The first was addressed to Jeroen. Would he be agreeable to the convening of an international conference on Greece’s debt, similar to that in London in 1953, which had resulted in substantial debt relief for Germany?13 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.
The second question was addressed to me. Would I cooperate with the troika? My answer was fully in line with what I had told Jeroen in my office: ‘We must be clear in our minds about the great difference between the properly instituted institutions of the European Union, such as the European Commission and the European Central Bank, as well as international institutions such as the IMF – organizations and institutions to which Greece proudly belongs – and a tripartite committee that is associated with the imposition of a programme that our government was elected to challenge and to dispute. Our government will proceed under the principle of maximum cooperation with the well-constituted legal institutions of the European Union, and of course the IMF. But with a tripartite committee whose objective is the enforcement of a programme whose logic we consider to be anti-European, with that committee, which even the European parliament considers to be flimsily constructed, we have no intention to cooperate.’
It was the same point that I had just made to Jeoren in my office and with which he had reluctantly agreed: yes to working closely and well with the institutions, but no to the humiliating troika process. As he listened in his earpiece to the translation of my response, an expression of increasing disapproval appeared on his face. 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.’
Turning away, Jeroen jumped to his feet to storm out. But I had managed to stand up at the same time and offer him my hand. Somewhat thrown by my gesture, and as he had to walk past me to reach the exit, he awkwardly took my hand in his without stopping. The photographers pounced. Their pictures showed an ill-mannered Eurogroup president rudely brushing past me before the customary handshake had been completed.
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.
Like all good things, it came at a price. The media, the establishment and the oligarchy now considered me Public Enemy Number One. One member of parliament posted a message of support for the Eurogroup president on Facebook, reading, ‘Hang on, Jeroen!’ This was an echo of a famous expression Greek black marketeers had used in support of Rommel’s North African campaign, fearful that an Allied victory there would bring the end to Greece’s occupation and consequently their business.14 Accusations of narcissism, boorishness and sociopathy were thrown at me in direct proportion to the rising tide of warmth and appreciation on the streets.
Besides earning me the undying hatred of Greece’s triangle of sin, Jeroen’s press-room antics had a more tangible effect, boosting the expectation (and thereby the fact) of an escalating liquidity squeeze. The Athens stock exchange fell to new lows; the banks’ shares declined even faster, and withdrawals accelerated. Leaving the press conference, I realized there was not a moment to lose. It was time to pack my bag and go on the tour of northern Europe I had been planning. Its two purposes were to steady the nerves of the world’s financiers and to work out the extent to which Jeroen’s ultimatum had the backing of the IMF and the rest of the Eurogroup, France’s government in particular.15
As I made my way back to my office, my secretary informed me that the French finance minister was keen to receive me in Paris. This would be the first stop on my journey, where as well as formal meetings with my French counterparts, four secret meetings had been planned: with Poul Thomsen, the IMF’s European chief, with Pierre Moscovici, the European commissioner responsible for the EU’s economic and finance portfolio, with Benoît Cœuré, the ECB’s second-in-command, and with President Hollande’s chief of staff. Next would be London, where the financial world’s heart beats. Over the previous few days I had been in touch with Norman Lamont, who had organized meetings for me with people in the City, Martin Wolf at the Financial Times and George Osborne at 11 Downing Street. Additionally, and very importantly as it turned out, the London branch of Deutsche Bank convened a meeting of more than two hundred financiers keen to talk to me. After London, I would travel to Rome to see Pier Carlo Padoan, Italy’s finance minister. Finally, a visit to Frankfurt would be required, for talks with Mario Draghi and the rest of the ECB’s executive council in their brand new office tower.
As I walked, I called Euclid to break the news: we would be off the day after tomorrow, I told him. Euclid protested that he needed to get his ministry in some order first. I cut him short: the whole point of clashing with Alexis and getting Euclid into his post had been in order to take him with me around Europe. ‘At least I get to keep your right-wing tendencies in check, especially around your Tory mates,’ Euclid replied only half-jokingly.
Alone in my office, I sat down to catch my breath. My mobile rang. It was Danae calling from Austin. How was I? Couldn’t be better, I joked. I gave her a sketch of the day’s events plus my travel plans. She countered with an account of her own clashes with the petty tyrants who ran our building in Austin and the bureaucracy of vacating the flat. And then she asked me if I felt overwhelmed. I replied that it was the enemy near at hand that scared me the most, the domestic establishment with its tentacles deep inside my ministry. Danae’s only concern was our unity: ‘If Alexis and you stick together, you can do it.’ To this day I think she was right.
Home front
I had twenty-four hours before flying off to Paris, but waging war against the domestic establishment could not wait until my return. At around 8 p.m. I was joined by my chief of staff Koutsoukos and Wassily. 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.’ With Koutsoukos and Wassily taking notes, I set out the agenda: catching hundreds of thousands of tax cheats and shocking 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 that the previous government had committed me 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.
‘What about the media?’ asked Wassily.
Pappas was responsible for that kettle of rotting fish, I told him.
‘Your good mate, yeah?’ my friend asked with a meaningful grimace.
‘Do I detect sarcasm here, Wassily?’ I asked.
‘The question is whether you can detect the opprobrium that your mate is spreading left, right and centre against you,’ was his retort.
It was not something I wanted to hear, not least because I very much feared it might be the truth.
One by one the battlefields were discussed and our strategy was decided. To combat tax cheats, Koutsoukos suggested that I appoint Panayiotis Danis special secretary of the ministry’s financial and economic crime-fighting unit. This was the only part of the state’s tax office that the troika had not taken under its tutelage. Stripped of many of its powers and personnel, it was a shadow of its former self, but its formal survival and the fact that it remained under my full control made it an ideal foundation on which to build a team of untouchables led by Danis.16
Chasing tax cheats using normal procedures was not an option. It would take decades just to identify anything like the majority of them and centuries to prosecute them successfully; the more we caught, the more clogged up the judicial system would become. We needed a different approach. Once Danis was on board a couple of days later, together we thought of one: we would extract historical and real-time data from the banks on all transfers taking place within Greece as well as in and out of the country and commission software to compare the money flows associated with each tax file number with the tax returns of that same file number. The algorithm would be designed to flag up any instance where declared income seemed to be substantially lower than actual income. Having identified the most likely offenders in this way, we would make them an offer they could not refuse.
The plan was to convene a press conference at which I would make it clear that anyone caught by the new system would be subject to 45 per cent tax, large penalties on 100 per cent of their undeclared income and criminal prosecution. 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
Alongside this I resolved to propose a simple deal to the finance minister of Switzerland, where so many of Greece’s tax cheats kept their untaxed money.18 In a rare example of the raw power of the European Union being used as a force for good, Switzerland had recently been forced to disclose all banking information pertaining to EU citizens by 2017. Naturally, the Swiss feared that large EU-domiciled depositors who did not want their bank balances to be reported to their country’s tax authorities might shift their money before the revelation deadline to some other jurisdiction, such as the Cayman Islands, Singapore or Panama. My proposals were thus very much in the Swiss finance minister’s interests: a 15 per cent tax rate was a relatively small price to pay for legalizing a stash and allowing it to remain in safe, conveniently located Switzerland. I would pass a law through Greece’s parliament that would allow for the taxation of money in Swiss bank accounts at this exceptionally low rate, and in return the Swiss finance minister would require all his country’s banks to send their Greek customers a friendly letter informing them that, unless they produced the electronic receipt and immunity certificate provided by my ministry’s web page, their bank account would be closed within weeks. To my great surprise and delight, my Swiss counterpart agreed to the proposal.19
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.
It was already midnight when we wrapped up our discussion of this plan, but we were nowhere near finished for the night. Next we discussed the great plague that was about to be unleashed upon our weakest citizens: the approximately 16,000 video lottery terminals that the privatized national lottery company OPAP had secured a licence to introduce throughout Greece. A population devastated by poverty and loss of income, in the midst of a great psychological and economic depression, was to be milked of the last remaining cash in its pockets through the mass installation of gambling machines. I could scarcely imagine a viler policy endorsed by a civilized state.
Initially I toyed with the idea of rescinding the licence. The problem was that OPAP would litigate and probably win, costing the state money it did not have. But there was another way. The finance ministry was responsible for the gambling regulator, the quaintly named Hellenic Gaming Commission.20 Since we could not eliminate the virus, we would have to regulate it instead. Two restrictions came to mind: one was a maximum loss per person per day (a limit of €60 seemed reasonable); the other the obligation to type into the machine one’s tax file number, which would act as a disincentive to anyone who might not want there to be an official record of their gambling, exclude underage players and ensure that winnings could be taxed as per the existing legislation. Koutsoukos liked the idea and suggested someone to chair the Gaming Commission. Two months later, after many trials and tribulations, Antonis Stergiotis’s appointment was approved by parliament at my recommendation.21
Next on the agenda were the corrupt practices of powerful companies. The good people of the Confederation of North Greek Industries had alerted me to the restrictive, cartel-like practices of certain supermarket chains, oil companies and the like, which were undermining the economy. For example, supermarkets would require small-scale producers to pay them for stocking their goods – for ‘advertising’ them in their stores – in effect forcing them to reduce their prices. Yet the producers would still pay tax on the higher declared price, with the supermarket pocketing the difference. 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.
Corruption within our ministries was what allowed these big businesses to function with impunity. There was a lone anti-corruption warrior, Wassily told me, a Mr Rakintzis, the official state ombudsman, whose job it was to coordinate the fight against graft. I would make a point of meeting him, increase the resources available to his depleted office and do something that had not been done before: stage a joint press conference that would announce the finance ministry’s full support of him and his office.
The last item on our agenda that night was Greece’s banks. I asked for ideas on how to approach the impending confrontation when I put my proposal for ‘europeanizing’ them to the EU. Wassily interrupted me in typical fashion: ‘The horses have bolted, Yani,’ he said, showing me a decree that had arrived that evening from the deputy prime minister’s office, fully authorized by the cabinet secretary. It stipulated that jurisdiction over all matters pertaining to the banks had been moved from the Ministry of Finance to the office of the deputy prime minister. ‘Don’t tell me I didn’t tell you so,’ said Wassily. ‘Dragasakis has taken his banker friends under his wing to protect them from the likes of you.’ Fearing that Wassily might be right, I still had no choice but to give Dragasakis the benefit of the doubt.
Before calling it a night, I asked Chouliarakis, chair of the ministry’s Council of Economic Advisers, to come to my office. He arrived a quarter of an hour later, clearly unhappy to have been summoned from his own office just down the corridor. As I would be meeting secretly with well-armed troika officials, I told him it would be useful to have in my briefcase a rough and ready first stab at a debt sustainability analysis (DSA) with which to make the initial case for debt restructuring being our government’s top priority. Chouliarakis left the room and returned a short while later with a two-page document: it was the DSA drawn up by the IMF. Given that we had only taken over three days earlier, it was perfectly understandable that Chouliarakis had not yet produced a DSA of our own. What was not acceptable was that he began to defend its accuracy and value when I knew that even the IMF knew it to be wrong. In the nicest possible way I asked him to go back to the drawing board and do it again. Without expressly agreeing to do so, he made his excuses and left.
With the long day finally at an end, I collapsed on the red couch, where Wassily was already sprawled. It was 3 a.m. on Saturday, 31 January.
‘I think we did well today, Wassily,’ I ventured.
He looked at me. ‘Yes, you did well, but I am prepared to wager good money that in six months Dragasakis will be prime minister and Chouliarakis will have replaced you.’
‘Maybe –’ I smiled ‘– but at least we will know that we did our best and they their worst.’
That night I went home for the first time in seventy-two hours. I walked, alone. It took no more than twenty minutes, past Melina Merkouri’s oversize bust opposite Hadrian’s Gate, taking a right towards the Herod Theatre, then a sharp left at the New Acropolis Museum, and I was home. A few pedestrians and a taxi driver noticed me and gave me the thumbs up. Those solitary walks from the ministry to our flat, or between Maximos and Syntagma Square, were to become my source of hope and courage.
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?’
Lull
A knock on my door at around 11 a.m. woke me up. It was Esmeralda, Danae’s daughter, checking on me. Where had I been for the past three days? Was I in one piece? I reassured her that all was well. She pointed out that sightseers had been gathering outside our first-floor flat trying to get a glimpse of the interior, the more daring of them photographing one another astride my motorcycle. She warned me in a motherly fashion to put some clothes on before going into the kitchen area to make coffee.
Paris-bound in the early evening, my plan was to stay in during the day to prepare a one-page technical non-paper on debt restructuring. I knew that the officials I was about to meet laboured under the carefully cultivated impression that my government was about to demand a debt write-off that was politically unfeasible. With my non-paper I sought to demonstrate that mutual gains were possible. 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.’22
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.
So, in the non-paper (reproduced in Appendix 4) I illustrated how not signing up to further extend-and-pretend loans could serve the creditors’ interests. It contained simple debt-swap ideas which would cost them, politically and financially, far less than the continuation of the vicious cycle that had begun in 2010 or the throttling of our government that Jeroen had hinted at the day before.
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. I told her that she should not worry; plenty of people were working hard to bring about my resignation. She was not reassured in the slightest.
When Xenia had ended our chat, a lingering worry resurfaced in the silence of the apartment. Would Alexis, Pappas and Dragasakis back my debt-restructuring proposals? Yes, they had agreed to its basic logic as part of our covenant and had given me carte blanche to propose such debt swaps. 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, and with only a tenuous, verbal covenant binding the leadership trio to my strategy, I could easily imagine having the rug pulled from under me at home while in the thick of the battle abroad.
The only colleague that I trusted to understand fully and support my debt-restructuring proposals was Euclid. As a Syriza insider, he could present my proposals to the party faithful for what they were: a shrewd strategy for getting Greece the debt relief it needed without putting Chancellor Merkel in a politically impossible situation. I spent another hour preparing a briefing for Alexis, copied to Pappas and Dragasakis, hoping to bring them into the fold as well by demystifying my proposals and providing the arguments and motivation they would need to back them within Syriza’s central committee and in cabinet against those who might accuse me of insufficient revolutionary fervour or of backpedalling.
It was afternoon by the time the non-paper, the briefing to Alexis and several urgent phone calls were behind me. I looked at my watch and realized I had an hour and a half before I had to be back at the ministry, where a car (a small ten-year-old Hyundai, now that the BMWs were gone) would pick me up to take me to the airport. My sister had texted me earlier to say that our ninety-year-old father was visiting her; if I could spare the time, a quick visit might be a good idea, as I could see them all at once: my dad and sister, her husband and my eight-year-old niece. I jumped on the motorcycle and within five minutes had carved my way through the thin Saturday-afternoon traffic.
Arriving at my sister’s flat was to step out of my life as a minister and into a vibrantly comforting, other world. Seeing my relatives gathered together, doing mundane family things, I realized how painful several lacunae had been: Danae’s absence in Austin, the loneliness of my political position and, underlying them both, the loss of my mother, which I had dared not acknowledge these past seven years except at the odd moment when my guard was down.
7 Auspicious February
Back at the flat, I prepared a small suitcase, slipped my laptop into my rucksack and stepped outside to hail a taxi. Uncharacteristically for Athens, the driver who pulled over got out of his cab to greet me and place my suitcase in the boot. Ten minutes later we were at Syntagma Square, in front of the ministry. Lovely as the driver was, his good wishes for an overseas trip which the media were reporting as ‘pivotal’ for the nation were so lengthy that I was eventually in danger of missing my flight. When I finally managed to bid him farewell, I was so anxious that I rushed from the taxi clutching only my rucksack. It wasn’t until I reached the doorway of the ministry that I realized I had left my suitcase in the cab, containing not just my change of clothes but my overcoat. All I had with me was the black jacket, white shirt and black trousers I was wearing. Too late, I thought. I would have to do some shopping in Paris. It was a mistake that would leave a small mark on cultural politics, at least in the UK.
On the plane Euclid was rereading a Jane Austen novel. Restless, I took out a notebook and scribbled down my thoughts
