than a paean to the agenda I had just outlined.
Unlike the ECB or the European Commission, the IMF had decades of mission experience. In the 1970s its technocrats had made a name for themselves by visiting failing states in Africa and Latin America to impose austerity, privatizations, school and hospital closures, liberalization of food and fuel prices and the like in exchange for IMF loans.
As a reward for his unmitigated failure in Greece, Thomsen was promoted to head the IMF’s entire European department.
Negotiating with Thomsen therefore presented a special difficulty: he had a vested interest in resisting any acknowledgement that the Greek programme had failed.
That’s it, I concluded: I am dreaming! He was talking about eliminating at a stroke the entire debt that Greece still owed the EU member states from the first bailout of 2010. Had some member of Syriza’s Left Platform infiltrated Thomsen’s mind? Was he possessed by some radical spirit?
As Michel and I were making our way from his office to the obligatory press conference– he speaking in French, which I understand, and I responding in English, which he grasped sufficiently– he informed me that Berlin had been in contact. They were very upset that I had come to Paris without also offering to go to Berlin, he told me in a low voice. I was more than happy to go to Berlin too, I told him. The reason I was in Paris and not there was that he had invited me and they had not.
switching to English almost as if he had practised the line, shared an opinion of historic importance and sadness: ‘Yanis, you must understand this. France is not what it used to be.’
‘In other circumstances, I would be compiling my report to the Central Committee with a recommendation that you are dispatched to the Gulag,’ joked Euclid.
‘Comrade, I’m happy to be sent to the Gulag for right- wing tendencies as long as the job is done– and if you promise to visit me occasionally so that I can be reminded of the expression of horror on your face just now!’ I retorted.
As I remarked to Euclid, who had been listening with incredulity, it was one thing for us lefties to be saying all this, it was quite another to be hearing it from the horse’s mouth– from the guy who had actually been implementing the Greek programme until only a few months ago.
‘Alas, the politicians did not use the time you bought for us wisely, did they?’ I said. The expression on Mario’s face conveyed embarrassed agreement.
‘Surely our task now is to end the death embrace, the doom loop, between insolvent banks– that the ECB is forced to keep afloat against its rules– and an insolvent state at which Europe’s taxpayers keep throwing good money after bad?’
Before we reached the other three bodyguards, who were waiting by the gate, he spoke for the first time. In very good English he asked permission to address me. ‘Of course,’ I said.
‘Minister,’ he said, ‘I want you to know that what you are doing is very important– not only for your country but also for us. You are giving us hope that there is a chance that we shall be liberated too.’
Whenever I hear people, including friends and supporters, tell me that Europe is finished, that there can be no common path for Germans, Brits, Italians and Greeks, I reach into my memory to retrieve the words of that German secret service officer.
First I had to write a press release to soften the blow of the waiver withdrawal. The happy task of the finance minister, I ruminated: packaging a shock as a non- event.
Typically for a financier’s brief, it came in bullet points:
He is a lawyer through and through.
His command of economics is quite weak. I can recall on more than one occasion him mixing up yields and prices and making references to financials without understanding what they mean.
Absolutely hates the markets. Thinks that markets should be controlled by technocrats.
Second was the topic he chose to turn to instead: his theory that the ‘overgenerous’ European social model was no longer sustainable and had to be ditched. Comparing the costs to Europe of maintaining welfare states with the situation in places like India and China, where no social safety net exists at all, he argued that Europe was losing competitiveness and would stagnate unless social benefits were curtailed en masse. It was as if he was telling me that a start had to be made somewhere and that that somewhere might as well be Greece.
My rejoinder was that the obvious solution was the globalization of welfare benefits and living wages, rather than the globalization of insecure working poverty. In response, he reminisced at length about a secret mission he had undertaken in the 1970s and 1980s, to liaise with the East German authorities on behalf of his Christian Democrat party. ‘The DDR people were not bad,’ he told me. ‘They had good intentions for a social welfare system that was not economically possible.’ The insinuation was perfectly clear.
‘We agreed to disagree,’ Schäuble said, dispelling any notion that our discussion had reached any common ground.
‘We did not even agree on that,’ I interjected.
Having established this, I made a statement aimed at healing the rift that was developing between ordinary Germans and Greeks. ‘Some are tempted to imagine that the solution lies in the separation of our peoples,’ I said.
Thankfully, today I did not just visit the finance minister of Europe’s powerhouse economy. Above all else, I visited a European statesman for whom European unity is a lifelong project and whose work and efforts to unify Europe I have been following with great interest since the 1980s. Today, my message to Minister Schäuble was that in this government he has a potential partner in the search for European solutions to a variety of problems afflicting not only Greece but the union more broadly.
As finance minister in a government facing emergency circumstances caused by a savage debt- deflationary crisis, I feel that the German nation is the one that can understand us better than anyone else. No one understands better than the people of this land how a severely depressed economy combined with ritual national humiliation and unending hopelessness can hatch the serpent’s egg within one’s society. When I return to Athens tonight, I shall find myself in a parliament in which the third- largest party is a Nazi one. When our prime minister laid a wreath at an iconic memorial site in Athens immediately after his swearing- in, that was an act of defiance against the resurgence of Nazism. 14 Germany can be proud of the way Nazism has been eradicated here. But it is one of history’s cruel ironies that Nazism is rearing its ugly head in Greece, a country which put up such a fine struggle against it in the 1940s. We need the people of Germany to help us in the struggle against misanthropy. We need our friends in this country to remain steadfast in Europe’s postwar project; that is, never again to allow a 1930s- like depression to divide proud European nations.
As these lines are being written, Michael Christoforakos continues to live freely in Germany, Stournaras continues as governor of Greece’s central bank, the Siemens scandal has still not resulted in a single politician facing charges, Dr Schäuble and Euclid continue the non- negotiations that confine Greece ever more securely in its debtors’ prison and, amazingly, a charge of high treason is pending in Greece’s parliament– against me.
With my by- now outstandingly low expectations of Europe’s social democrats further downgraded by my previous night’s experience with Jörg and Jeromin, I continued unperturbed and gave my standard spiel about our government’s quest for sustainability by means of moderate proposals to recalibrate radically the troika’s failed Greek programme.
But as we were leaving the press room, I asked Sigmar how easy it was for him to say one thing in private and quite another in public. ‘It is something that I’m finding very hard,’ I added.
It was not looking good. Most were simply slightly edited versions of Syriza’s pre- election policy proposals, half- baked and badly written up. We would need to put a great deal of work into them before they were presentable in Brussels. Of course that was as it should be: we were a new government and needed what most new governments need– a honeymoon period in which pre- election plans could be developed with the help of experienced civil servants into implementable policies. We did not have that privilege, perhaps because ours was less a government and more a committee planning a mass escape from Bailoutistan.
In poker or blackjack this assumption is unproblematic, but in the current deliberations, I wrote, ‘the whole point is to forge new motives. To fashion a fresh mindset that transcends national divides, dissolves the creditor– debtor distinction in favour of a pan- European perspective, and places the common European good above petty politics, dogma that proves toxic if universalized, and an us- versus- them mindset.’
The major influence here is Immanuel Kant, the German philosopher who taught us that the rational and the free escape the empire of expediency by doing what is right.’
Walking through that door, I found myself suddenly amid the ministerial benches, with the podium to my left and the speaker’s bench towering above. In front of me, arranged like an amphitheatre, were three hundred seats, one for each member, the same number as there were Spartans at the famous battle of Thermopylae. On the far right (appropriately) I couldn’t help but recognize the seventeen MPs of the Golden Dawn, so keen were they to dress and look like Nazis.
If you cannot imagine walking out of a negotiation, you should never enter it. If you cannot fathom the idea of an impasse you might as well confine yourself to the role of a supplicant who implores the despot to grant him several privileges but who accepts in the final analysis whatever the despot grants.
The Eurogroup is an interesting beast. It has no legal standing in any of the EU treaties and yet it is the body that makes Europe’s most vital decisions. At the same time most Europeans, including most politicians, know almost nothing about it. It convenes around a huge rectangular table. Finance ministers are seated along its two longer sides, each accompanied by a single aide who also represents them in the Eurogroup Working Group. However, real power sits at either end of the table.
Jeroen Dijsselbloem had joked in Athens that the EU already had a permanent debt reduction conference– the Eurogroup. I turned this into a proposal: ‘We welcome Mr Dijsselbloem’s recent statement in our joint press conference in Athens that the Eurogroup is the proper forum to act as a permanent European debt conference, addressing debt problems in euro- area member states. We therefore propose to create a specific Eurogroup working group gathering member states’ representatives and experts.’ (While speaking, I noticed the angry look that Schäuble gave a seemingly apoplectic Dijsselbloem and could not help but smile.)
The notion that elections cannot be allowed to change economic policy, indeed any policy, is a gift to [founder and leader of Singapore] Lee Kuan Yew supporters or indeed the Chinese communist party, who also believe this to be true. There is of course a long tradition of doubting the efficacy of the democratic process. But I would like to think that this tradition has been expelled long ago from the heart of democratic Europe. It now seems that the euro crisis has brought it back. I urge you all to band together in a collective bid to resist it. Democracy is not a luxury to be afforded to the creditors and denied to the debtors. Indeed, it is the lack of due democratic process in the heart of our monetary union that is perpetuating the euro crisis. Then again, I might be wrong. Colleagues, if you think that I am wrong, if you agree with Wolfgang, then I invite you to say so explicitly by proposing that elections should be suspended in countries like Greece until the country’s programme is completed. What is the point of spending money on elections and asking our people to get all fired up to elect governments that will have no capacity to change anything?
We did not agree politically or ideologically but shared a common language and the desire to get to the bottom of whatever problem was staring at us. One day I realized what they all had in common: they were all Goldman Sachs alumni!
It was the first time the troika’s representatives had been ordered to negotiate with technical staff of their own rank in Brussels rather than cross- examining our ministers in Athens. In the weeks to come they would make their feelings about this demotion abundantly clear.
And if the ECB forced capital controls upon us, as it had the power to, the whole cabinet should join the inevitable demonstrators outside the closed banks with banners castigating the ECB and the Central Bank of Greece for such a fundamental dereliction of duty.
His pithy advice was deliciously in character: we should put forward a deal that looked like a win for Merkel and the EU but at the same time served justice and truth. Easier said than done, I thought, although I recognized the important point he was making.
I told Jeroen I would grant these concessions, which were of little real consequence as far as I was concerned, in return for something I truly valued: policy space. Eurozone member states receiving money from Europe’s bailout fund (the EFSF and later the European Stability Mechanism) have to be ‘assessed’ every few months. This was inescapable, and we had always been prepared to accept it as a condition of the interim agreement we were seeking. The multi- billion- euro question was: assessed by whose criteria?
To my great surprise, Jeroen agreed. As for the primary surplus, he suggested that we replace the target of 4.5 per cent with the words ‘sizeable primary surpluses’, leaving the question of whether 1.5 per cent was ‘sizeable’ enough to be negotiated. I counter- proposed that we replace ‘sizeable’ with ‘appropriate’. Again he agreed, and soon the draft communiqué was complete.
The point of the interim agreement was merely to carve out the time necessary to see if common ground existed. Instead of specificity, we were looking for language that was sufficiently ambiguous to satisfy both parties without exposing the rifts that remained between us. At this stage avoiding each side’s red lines was essential if there was to be any progress. Euclid reminded me of the term often credited to Henry Kissinger for this diplomatic technique: ‘constructive ambiguity’. This was our immediate task.
Still, what I could not understand was Alexis’s failure to appreciate the solution I had proposed, which involved promoting Chouliarakis, thereby sparing both him and Dragasakis any embarrassment.
Admittedly my glimpse into Alexis’s inner world had been brief, but the ghastliness it revealed, however fleetingly, should have provoked me into an eruption. Anything less than rage at Chouliarakis for having dared to threaten us with defection should have alerted me to the troika’s presence in that office, to the fact that its tentacles were not just confined to my ministry. To my shame, I looked the other way, allowing wishful thinking to airbrush what I had seen. A pattern was thus established.
First, by refusing to agree a road map to any specific destination– let alone our desired one– or any credible milestones along it, they cultivated and maintained a deep and corrosive uncertainty in Greece as to its future. Any financial planning, whether in the home, a small business or across a large corporation, short term or long term, was made impossible. Such ‘permanent temporariness’ is a tried and tested strategy for keeping an occupied land subdued. 3
Second, they deployed what I have described elsewhere as fiscal waterboarding. 4 Like waterboarding a prisoner, the victim (in this case a eurozone government) is brought to the edge of asphyxiation. But just before an actual default, which would trigger the ECB’s closure of the country’s banks, the creditors provide just enough liquidity to keep the suffocating government alive. During this brief respite the government passes whatever austerity or privatization measures the creditors demand. In our case, fiscal waterboarding began with a carefully orchestrated bank run before we were even elected and was ramped up with the removal of our waiver on 4 February 2015.
The uninitiated may be excused for thinking that this eurozone runaround was the result of incompetence on the part of the creditors. While there is an element of truth in this, it would be the wrong conclusion. The runaround is a systemic means of control over governments of countries whose banking and/ or public sectors are financially stressed. Indeed, to politicians like Wolfgang Schäuble it is a welcome feature of the eurozone. A finance minister who wants to table, say, debt- restructuring proposals is simply denied the name of any person to speak to or a telephone number to call so that she or he simply does not know who to talk to. As for apparatchiks like Wieser and Costello, the runaround is essential to their personal power.
Possibly because of my academic background, this was the Brussels experience I least expected and found most frustrating. In academia one gets used to having one’s thesis torn apart, sometimes with little decorum; what one never experiences is dead silence, a refusal to engage, a pretence that no thesis has been put forward at all. At a party when you find yourself stuck with a self- centred bore who says what they want to say irrespective of your contribution to the conversation, you can take your glass and disappear to some distant corner of the room. But when your country’s recovery depends on the ongoing conversation, when there is no other corner of the room to retreat to, irritation can turn into despair– or fury if you grasp what is really going on: a tactic whose purpose is to nullify anything that is inimical to the troika’s power.
Meanwhile, Operation Truth Reversal was on. Through tweets, leaks and a campaign of disinformation involving key nodes in the Brussels media network, the troika spread the word that I was the one wasting time, arriving at meetings either with no proposals at all or with proposals that lacked quantification, consisting only of empty ideological rhetoric.
Bullies blame their victims. Clever bullies make their victims’ culpability seem self- evident. Of the three institutions I was dealing with, the ECB proved particularly adept at this.
However, the ECB places restrictions on how much outstanding T- bill debt a government can have at any one time, as excessive issuing of new ones can undermine trust in the government’s capacity to redeem its outstanding Treasury bills, rendering the T- bills themselves unsafe. In other words, T- bills provide a government with the equivalent of a credit card, with the borrowing limit set by the ECB.
Mario Draghi’s claim that he was only following the ECB’s rules in stopping Greek banks from buying new T- bills– thus preventing us from rolling over the debt from our outstanding T- bills into new ones as the existing ones matured– was ingenious. How can you blame a man for following the rules imposed on him by the charter of his institution? Surely there was nothing else he could do? Surely the fault was mine for imagining that I could convince him, through posturing and moralizing speeches, to do otherwise? It was simply prudent action on the part of an ECB that prioritized the health of our banks, the implication being that our government had brought its liquidity problems upon itself.
Far from being apolitical, the ECB’s huge discretionary power over when to enforce its rules and when to circumvent them– when to strangle a government and when not to– make it the most political central bank in the world.
While the ECB’s shameful threat to choke the Greek government was responsible for the lack of interest in our T- bills, we were nonetheless falling into Draghi’s trap by indulging an archaic leftist hostility to potentially advantageous foreign investment, enabling the troika to present us as boorish leftists who deserved the ECB’s asphyxiation.
From a strategic perspective, it struck me as daft to antagonize Beijing at a time when the battle lines against Berlin, Frankfurt and Brussels were being drawn.
The next day Alexis relayed the news from Beijing. Someone had apparently called Beijing from Berlin with a blunt message: stay out of any deals with the Greeks until we are finished with them.
That same day my alternate finance minister Nadia Valavani and I were working to finalize our Humanitarian Crisis Bill. At its heart were two measures: the provision of a prepaid credit card for 300,000 families living without food, shelter and electricity, and a Herculean effort to bring the 40 per cent of the Greek population who had dropped out of the tax system because they were in arrears to the state back into the fold. How? By letting them pay back a small amount, even € 20, each month. Although millions had been rendered so impecunious by the crisis that they would have difficulty paying even such a small amount, we were confident that they would do all they could to find it in return for the right to reactivate their tax file numbers and leave the purgatory of official bankruptcy. It was an act of mercy and economic common sense. Indeed, within a month of the system’s subsequent introduction € 700 million had been paid into the state coffers by those striving to return to the formal sector. 10
Instead, over the course of a lengthy meal, he laid down the law with the charisma of a bailiff and the sensitivity of a litigator. Outlining the coming weeks and months, he carefully avoided the substance of the negotiations, instead giving us chapter and verse on Eurogroup and Eurogroup Working Group rules and constraints. From his litany of troika- speak, one thing of interest emerged: we should expect no easing of the squeeze on our liquidity before 30 April– which was presented as a natural, apolitical consequence of bureaucratic constraints.
‘It sounds reasonable,’ replied Wieser, advising me to send a formal request to Jeroen, his boss, for access to that € 1.2 billion. (Days later, when I did so, Jeroen referred me to the president of the Eurogroup Working Group… Thomas Wieser! And what was Wieser’s verdict, now that he had been given the authority to decide? That what I was requesting was ‘too complicated’.)
‘This is not up to me,’ Draghi said. ‘It is up to the Eurogroup.’
‘Just wait and see what the politicians do when I raise the subject with them,’ I said to Jeff as we were leaving. ‘They will refer me to back to the ECB, possibly to Poul Thomsen.’ Jeff shook his head in disbelief.
For Klaus it was a no- brainer. ‘You must never, ever default to the IMF. Suspend all pension payments instead. This is what you must do,’ he said with striking conviction.
Jeff rewarded me with what I took to be a massive compliment: ‘Having sat in your meetings with Thomsen, Draghi, Schäuble and Regling, I must tell you that I have never seen anything like this in my decades of experience with meetings between debtor governments and creditors such as the IMF, the US government, the World Bank… In every meeting you were positive, bristling with ideas regarding practical solutions. And they kept knocking your ideas down, even though they were good ideas, without proposing a single one of their own. Unbelievable!’
By contrast, although they had nothing of substance to propose and their only concern was how to avoid any discussion of debt restructuring, the troika were on time, in tune and on target.
perfect gift– my cue to push the bill immediately through parliament while making Costello’s email public, thus exposing the troika’s opposition to our plan to extend urgent help to those Greek families suffering the most. The outcry in Greece and beyond was deafening. Costello must have kicked himself. But the troika learned their lesson well: from then on they never emailed or put in writing anything that revealed their intent or character– at least, not until one day in late June when they were ready for the kill.
She asked me how I felt. As I began to answer, she got out her phone and started videoing. ‘These are historic moments,’ she explained. It was something that Danae would go on to do quite a few times thereafter. The experience of watching those videos has been painful enough to deter me from returning to them more than once. That night my spontaneous response was: ‘I feel alone, Danae. I sit in my ministerial office, supposedly the head of fourteen thousand civil servants. But in reality I am on my own, confronting a large, fully weaponized army without even a small shield for protection… hell, without even a proper press office to let the world know of the solid policy work that my tiny team is doing; let alone protect me from lies and distortions that would make Joseph Goebbels proud.’
We had understood each other but we were obliged to finish with a last rendition of our tussle, one that was performed with the greatest courtesy.
‘They complain you are unreasonable until they realize they can’t buy you or bluff you or intimidate you. Then they really negotiate, often late at night.’
OBAMA: I understand. But you must know that I was forced to do things that were very hard for me. Things that I did not want to do. Things that amounted to political poison. I had to go against my policy to save Wall Street. To collaborate with people that had created the problem.
‘Unless you adopt the Polish strategy,’ he said thoughtfully.
In the 1990s, when Poland was burdened by huge communist- era debts and the IMF had been called in to impose austerity, reform and a debt- restructuring programme, the Warsaw government had refused to accept the IMF’s MoU- based process. ‘Just like you’re refusing,’ he said. What the Poles did was to put together their own plan covering debt, fiscal policy and reforms, which they presented to the IMF as the basis of the negotiations. ‘It was the only occasion I know of when the IMF was forced to abandon its own programme and to accept as the basis of negotiations that of the government.’ Glancing at the ceiling, Lipton asked, ‘Why don’t you try the Polish strategy? After all, Jeff had helped them put it together.’
This is impossible. In my capacity as finance minister, every other week I guarantee worthless IOUs issued by the banks to the tune of tens of billions of euros which they then post for collateral with the Bank of Greece. The only way they will run out of eligible collateral is if you guys at the ECB ban the Bank of Greece from accepting my guarantees. And this is 100 per cent a political decision, since we all know that the Greek government never had the capacity to honour these guarantees.
I am happy to hear this, Benoît. These matters are above our pay grade.
I then spent a heart- wrenching hour on the phone explaining to Nicholas Theocarakis that the prime minister had ‘burned’ him in favour of Chouliarakis.
Friends chastise me for my forbearance. They think I was naive to maintain faith, despite all the evidence, that Alexis might bounce back. Hopefully, the following two episodes will help convey something of the pressure we laboured under and the scale of what we faced.
Half an hour later my phone rang again. It was Jeff, laughing uncontrollably. ‘You will not believe this, Yanis,’ he said. ‘Five minutes after we hung up, I received a call from the [US] National Security Council. They asked me if I thought you meant what you’d said! I told them that you did mean it and that, if they want to avert a default to the IMF, they’d better knock some sense into the Europeans.’
I had fully expected my phone to be tapped, but two things made Jeff ’s news remarkable. First, the eavesdroppers not only had the capacity to recognize that what I had said was of real significance but they must also have had an open line to the NSC. Second, they had no compunction whatsoever about revealing they were tapping my phone!
He thought about it for a couple of seconds before responding: ‘You’re welcome to return when you’re no longer a minister.’
‘See you soon then,’ I replied.
Part Three: Endgame
With foes like these who needs friends?
I argued that approaching Merkel with this plan was our only chance. It was a moderate proposal, containing everything that Greece needed immediately and in the longer run while maximizing the creditors’ chances of getting their money back, but above all this strategy would allow the chancellor to present it as her own idea.
Pier Carlo’s only piece of criticism was that it was a mistake to refer to a ‘humanitarian crisis’. ‘They don’t like being criticized for having caused such a thing,’ he told me. He suggested using the term ‘anti- poverty campaign’ instead, advice that I adopted instantly.
That day in his office he confirmed my suspicion. Over a simple but fabulous dish of paella, with a glass of excellent red wine to complement it, a disarmingly friendly conversation ensued. Not only was Luis quick to endorse my idea for breaking the deadlock, but when I told him of Pier Carlo’s similar reaction he shook his head appreciatively and said, ‘You, the Italians and we must band together.’
As I had suspected, the chancellor knew of Wolfgang’s plan but had not approved it. At that point it hit me: he and I had something important in common. We disagreed on everything, Grexit included, but there was one thing we shared: a leader who was muddling through.
‘From what you are telling me,’ I probed, ‘this is a conversation that you do not have a mandate to have with me.’
‘Yes, you need a mandate from your prime minister for us to have this conversation and I need a mandate from the chancellor.’
He shrugged repeatedly and told me that, given this development, he was out of ideas. He seemed lost for words. Again and again he said he had ‘no idea’ about how to resolve the impasse, that he had ‘no authority’ to discuss an agreement within the eurozone behind the institutions’ backs. For the first time I recognized not a lack of interest or some cynical stratagem but genuine helplessness, so, I tried to revive his spirits a little.
‘Our conundrum,’ I continued, ‘our task is to find a solution that minimizes pain under the twin constraints that you and I have agreed are binding: first, the MoU does not offer a viable solution for Greece and, second, neither you nor I have a mandate to discuss Grexit, time outs and the like. So let’s find the best solution within our current set of constraints. This is what elected politicians must do.’
Then he turned and stunned me with his answer. ‘As a patriot, no. It’s bad for your people.’
When they showed me their models, I realized why they had been reluctant to do so. Inside there lay a scrupulous economist’s nightmare: an inbuilt and frankly ridiculous assumption that price increases such as those produced by VAT increases never reduce sales, and that rises in corporate tax rates always lead to more tax paid by business. They had omitted to include any ‘price elasticities’ in their models– to use the technical term for this blunder. To my knowledge, no economist ever assumes that
To demonstrate the flaw, I performed a simple exercise: I asked the troika’s model to simulate the impact on the government’s revenues of raising the VAT rate from 23 per cent to 223 per cent. We all know what would happen in reality after such a ludicrous tax hike: sales would collapse and so would the government’s revenues. But not in the troika’s model, which produced a massive increase in revenues. Like all models, garbage assumptions beget garbage predictions.
Christine pointedly ignored the question’s substance and chose to vent her anger instead: ‘For the moment we are short of a dialogue; the key emergency is to restore the dialogue with adults in the room.’
After a while, Jeroen called us back to order and a member of the secretariat addressed me: ‘Minister, the Eurogroup does not exist in law, as it is not part of any of the EU treaties. It is an informal group of the finance ministers of the eurozone member states. Thus there are no written rules about the way it conducts its business, and therefore its president is not legally bound.’
Three months after my resignation, in October, Emmanuel invited me to visit him at his ministerial office even though I was not in government any more. He told me that at a summit meeting before his failed attempt to mediate with Alexis he had used my line that the troika’s deal for Greece was a modern- day version of the Versailles Treaty. Merkel had heard him and, according to Emmanuel, ordered Hollande to keep Macron out of the Greek negotiations. Merkel’s spell was every bit as powerful as I had imagined.
when instructed by the enemy to throw down their weapons: ‘Μολών λαβέ’– ‘Come and get them!’
When I saw Danae afterwards, she asked me what had happened. ‘Tonight we had the curious phenomenon of a government overthrowing its people,’ I said.
Friends ask Danae and me how we cope with the opprobrium, especially from within Greece. My answer is that I can only consider it an honour to have the antipathy of such people.
Having said all that, it is time for a confession. Although I am immune to the slings and arrows of the troika, which I fully expected, having former colleagues– my parliamentary comrades who stayed in government and assented to the third bailout– do the same is hurtful.
I recall something my father said to me when he realized that, at a young age, I was becoming enthusiastic about left- wing politics. ‘When I was in the concentration camp as a communist,’ he said, ‘I knew that, had our side won the civil war, I would be in the same camp only with different guards.’ Since my resignation, when witnessing the nastiness and blatant untruths of my former comrades, I have been reminded of my father’s prescience.
Surprisingly, it was to thank me. ‘Do you know who this guy is?’ he asked his brother while pointing at me. ‘He is the guy who gave our mother her plastic card. It lets her buy stuff from the supermarket. Two hundred euros a month!’ he said, proud to have remembered the number. Turning to me again he asked, ‘You did that, didn’t you? Did you really?’
‘We tried our best,’ I replied and hugged the boy. No one was there to witness this scene except the German photographer, who didn’t understand our exchange in Greek, which made the whole thing so much more satisfying.
In it she said that Lambros had used the bill I had passed to get assistance with his rent. This was the same bill that had provided the boys’ mother with her card and the very same bill that Declan Costello and his troika cohorts were so upset by and so eager to kill off. The Spanish journalist’s email finished: ‘Lambros wants me to tell you that he is moving into his new apartment tomorrow, and that he is very proud of you, and that you have his support more than ever.’
When all was said and done, how could I consider myself anything other than undeservedly privileged?
‘But your parliament voted in favour of it with a large majority, didn’t it?’ he pointed out. Sure it did, I replied. Except that consent without the freedom to say no is a form of slavery, as feminists and civil right campaigners taught us long ago.
A little less than a year after my resignation the people of Britain voted to leave the European Union.
In the bonfire of its illusions that followed the financial crash of 2008 and the subsequent euro crisis, Europe’s deep establishment lost all sense of self- restraint. I witnessed first hand what I can only describe as a naked class war that targeted the weak and scandalously favoured the ruling class.
After I had left the ministry, those salaries were raised by up to 71 per cent, the CEO’s salary being bumped up to € 220,000.
One night in March 2016 I spent a few hours in Ecuador’s London embassy with Julian Assange listening to a recording of a telephone conversation between the IMF’s Poul Thomsen and his Greek mission chief. With bitter satisfaction I heard Poul confirm everything I had been saying about the unsustainability of the third bailout agreement. I also heard him insist passionately that the correct fiscal targets were the ones I had been proposing– and which he was, interestingly, rejecting in the Eurogroup.
Notes
He teed it up this way: I had a choice. I could be an insider or I could be an outsider. Outsiders can say whatever they want. But people on the inside don’t listen to them. Insiders, however, get lots of access and a chance to push their ideas. People– powerful people– listen to what they have to say. But insiders also understand one unbreakable rule: they don’t criticize other insiders. I had been warned.
This is a statement that Mrs Thatcher made often and in a variety of ways. For example, in an interview for Thames TV (This Week, 5 February 1976) she said ‘… and socialist governments traditionally do make a financial mess. They [socialists] always run out of other people’s money. It’s quite a characteristic of them.’
Greek pension funds, like in most countries, were forced by law to hold much of their reserves in Greek government bonds. In effect, pensioners were made to lend their fund reserves to the state. The charters of professional bodies, like the lawyers’ association, also compelled their fund managers to invest in government bonds. Greece’s bankers would be hit too, but unlike pensioners and private investors they would be compensated fully with the European taxpayers’ money that the Greek state would borrow as part of the second bailout loan and return to the bankers– in the interests of financial stability, of course.
The reader may suspect that Wolfgang Schäuble’s opposition to the communiqué of the 20 February Eurogroup was mere pretence, designed to lure me into the belief that I had got my way in order to trap me at the meeting of 23 February. I do not believe so. During the Eurogroup of 20 February Wolfgang was visibly agitated. He is neither as duplicitous nor as good an actor as would be required for such an elaborate ploy.
62.5 per cent was a very high turnout given that no postal or remote voting was permitted.
This is not my comparison. I owe it to someone who appeared on a BBC television discussion programme who said, ‘Saying that Varoufakis is responsible for Greece’s economic woes is like saying Dunkirk was responsible for World War II.’
That annotated version of the August 2015 MoU can be found at: https:// www.yanisvaroufakis.eu/ wp- content/ uploads/ 2015/ 08/ mou- annotated- by- yv.pdf
Appendices
Despite its spectacular predictive blunder Greece proved a nice little earner for the IMF. By the time I resigned, the bankrupt state had paid over € 3.5 billion in interest and fees to the IMF, averaging 37 per cent of IMF total net income, and covering 79 per cent of its total internal expenses. Ever since Greece entered debtors’ prison, the IMF has had an average operating profit of 63 per cent, much larger than that of Goldman Sachs or J.P. Morgan. And where have the IMF’s profits come from? Europe’s taxpayers, of course.