Unperturbed by Alexis’s discomfort, I went on to enlist the help of other troika defectors, some of them from abroad. One was Glenn Kim, who came on the recommendation of an ally in the media. Glenn was a banker, had been involved in many of the big bond deals between Greece, the eurozone and Germany, and was now working independently on contract for various European governments. He was ‘quite an expert’, I was told, on the GDP-linked bonds that I intended to propose as part of Greece’s debt swap. I contacted Glenn right away.
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.4
‘What we did to Greece in 2011 and 2012 was appalling,’ he admitted.
I asked him what he was up to currently. He told me he was working for the government of Iceland, helping to restructure its public debt and work towards lifting the capital controls that had been imposed in the wake of its own financial collapse in 2008.
‘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.’
Never one to look a gift horse in the mouth, I agreed and asked him to be ready to come to Athens on 26 January, if we won the election of the previous day.
A cynic might say that professionals like Glenn were in it for the money and for their own career purposes. Possibly. But having people such as Glenn on my side, who knew where all the skeletons were buried, was a priceless weapon. (When the troika’s apparatchiks saw him among my team, they almost had a stroke.) But I also suspected that in Glenn’s case I could rely not only on his professionalism but on something beyond enlightened selfishness. Two days before the election, Glenn seemed to confirm this in an email to me in which he wrote, ‘Yanis, if all goes to plan, the good folks of Greece (and in fact Europe as a whole) will have charted a new course for their future … in thinking about this weekend, I am reminded of Homer’s words: “Εἱ̑ς οἰωνὸς ἄριστος, ἀμύνεσθαι περὶ πάτρης.”’ This is from Homer’s Iliad and means, ‘There is no better omen than fighting for our country.’
Another foreign powerhouse also offered its services to our cause: the French investment bank Lazard, led by Daniel Cohen and Matthieu Pigasse. Like Glenn, Lazard had acted as a consultant and facilitator of the second second bailout, charging the struggling Greek state tens of millions of euros for its services. So, when Daniel and Matthieu asked to see me, I was puzzled, guarded and sceptical. But they won me over with a frank account of their complicity, an equally frank apology and an offer to help get Greece back on its feet by providing their considerable services pro bono.
With these illustrious defectors on our side, our technical strength was bolstered no end. No one in Syriza or known to the party had access to such expertise. They would be my heavy artillery. Of course, my association with them was used to suggest a variety of sins. It was no coincidence that on the very same day Glenn shocked the troika with his presence in Brussels, an opposition member tabled a question in parliament asking why the Greek government needed to have a ‘Korean’ on its team and what his links with me were, implying some sordid relationship with American, Asian or other dark forces.5 Meanwhile, Syriza people, often well meaning and genuine in their concerns, warned the party faithful that I was preparing to make a Faustian bargain with the troika.
In fact, Elena, Natasha, Glenn and the good people of Lazard stood tall against the troika even after Syriza’s young zealots fell. Together with some other former students and graduates of the University of Athens doctoral economics programme, these troika defectors backed our cause selflessly, producing splendid economic modelling, putting indefatigable legwork into the negotiations and giving me mammoth moral support before each meeting with the Eurogroup, in Maximos or any of the other rooms where adults behaved very, very badly.
While building a team of experts, I was also engaging friends and potential allies outside Greece. One of my missives for help went to Lord (Norman) Lamont. ‘Dear Norman,’ it read,
As you may have gathered from press reports, Greeks are going to the polls this coming Sunday. For better or for worse I am standing for a seat in the Greater Athens constituency and, according to pollsters, I seem ‘condemned’ to win it. Even worse, if my party forms the government (which is not unlikely) I stand to inherit the Ministry of Finance – replete with empty coffers and outrageous pressure from Brussels and Frankfurt. Might I count on you as a prospective counsel in the turbulent times ahead?
Trusting that you are well.
Yanis
Norman responded immediately. Yes, he was willing and ready to offer counsel. 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,
I entirely agree with what you say of course about democracy and the sovereignty of parliament. I keep trying to remind Cameron and Osborne that if they get the chance to renegotiate our relationship with the EU, as they hope, it should be about restoring sovereignty and not just economics and competitiveness. You and I are at one on that. I also agree with you there has been too much emphasis in the eurozone on austerity alone … Assuming you become finance minister I will be very happy to do what I can to help … I have some ideas. Good luck personally. Yours ever.
Norman
My friendship with true-blue Tory and Eurosceptic Lord Lamont of Lerwick, the chancellor who had ensured that Britain dropped out of the European Monetary System, thus guaranteeing that the UK would not join the euro, was at odds with my image as a loony-left extremist. It was also taken as further proof by some that, guided and prodded by Lamont, I was hell-bent on getting Greece out of the euro.
Of course, precisely the opposite was true. When a few months later things came to a head and Wolfgang Schäuble was pushing us towards Grexit, Norman’s advice to me was to think twice before even considering it, such were the costs and perils of returning to a national currency. Throughout my 162 days in office Norman proved a pillar of strength, advising me on the final draft of my reform, debt and fiscal proposals to the EU and the IMF. If only more left-leaning politicians had stood as firm, the outcome might have been altogether different.
Besides Norman, my overseas supporters included Columbia University economist Jeff Sachs, who played a central role as adviser and advocate, the aforementioned Thomas Mayer of Deutsche Bank fame, Larry Summers and Jamie Galbraith, who had worked for years with me on refining the Modest Proposal for Resolving the Euro Crisis, helping reduce the antipathy towards Alexis and Syriza in Washington, writing speeches for Alexis and organizing conferences to prepare the Anglosphere for the new Syriza administration.
On 20 November I dispatched a cheerful email to Jamie:
Jamie,
Yesterday Alexis told me that he had received a phone call from a prominent bank owner, who threatened that the bank’s ATMs will not function the day after our election if Alexis appoints me minister of finance. 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!
It was one of those moments of sheer pride in my friends, old and new, and joy at having acquired vicious foes.
Wasteland
Without the skills of a T.S. Eliot or a John Steinbeck, it is difficult to convey the scale of Greece’s devastation in January 2015. A numerical comparison will have to suffice.
Britain in the early 1980s suffered a major convulsion when unemployment quadrupled. The damage was done by a recession lasting a single year, 1980–1, when national income fell by 1.26 per cent. The next recession to hit Britain came a decade later, lasting also a single year (1990–1), with national income shrinking by 1.78 per cent. More recently, following the Credit Crunch, another single-year recession (2008–9) left the country reeling, with a drop in national income of a substantial 5.15 per cent. Compare and contrast these three traumas with what befell the Greeks.
By 2010, the year of the first bailout, national income had fallen by a whopping 7.5 per cent since the previous year. Did things improve as a consequence of the bailout? On the contrary, during 2010–11 incomes fell by a further 8.9 per cent. By comparison, 2011–12 was a good year, the economy shrinking further by a trifling 1.1 per cent. To what did we owe the relative lull? Ironically, to the political crisis caused by the depression, which meant that we either had no government or too weak a government to legislate further austerity!
But as soon as Prime Minister Samaras came to office in June 2012 with a small but solid parliamentary majority, the troika ensured he made up for lost time by cranking up the austerity machine with a vengeance. The result? The cruellest year yet, with national income plunging a further 14 per cent by the end of 2013 and another 3.3 per cent during 2014.
When British friends remark sympathetically that Greece is today where Britain was during the Great Depression, I thank them for their kindly intended comparison but am forced to correct them. Between 1929 and 1932 Britain’s economy shrank by 4.9 per cent and unemployment rose from 8 to 17 per cent. (At this point I imagine a Greek version of John Cleese’s character in Monty Python’s ‘Four Yorkshiremen’ sketch crying out, ‘You were lucky!’ ‘Luxury!’) By comparison, Greece has endured six consecutive years of recession, the loss of 28 per cent of its national income, more than one in five workers losing their job, and an unemployment rate propelled from 7 to 27 per cent, with youth unemployment at more than 65 per cent.
And yet today, as these lines are being written, there are still those who believe that by the end of 2014 Greece’s economy was returning to health and would have been out of the woods by the end of 2015 had it not been for the idiocy of those Greek voters who jeopardized the recovery by voting in people like me on 25 January 2015. Like unruly children screaming, ‘Are we nearly there yet?’ from the back seat and distracting the driver, the Greek electorate caused their country to swerve off the road to recovery just as it was entering the final straight. And had it not been for the actions of the insufferable finance minister of the populist government they elected, a third bailout would never have been necessary. Do they have a point?
The jagged grey line in Figure 1 shows Greece’s total income, undiluted by statistical tricks and given in raw euros. The black line superimposed upon it is a four-month average, providing a clearer sense of the overall trend. The shaded oval highlights the period in 2014 when the alleged recovery began. Can you spot it? The Greek voters could not.
Figure 1: Greece’s unadjusted national income (quarterly) 2007–14, with a four-month moving average superimposed.
Soon after it became clear that I might become Greece’s finance minister in this economic environment, I gave a speech attended by members of the European parliament, journalists and other so-called opinion makers. Asked whether a new government might jeopardize the ‘recent recovery’, I had no alternative but to expose them to the wretched facts that almost never appeared in the press.
There are 10 million Greeks living in Greece (falling fast due to emigration), organized in around 2.8 million households with a ‘relationship’ with the tax authorities.
Of those 2.8 million households, 2.3 million (and 3.5 million tax file numbers) have a debt to the tax authorities that they cannot service.
One million households cannot pay their electricity bill in full, forcing the electricity company to ‘extend and pretend’, thus ensuring that a million homes live in fear of darkness at night and the electricity company is insolvent. Indeed, the Public Power Corporation is disconnecting around 30,000 homes and businesses a month due to unpaid bills.
For 48.6 per cent of families, pensions are the main source of income. Meanwhile the troika demands that pensions be cut even further. What was the €700 old age pension has been reduced by about 25 per cent since 2010 and is due to be halved over the next few years.
The minimum wage has shrunk (on the troika’s orders) by 40 per cent.
