When our eyes met again, Alexis had acquired a serious look, which he followed up with serious words: ‘Listen! Don’t get comfortable in here. Don’t learn to love the trappings of office. These offices, these chairs, are not for us. Our place is out there, on the streets, in the squares, with the people. We got in to get a job done on their behalf. Never forget that this is why we are here. For no other reason. And be ready. If the bastards find a way to stop us from delivering what we promised, you and I must be ready to hand back the keys and get out on the streets again, to plan the next demonstration.’
The earth could have stopped turning and I would not have noticed. It was a moment to savour. I felt ashamed at the qualms I had had about Alexis. Fear and anxiety evaporated. I did not care if the light died, as it inevitably would. Here we were, together, raging against its dying.
It was time to get down to work.
PART TWO
Invincible spring
6 It begins …
The sentry outside Maximos was aghast. ‘Are you going out alone, Minister?’ he asked.
I nodded as the electric gate opened, mindful of the waiting photographers camped outside but determined to arrive at the Ministry of Finance on foot and in solitude. They were just as taken aback as the sentry and scrambled to follow me, laden with equipment, falling over their cables and each other. By the time I had turned left onto Queen Sophia Avenue at the corner of the National Gardens, which separate Maximos from Parliament House and Syntagma Square, they had given up.
Walking past the side entrance to Parliament House I was reminded of the exchange I had witnessed between the aggressive parliamentarian and the demonstrator – his ‘Who are you to judge what I should or shouldn’t vote for?’ and her magnificent ‘Who do I have to be?’ Every step towards Syntagma Square brought back a face, a slogan, a memory from those long nights in 2011 when Athens had come alive in opposition to our collective indignity. Crossing Amalia Avenue, right in front of parliament, onto Syntagma Square itself was to cross onto sacred ground.
The sun had set and a cool January breeze was rattling the remaining leaves on the trees, sending pedestrians hurrying on their way. The street lights had not yet come on, and in the dusk it took a few moments to locate the tree, enshrined with flowers and handwritten messages, next to which Dimitris Christoulas, the retired pharmacist, had shot himself. With almost no one around, I took a moment to build a mental bridge between that tree and the brightly lit offices of the Ministry of Finance that I could see opposite. A moment later I had crossed Philhellenes Street to enter the ministry that would be my crucible for the next 162 days. As I entered the building, a cheer rose from the fifty or so women camped outside: some of the ministry’s legendary cleaners, who had been dismissed overnight and without compensation two years before by the previous government. ‘Don’t betray us!’ they shouted.
‘I won’t,’ I replied firmly as I headed for the lift.
The lift door opened onto the sixth floor, and a secretary led me to the ministerial suite where my predecessor awaited. He was alone and greeted me graciously. His desk was strikingly bare. None of the gadgets that fill a modern office was in sight, not even a computer. Its only visible weapon against the sea of troubles that besieged it was an icon of the Madonna on the shelf behind the minister’s desk. The large high-backed desk chair, which was no doubt intended to project authority, looked as uncomfortable as it was ugly. The array of old-fashioned phones on a side desk were straight out of a 1970s movie, and the books on the shelf were clearly gifts that no previous minister had cared enough to read or take away. The oil paintings on the wall were on loan from the National Gallery. It would have taken only a word to have them replaced, but I felt no urge to get comfortable in that office.
The rest of the furniture had an air of decadence, especially the fading red velvet couch – perfect, I thought, for the finance ministry of a bankrupt state. The only exception was a large rectangular wooden meeting table, which I immediately decided would become my workstation, a long way from the ministerial desk, which I made a point of never using. The table made me feel as at home as it was possible or desirable to feel in that spacious but sad office with such a sorry recent past. The office had one outstanding redeeming feature: a wide, tall window offering a magnificent view of Syntagma Square and Parliament House beyond. One look through it is enough to stiffen the resolve of anyone who has ever harboured an ounce of pride in modern Greece’s long struggle for democracy.
My predecessor was gentle, pleasant and visibly relieved that his ordeal was over. He had two dossiers for me, one medium-sized blue one and a bulging red file. The blue dossier contained ministerial decrees that he had not had the opportunity to sign and which he encouraged me to consider. The red dossier was labelled ‘FACTA’ and pertained to a deal that the United States was ultra-keen to foist onto every country, which would allow the US Treasury to keep tabs on American citizens’ foreign financial transactions.1 Intriguingly, he had no documents to hand over regarding Greece’s loan agreement with the EU and the IMF, though he offered to brief me on our repayment schedule, which of course I could already recite, chapter and verse. Days later, when I asked for a copy of the original second bailout loan agreement, I received the astounding reply: ‘Minister, your predecessor seems to have taken the only copy with him, along with his private archive.’ Curious as this may sound, it was not the most stupefying discovery of those early days.
While I would have enjoyed the chance to discuss with him his failed last-ditch attempt to conclude the second bailout programme, which was meant to have ended three weeks before, the discussion would have been of academic interest only – concluding the bailout was impossible for the simple reason that it had been designed at the outset to fail.2 Meanwhile, most of the country’s news journalists, a forest of cameras, foreign correspondents and various curious officials had assembled in the ministry’s press room, awaiting the traditional press conference held jointly by the outgoing and incoming ministers, and were becoming increasingly restless. We had to move on.
Before we did, my predecessor asked me to give some thought to keeping three of his non-permanent staff, especially a single mother who would have faced intolerable hardship were I to let her go. Naturally, I agreed. At the same time I suddenly realized that the three secretaries in the minister’s office whom I had just met were not civil servants but his private employees. As such, they would be leaving too. After the press conference I would return to an empty sixth floor to engage in battle with the world’s most powerful creditors without secretaries, staff or indeed a computer. Thankfully, I had my trusty laptop in my rucksack. But who would furnish me with the Wi-Fi password?
Parsimony versus austerity
After a dignified speech by the outgoing minister, it was my chance to set the scene. ‘The state must have continuity,’ I said after thanking my predecessor for his efforts. ‘But there will be no continuity of the motivated error that began to devastate our society in 2010 and which has been repeated continuously ever since: treating our state’s insolvency as a shortage of liquidity.’
Once I had outlined my analysis of how Greece’s impossible debt and unacknowledged bankruptcy had caused the depression, 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.
With huge reductions in private expenditure and massive cuts in public spending, families and companies were unable to make ends meet. In other words, the government’s attempt to create an unfeasible public surplus had made it impossible for people to live within their means. Put simply, public austerity had to end because it was killing private parsimony. We would begin with the Ministry of Finance’s own accounts. To demonstrate the principle, I announced a symbolic move: the immediate sale of the two BMW 7 series armour-plated limousines that a previous minister had ordered for himself, costing a scandalous €750,000, I was informed. My motorcycle would do nicely, especially in the infuriating Athens traffic. I also announced that I and my two deputy ministers would desist from hiring the hordes of expensive advisers which had invaded the ministry with each previous administration, not to mention the multinational consultancy companies that charged tens of millions to deliver catastrophic advice. Parsimony would thus return to the Ministry of Finance under a new administration whose main aim was to put an end to austerity.
When a few days later I travelled to Brussels and Berlin to begin talks with officials, one of the first things they took issue with was another of the announcements I had made in that first press conference: the rehiring of the three hundred cleaners who had been sacked by the previous government, some of whom had cheered me as I entered the ministry. ‘Backtracking on reforms’ was the expression used to criticize me. Some even suggested that rehiring the cleaners was a casus belli. The fact that I had saved many times their wages through genuine parsimony did not matter to them, nor did the perverse morality of casually paying tens of millions of euros for a few days’ worth of calamitous advice while dismissing the people who cleaned up after the consultants for no more than €400 a month. (The fact that standards of hygiene had declined was apparently also considered immaterial.) If the country’s bankruptcy was to be blamed on its victims, then the ministry’s cleaners were ideal scapegoats.
But the cleaners’ gender and class, their demonstrable powerlessness, their dependence on the state for a minimally safe job, their defiance and determination to camp outside the Ministry of Finance for months on end were to my mind symbolic of something else. They reminded me of the British women who had set up a peace camp in 1981 at Greenham Common to protest against the deployment of new medium-range US nuclear missiles. Those women drew upon themselves the ire, eventually the hatred, of an establishment that recognized in them a challenge to its patriarchal authority. So it was with the ministry’s cleaning women: not only did they symbolize the groundswell of public feeling against austerity, they threatened to feminize the struggle, just as women partisans had against the Nazi occupation of the 1940s.
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.
Moderation versus subservience
As I saw it, my task as the finance minister of a bankrupt country was not to offer false hope through fake optimism, but rather to promote moderate policies and realistic expectations. So I was pleased to be able to conclude that first press conference with a genuinely good piece of news with regard to our impending negotiations.
‘TV evangelists of subservience have been calling upon us for weeks now to issue a declaration of allegiance to the troika and its programme, for otherwise Europe will not even talk to us,’ I said. ‘Anyone calling for this must have a poor opinion of Europe.’ I then went on to describe a telephone conversation I had had on election day with Jeroen Dijsselbloem, president of the Eurogroup and finance minister of the Netherlands.
Jeroen had called to congratulate me on our victory and lost no time before asking the obvious question: what were our intentions regarding the ongoing Greek programme? I replied as accommodatingly as possible while making the point that had to be made: our new government, I said, recognized that it had inherited certain commitments to the Eurogroup while hoping and trusting that its partners would also recognize that we had been elected to renegotiate key elements of our loan agreement and its associated programme. Thus it was incumbent upon us all to find common ground – a bridge I called it – between the existing programme and the new government’s priorities and views. Jeroen agreed immediately with a plain, ‘This is very good,’ proposing to pay me a visit on the following Friday, 30 January 2015. Out of courtesy I offered to visit him in Brussels instead if that suited him better, but he insisted that he and his entourage should honour their new Greek colleagues with a visit.
Encouraged by Jeroen’s acceptance of our common task – to throw a solid bridge over the chasm between their programme and our mandate – and with an eye to the unfolding bank run that the previous regime and the Bank of Greece had fuelled weeks before, I emphasized my determination to establish common ground. As for the narrative of confrontation that the media were perpetuating, I went to some lengths to dispel it at the press conference:
Journalists like to report on conflict. They see High Noon shootouts everywhere. I was listening to the BBC portray my impending meeting with Jeroen Dijsselbloem as a shootout, as a game of chicken to see who will blink first. I understand the appeal of such depictions to ratings-hungry journalism. But Jeroen and I agreed that we shall deconstruct the foundation upon which predictions of belligerent clashes are based. There will be no threats. It is not a matter of who will yield first. The euro crisis only has victims. The only winners are the bigots, the racists, those who invest in fear and division and in the serpent’s egg, as Ingmar Bergman might have said.3 With Jeroen Dijsselbloem on Friday we shall build on a relationship that annuls Europe’s deconstruction.
I meant every single word.
After the press conference I returned to the offices on the sixth floor to find them eerily empty. My predecessor had left, along with his staff, leaving behind two young women almost trembling in expectation of being instantly dismissed by their new ‘radical Left’ boss. I reassured them that the last thing I had time for was a purge of the previous regime’s staff, closed the door behind me and pulled up a chair at the large table. I took my laptop out of my rucksack, plugged it into the mains and, while waiting for it to boot up, looked out of the window that framed Parliament House, my mind racing to compile a list of the day’s most pressing priorities.
When I looked back to my laptop screen, I remembered that I did not have the Wi-Fi password. I got up, opened the door to the secretaries’ office and called out, ‘Anyone here?’
Soon one of the two visibly relieved and somewhat embarrassed secretaries appeared from some distant room. Half an hour later we located someone who knew someone else who knew the password. And thus the new minister acquired a very, very slow connection to the Internet – not the most auspicious beginning to a long, lonely campaign against the most highly weaponized and best prepared creditors in the history of capitalism.
American friends
The first phone call I received that evening from overseas came from an unrecognized number in the United States. It was Danae, who had arrived in Austin and was calling to see how I was coping. As soon as we hung up, the phone rang again. Once again the unknown number on the screen began with the US dialling code. I picked up to hear a distant, gentle male voice with what sounded like a New England accent.
‘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.’
Mind the intrusion? We needed as much support as we could muster. After thanking him, I explained that of course I knew who he was – Jamie Galbraith had told me all about Vermont politics.4 Bernie went on to say that he was about to write to Christine Lagarde to state in no uncertain terms that he would be watching the IMF’s behaviour towards Greece. Was there anything in particular that I would like him to mention?
Yes, there was. First, I asked that he state clearly that the Greek programme that the IMF had been policing since 2010 had failed dismally as a result of the ridiculous levels of austerity the IMF had helped impose. Second, I asked that he point out that the resulting great depression had bred the monsters of the Nazi Golden Dawn and that if our democratic pro-European government were to be squashed by its creditors, it was highly likely that democracy itself would be strangled in its birthplace, just as it had been during the Second World War. Bernie promised he would make both these points, and added that he would make another, one that the International Monetary Fund would take seriously: if the IMF continued its abysmal behaviour towards Greece, he would press in the US Senate to reduce its funding.
Since 2012 Jamie Galbraith and I had worked hard to win American progressives over to the cause of dismantling Bailoutistan. When I called Alexis to relate Bernie’s offer of help, Alexis provided further evidence that those efforts had not been wasted. President Obama had called him with the customary congratulations but also with a suggestion that a meeting be organized soon between Jack Lew, the US Treasury Secretary, and myself. I asked Alexis to convey my readiness to meet Lew at his earliest convenience. 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.’
An hour or so later, my mobile phone rang again with yet another US number. It was Jeff Sachs, a Columbia University economics professor and head of the Earth Institute. He was calling to offer his services in our ‘worthy struggle’, as he put it, to convince the creditors to proceed with large-scale meaningful debt relief and a sustainable fiscal policy. Jeff was one of those American economists who aged well, turning increasingly progressive with experience. Always close to the IMF in spirit but also in practice, he had participated in IMF ‘rescue’ programmes in the 1990s, most of which had gone badly wrong (for example Yeltsin’s Russia) with some exceptions like Poland. Like the economist Joe Stiglitz, who became a staunch critic of the Washington Consensus after witnessing the horrors perpetrated by the IMF and its programmes during the 1998 South East Asian crisis, Jeff had been shaped by the experience of seeing from the inside the bad behaviour of international creditors and the IMF towards bankrupted states such as Argentina. Both men had been transformed as economists and public intellectuals by these hands-on experiences and were to prove remarkably generous and dedicated supporters of our cause.
My last American phone conversation of the day was with Jamie Galbraith. I told him about the auspicious messages from Bernie, Jeff and Obama before discussing his arrival in Athens, where I wanted him to begin urgent work on our Plan X – the contingency plan that Alexis had first asked me to prepare at the end of our long late-night meeting at his flat in November 2014 and which was to be deployed only if Grexit was forced upon us. Given that the ECB had a plan for Grexit, devised by among others Thomas Wieser and Jörg Asmussen,5 as did every major European bank, we had a duty to develop our own. Indeed, I was under express orders from the prime minister to ready one. The reason I picked Jamie to lead the team was that the plan needed to be developed in total secrecy, since public knowledge of its existence would undoubtedly accelerate the bank run in anticipation of the devaluation of the currency that would inevitably result from its redenomination, which would in turn provide the ECB with the perfect excuse to close our banks, thereby forcing Grexit upon us: Plan X would become self-fulfilling. If I had asked a civil servant from within the finance ministry to head the team, a fatal leak would have been inevitable. In fact, finding anyone within Greece with Jamie’s expertise and capacity for discretion would have been impossible. In the event, he worked for several months on Plan X literally next to me – in a room within my ministerial inner sanctum.
A couple of hours later, the letter that Bernie Sanders had sent to Christine Lagarde arrived in my in-box. It was an absolute gem. The following extract captures its marvellous essence.
This week, the Greek people elected a new government and invested that government with a mandate to reverse the failed austerity policies of the last six years. Austerity has not only impoverished the Greek people, leading to an unemployment rate of upwards of 25 per cent, it has created a political vacuum so dangerous that the neo-Nazi party Golden Dawn has gained seats in parliament … The people of Spain, Italy, and Portugal are watching, and if this situation is not addressed with sufficient consideration for the broad swath of workers and citizens involved, the results of continued austerity could lead to more severe political consequences and a worldwide financial crisis. Fortunately, this is not inevitable.
The International Monetary Fund, as a multi-lateral institution and one member of the troika … has an important role to play in this episode. As ranking member of the Budget Committee, I am concerned about the IMF using United States government resources to impose austerity on a people that cannot take any more of it and risking severe financial contagion in doing so … There is substantial debate over whether the American government should increase the amount of US resources available to the IMF for lending to foreign countries, including questions over how to score the cost of such commitments. Without wading into this debate, I would like to understand how our commitments are being used in this case, and whether those commitments are being used to induce financial contagion and right-wing political extremism through excessive austerity or to aid in helping Greece achieve a manageable debt load and a sustainable economy.
By the time I had finished admiring the letter, it was 3 a.m. 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.
Over the next forty-eight hours the sixth-floor office that until so recently had attracted our people’s wrath, would become my home. With Danae having flown back to Austin the day before to close down our apartment and ship everything back to Greece, at least I had no reason to leave the office. The fading red couch would be ideal for the three hours’ sleep available before the ministry woke up every morning. Adrenalin would do the rest. A few hours later a bright sun rose above Parliament House bathing the office in a luminous yellow. The new day dawned hopefully.
Define ‘not too bad’
