How I wish Teresa May had read this book before she entered into her doomed dealings with the EU. Yanis Varoufakis’s account of his negotiations with the Eurogroup, the collection of EU member Finance Ministers during his five months as FM of Greece is as gripping as any thriller, as the stakes are so high, the battle so unequal and the characters so well-drawn.
At stake is not only the long-term prosperity of his beleaguered country, but the dignity of its people, condemned to penury and multi-generational unemployment as a result of the ‘conditionalities’ they were forced to accept in exchange for the 2010 and 2012 bailouts thrust upon them by the ‘troika’: the European Commission (ie the EU’s executive body), the European Central Bank and the International Monetary Fund.
Where the book diverges from thriller territory is the seemingly verbatim recounting of conversations which YV probably felt duty-bound to include in their entirety in the interests of fairness and completeness, but which a fiction writer could freely slash with a red pen. This may sound laborious, but in actual fact these exchanges are fascinating, and illuminate the characters involved far better than in employing summary or description alone.
A bailout sounds like a marvellous thing: but in Greece’s case it entailed having cash change hands over its head, switching private creditors for official ones, being forced to cut pension funds and other vital benefits, restricting infrastructure investment, curtailing freedom of economic choice and ceding sovereignty to a bureaucratic behemoth.
Overdramatic? Not at all. ‘Forcing new loans upon the bankrupt on condition that they shrink their income is nothing short of cruel and unusual punishment.’ As YV makes clear, the bailout was not for Greece’s benefit, it was for the benefit of the German and French banks, which needed Greece to swallow this bitter medicine in order to hide the fact that they themselves were massively exposed to an economy which was utterly bankrupt. Private creditors share an important characteristic: they want their money back, and have an incentive to ensure their debtor’s long term economic health. Official creditors have wider priorities, including but not limited to, the accumulation of authority from debtor governments, and the desire to use them as examples for other upstart members.
In one striking scene, YV witnesses a shouting match between Michel Sapin, French Minister of Finance and Wolfgang Schäuble, as Schäuble ‘wants the troika in Paris’. What is so fascinating about the book is the light it shines on how power is truly exercised in the back rooms of the troika, and YV’s nightmarish attempts to negotiate the labyrinth.
‘Kafkaesque’ is a very overused word, but in this case it is apt, as every time he reaches an agreement with one of the power-brokers in private, they publicly renege on it at the first opportunity. The EC representative in the Eurogroup, Pierre Moscovici agrees to redraft the Memorandum of Understanding by which Greece is bound in language acceptable to both sides, but meekly capitulates as soon as it is slapped down, without consideration, by Jeroen Dijsselbloem. ‘In a voice that quavered with dejection, Moscovici meekly assented: “Whatever the Eurogroup president says.”’
YV describes many similar instances where people willing to help find a solution are beaten down and stymied by overwhelming psychological pressures and plain common or garden bullying. Wolfgang Schäuble, Germany’s Finance Minister tells YV to ‘talk to the institutions’. When he attempts to do so, he is told to ‘talk to Schäuble’. Indeed, the private conversations that he recounts are breathtaking in their frankness, and illuminate the individual power struggles and vested interests that compete for political and financial capital.
Christine Lagarde privately tells him: ‘You are of course right, Yanis. These targets that they insist on can’t work. But, you must understand that we have put too much into this programme. We cannot go back on it.’ Astonishing, really: a clear admission that doggedly pursuing failed policies is more important than alleviating the misery of a downtrodden populace. Lagarde is portrayed favourably in this book, but even to this day, she continues to place her faith in bailouts which can’t possibly work: [‘Just how many economies does Christine Lagarde have to ruin before the penny finally drops?’ asked Matthew Lynn, Telegraph Business comment, 31st Aug 2019, in response to Argentina’s 9th bailout.] Einstein’s definition of insanity springs to mind.
Varoufakis clearly likes and admires her, but as he admits, ‘her top priority was the preservation of the insiders’ political capital and the minimisation of any challenge to their collective authority.’
What does he mean by ‘insiders’? The book opens with Larry Summers, former Secretary to the US Treasury providing YV with a helpful definition: ‘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 [my emphasis] of influencing powerful people and outcomes.’ Jeez Louise, no wonder we’re in such a mess.
My takeaway is that those willing to speak up for Joe Bloggs (or in this case, Stavros Papadopoulos) lack the power to help him, and the others won’t speak up for Joe or Stavros unless all other power-brokers agree to speak up for them too. So YV can’t say he wasn’t warned, yet he valiantly enters the fray regardless, not only fighting the troika, but the multiple vested interests on his own side: the infighting amongst Syriza, the oligarchy, the corrupt banks and corporations and tax-dodging on a massive scale. As he describes it, since the country broke away from the Ottoman Empire, ‘tax evasion has been something between an Olympic sport and a patriotic duty.’
His agenda was to catch the tax cheats and ‘shock Greek society out of its tax-evading ways; breaking down the collusion between the supermarket chains that exploited consumers and their suppliers; protecting a financially desperate population from the invasion of gambling machines which the previous government had committed [him] to; empowering the government’s own anti-corruption ombudsman; lastly, planning the assault on the towers of sleaze that were Greece’s four systemic banks.’
To achieve these laudable ends, the troika did precisely zero to help. On the contrary, they frustrated his every attempt to strengthen his economy, even sabotaging his attempts to secure outside investment from the Chinese (in this rare instance, the troika may have done Greece a huge favour).
Syriza is a far left party; YV by his own admission is a ‘proud leftie’, but there was nothing about his plan that a libertarian couldn’t sign up to (this reminds me of Clint Eastwood, who allegedly said: ‘when you go far enough to the right you meet the same idiots coming around from the left’!) In fact, he even wanted to cut VAT and business tax, knowing that if he did so, he would give commerce space to breathe and tax revenues would increase. He was also willing to undergo privatisations of certain state assets in exchange for worthwhile investment programmes and the protection of workers’ rights. None of his plans were taken seriously by the troika, which provides evidence that for them, austerity was not a means by which Greece could get back on its feet, but a goal in itself, whereby they could call the political tune and accumulate powers which rightfully belong to democratically elected governments. As YV repeatedly reminds us, debtors have a right to democracy too.
As an econometrician, YV was uniquely qualified to judge the economic model used by the troika to justify their unconditional love of austerity; it had an inbuilt assumption that price increases always led to an increase in VAT payments, and that rises in corporation tax always resulted in more tax receipts, which is plainly absurd. ‘Economic idiocy’ YV rightfully calls it, ‘implicitly endorsed by the troika, the Greek Council of Economic Advisers and the respected financial press.’ Within a fortnight, YV’s tiny team had created an alternative model, which even the troika’s technicians admitted was superior to their own. Tsipras congratulates him. ‘Your model has won,’ he said approvingly. ‘Brussels conceded that it is better than theirs.’ And then he added, ‘But Yanis, they still insist on [my emphasis]the same parametric reforms [in tax rates] and we decided to let them have them. [my emphasis]’
Indeed, the most heartbreaking aspect of this book is how YV’s Syriza colleagues fall like dominoes in the face of the troika’s demands, and also how, one by one, they renege on their pre-election pledges. Most puzzling of all is Tsipras, who to his dying day must regret the massive opportunity he squandered; he held a referendum, advising the Greeks to vote against a third bailout, and won it by 61.3% with a huge turnout of 62%. No sooner had he won the vote than he capitulated to the troika, falling under the ‘Merkel spell’.
YV describes it as ‘overthrowing a people’. Does this sound familiar? The very same thing is happening right now in the UK under our noses.It is one thing to fall to a powerful enemy, quite another when your own side cheerfully throws you under a bus. YV developed a ‘parallel payments system’ in the event that the ECB closed the Greek banks, (as they had unceremoniously done to the Cypriot banks) in order to allow the Greek economy to continue to function, and which would be a blueprint for a new drachma if a new currency were needed.
His reward for prudently developing a Plan B? To face the threat of criminal investigation and accusations of high treason. I have no idea if his parallel payments system would have worked. Certainly, his description sounds highly plausible. There is no way of seeing into YV’s inner heart, but I get the impression that ultimately it was developed as a deterrent, a bargaining chip, and I don’t believe he ever truly meant to launch it. It’s a great pity for the Greeks that he didn’t. Even more of a pity for the troika, as a dose of democracy-in-action would do them the world of good.
Still reading? It’s my belief that YV is a highly principled, decent guy who did his best. In a section entitled ‘Mea maxima culpa’ he describes the moment that he could have withdrawn from negotiations and executed his Plan B, but to be fair, he would have done so without the approval of the PM or the Cabinet. He nevertheless admits that it was a crucial moment and he bottled it. Further, he continued to believe in Tsipras, despite clear signs he was wobbling. When you’re in the thick of the fray, it’s hard to be objective, and we all see what we want to see. One of the more frustrating aspects of the book is YV’s dogged persistence in the face of all evidence; he continues to present rational arguments and logic and slaves away on his non-papers (i.e. unofficial proposals) in the belief that the other side will bend in the face of reason, when it is clear they will not.
As J.W. Mason writes in the Boston Review: ‘When he assures Alexis Tsipras, then the Prime Minister of Greece, that Merkel will “100%” accept his new proposal if she is rational, one wants to reach through the page and shake him and say, “Yanis, haven’t you been reading your own book?” The dejected Tsipras has a clearer view of the situation when he replies that new proposals don’t matter: “They want to destroy us.”
To this day, YV remains a committed Europhile, convinced that Europe can be reformed from within. Oh Yanis, Yanis, this just proves to me that hugely intelligent people can be hugely mistaken. If I could give this book more than five stars I would: YV writes like a dream, and shines a light on practices and shenanigans that would shame the Medicis, the Borgias and the most Machiavellian Mafia don thrice over.
It’s rare to read something contemporary that you know will continue to be studied far into the future, and this book is worth every minute of the time invested in it. Particularly commendable is his clear explanation of complex financial concepts, probably thanks to his time as a university lecturer. I haven’t read any of his other books, but I’ll definitely make the effort to read them all now.
At the risk of incurring the wrath of the woke everywhere, it doesn’t hurt that he’s very easy on the eye and sexy as all hell… (I didn’t include that last sentence on my Amazon review.)
