I knew of Wieser’s official role within the EU bureaucracy. As president of the Eurogroup Working Group, he led the cabinet of deputies whose job it is to prepare the Eurogroup meetings, the forum at which their respective finance ministers make all their key decisions. In theory then Thomas Wieser was the deputy of Jeroen Dijsselbloem, Dutch finance minister and president of the Eurogroup. What I did not know then but came to understand later was that in reality he was the most powerful man in Brussels, far more so than Jean-Claude Juncker, president of the European Commission, or Pierre Moscovici, commissioner for economic and finance affairs (the commission’s finance minister), or even, on occasion, Dijsselbloem himself. At such times he seemed to run the whole show.
In his email Asmussen adopted the posture of a left-leaning potential ally of our new government who wanted to see us succeed. To that end, he asked us to trust and work with Wieser, an Austrian Social Democrat, describing him as a ‘friend’, ‘reliable’, ‘trustworthy’ and ‘a key one in the Brussels machinery’. In addition, Asmussen suggested Wieser would help us carve out the time we needed in which to conduct our negotiations. According to Asmussen, Wieser was proposing a ‘programme extension’ as a ‘good way forward, to have a kind of protection for Greece while deeper renegotiations are undertaken. It might be worthwhile that your economic team gets in contact with him quickly after the elections.’ Asmussen ended with ‘if I can be of any help, just let me know’.
It sounded hopeful. The previous Athens government had negotiated an extension with the troika that would end a month after our election, more a guillotine to cut our heads off than a platform on which to build a new agreement, so yes, we wanted a further extension. And if Wieser and Asmussen wanted to help construct one, that would be splendid. But did they?
Attached to Asmussen’s email was an unsigned ‘non-paper’ – jargon for an unofficial document circulated for negotiation purposes which is wholly unbinding – written by Wieser that began by stating the completely obvious, namely that our government ‘will face a very tight liquidity situation’.14 This was followed by a dry announcement that we should not expect to receive any of the money the ECB owed us (around €1.9 billion profit on those SMP bonds of ours that it held and had agreed to return to us), nor any of the loans agreed under the previous government that Greece needed in order to (pretend to) repay its debts.15 But, Wieser made clear, the troika still expected us to honour Greece’s debt obligations to them.16 The asphyxiation of the Greek government that would be caused by this would lead to ‘liquidity concerns’ and, inevitably, to ‘market tension’. In short, we shall squeeze you so much and so publicly that investors will pull out of Greece, depositors will accelerate their bank run, and your government will suffocate. This was the stick.
After the stick came Wieser’s carrot: the troika might give us an extension to the existing second bailout loan agreement, granting us a reprieve beyond the guillotine deadline of 28 February 2015, and might increase the maximum value, set by the ECB, of short-term Treasury bills (T-bills) we were allowed to issue for the purpose of quick cash loans – essentially our credit card limit – so that we could withdraw some extra cash with which to pay the IMF in March, but this would be conditional on our taking a ‘cooperative approach’ to the troika.17
The message could not have been clearer: we were to be fiscally waterboarded until we agreed to participate in the sick ritual of extending and pretending that we had been elected to put an end to.18 After reading the email I briefed Alexis and Pappas on the situation: as we had expected, they were activating a plan to throttle us. I took the opportunity to reiterate our covenant: we should look to secure the extension beyond 28 February that Wieser was offering in order to give the negotiations a chance, but only if we remained committed among ourselves to defaulting if they refused to negotiate in good faith a different type of agreement. Both reconfirmed their commitment.
I then sat down to pen our response to Wieser. Exuding moderation and a willingness to work with him, I made two crucial points. The first concerned the profit owed to us on our SMP bonds, which Wieser had said we should not expect back from the troika. ‘Not handing back Greece’s own money unconditionally,’ I wrote, ‘is difficult to justify even if previous Greek governments have consented to some such legalism. It is our express view that these funds should be released immediately by the ECB. This way, funding is secured, using Greece’s own rightful assets, through the end of March.’
My second point addressed Wieser’s thinly veiled threat of ‘market tension’, which echoed Stournaras’s incendiary statement of 15 December.19
The expectation of a potential impasse does yield uncertainty which, in turn, may cause liquidity problems. But what causes this expectation of impasse in the first place? It is the insistence of EU and ECB officials that, within days of being elected, the new Greek government must sign on the dotted line of an agreement that it campaigned in favour of renegotiating.
Democratic Europe must give Greece fiscal space to allow its new government to table proposals that will constitute the foundation of a viable agreement. Denying the new Greek government this fiscal space causes the liquidity problems. To then portray these liquidity problems as exogenous constraints is to be in denial of the ECB’s and the EU’s responsibility for having caused them.
After I’d sent the email, just before Danae and I left to attend a pre-election meeting, she asked me what I had been working on.
‘A beautiful new friendship,’ I replied.
Democracy at gunpoint
Two nights before the polls opened on 25 January 2015 my Syriza friends were agonizing only over the extent of our impending victory and whether it would suffice to secure an outright majority in parliament. But my mind was elsewhere.
Three days earlier Glenn had emailed confirmation that the noose was tightening. Since 15 December, when Stournaras accelerated the bank run that Prime Minister Samaras had begun, depositors had withdrawn €9.3 billion from Greek banks, and the rate of withdrawals had hit €1 billion daily. By the time of the election, €11 billion would have found its way abroad or under mattresses.20 To be able to pay out so much money, the banks had had to increase their dependence on the ECB to the tune of more than €60 billion. The threat of Mario Draghi to close down the banks was providing precisely the conditions he needed to justify doing so.21
In the run-up to polling day the only future government colleague with whom I managed to share my fears was Spyros Sagias. Danae and I met him in his apartment in the Athenian coastal suburb where I had grown up. Surprised by the security men stationed under his apartment block, we took the lift to his airy penthouse decorated with a few well-chosen pieces of contemporary Greek art overlooking the marina. Sagias was a pudgy middle-aged man with a reassuringly deep voice who excused himself for being under the weather. He was nursing a heart condition, which did not seem to dull his intelligence or prevent him from demonstrating a perceptive eye.
Sagias was not a politician but, as he introduced himself half-jokingly, a systemic lawyer. (‘Systemic’ is post-2008 jargon for banks that are deemed too big to fail.) There was hardly a large-scale business deal involving private interests and the public sector that Sagias and his successful practice had not been involved in: privatizations, large-scale construction projects, mergers, all were within his ambit. Until recently he had even provided legal counsel to Cosco, the Chinese conglomerate that had acquired part of the port of Piraeus and was eager to take over the whole of it, a privatization that Syriza vehemently opposed. When Pappas informed me that Sagias was destined to become our cabinet secretary, I was surprised but also pleased: at least we would have a legal eagle on the team, a counsellor who knew how to author legislation and moreover where all the skeletons of the ancien régime were buried.
Sagias went straight to the subject that was foremost on my mind, asking how exactly the ECB would try to asphyxiate us. First, I explained, Draghi would cut off the direct flow of liquidity from the ECB to our banks, referring them to Stournaras’s Central Bank of Greece for more expensive short-term loans instead (the so-called emergency liquidity assistance or ELA mechanism, funded indirectly by the ECB). Then, the second stage, the ECB Governing Council would prohibit Stournaras from providing any further ELA to the banks, at which point tellers would run out of cash, depositors would riot and the banks would close down. Already by 21 January 2015, I told Sagias, two of Greece’s four systemic banks had applied to Stournaras’s ELA for liquidity. ‘The scene is set,’ I concluded. ‘They are just waiting for us to come on stage.’22
I then outlined our key deterrence strategy and the essence of the covenant with Alexis, Pappas and Dragasakis that was the basis of my accepting the finance ministry. He agreed with the plan.
‘So, what brings you to this government?’ I asked. ‘Your background doesn’t immediately suggest a reason.’
‘I am only doing it because I believe in Alexis,’ he replied. As a young man he had inclined to the Left, he explained. Even after he shifted to the very heart of the establishment, oiling the cogs of the system, deep inside he always maintained a romantic link with the Left. ‘So when I met Alexis, it struck me that I wanted to put my experience at his disposal. I am not here for Syriza. I am here to protect Alexis. He will need a great deal of protection. And so will you. Make no mistake, Yanis: they will all try to undermine you, from the worst of the bankers to Dragasakis to everyone in Syriza. It’s going to be nasty.’ It turned out I was not the only one ridden with angst as we were about to take over the reins of government.
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.
Nevertheless, as we were leaving he confessed that he was having second thoughts. ‘I am still not 100 per cent sure I shall accept the position,’ he told me.
‘You must!’ I urged him. ‘This is a 28 October moment,’ I said, referring to the day the Greek government rejected Mussolini’s ultimatum to surrender in 1940. ‘We cannot duck this.’
‘I will think about it,’ he said in such a way that led me to believe he would accept.
Back at our apartment, an email arrived from Jamie asking, ‘What’s the exact agenda, so far as you know?’
‘Not to be throttled at birth by the troika and local bankers…’ I replied.
Doing my sums with Glenn’s help, it turned out that for 2015 alone the Greek state needed €42.4 billion just to roll over its debts, the equivalent of 24 per cent of national income. Even if the troika were to disburse all the money specified by the second bailout loan agreement, we would still be €12 billion short. For a country with no capacity to borrow from private investors, empty coffers and a devastated population, meeting these debt repayments meant only one thing: the plunder of what was left in the reserves of pensions funds, municipalities, hospitals and public utilities, while going to the troika cap in hand to borrow huge amounts more, pledging to squeeze our pensioners, municipalities, hospitals and public utilities yet further, all in order to give the money back to the troika. Only a lobotomy could have convinced me that doing this was in our people’s interest.
On polling day people would walk up to me in the street, pat me on the back and make me promise I would not go back on my word. We support you, but don’t you dare do a U-turn, because if you do we shall round on you, was the unanimous message.
Partners beyond the pale
While Alexis was drawing up plans for the composition of his cabinet, I was trying to whittle down the number of our potential enemies. Glenn suggested I should bring some private financiers on side. There were two reasons for doing this: very little of Greece’s debt was owed to them as they had been repaid in full from the bailout loans (in fact, only 15 per cent of the total debt was now owed to private bodies), and they understood arithmetic; they could see that my basic argument was right. Why not have such rich, powerful and well-connected people with us, rather than antagonize them? Glenn’s suggestion was that I make overtures in the form of a statement: ‘We do not foresee a need to seek any further restructuring of Greek Government-related debt in the hands of private-sector investors.’ In the event, I went further, stating not only that we foresaw no need but were ‘opposed to the notion’ of it.
Meanwhile, in the little thinking time I had to spare, I joined the discussions about the government’s composition. If we did not win a working majority, a coalition was on the cards. But who would be our partners? Excluding the parties that had governed until this point and brought us the bailouts, the communist party, which was simply not interested, and of course the Nazis of the Golden Dawn, there were two possibilities.
One was the River (To Potami), a socially liberal centrist party led by a journalist with whom Danae and I had been friendly and for whose news site I had written hundreds of articles. On a personal level, this was the party that I would have preferred to get into bed with. Its key figures were people whom I knew and got on well with. But there was a major snag: they had adopted a strongly pro-troika position.
Negotiate with the troika as toughly as you want but under no circumstances contemplate a rupture, they would tell me. There is no point in entering a negotiating room if you are not prepared to contemplate walking out, I would retort. No, a coalition with the River would have been strategic suicide and actually pointless. The troika would know that the moment they pressed the button to close down the banks the River would pull the plug on us, censuring me in parliament for having caused a rupture with the creditors.
In any case, Syriza’s leadership, and Alexis in particular, had already made their minds up. But while I understood their choice, the very idea of it was nauseating. Alexis had struck a deal with Panos Kammenos, leader of the Independent Greeks. Kammenos, the party’s founder, had been a junior minister in previous New Democracy governments, but in 2011, to his credit, he voted against the technocratic coalition headed by the former vice president of the ECB, whose mission was to pass the second bailout through parliament. Expelled by New Democracy for doing so, he had set up the Independent Greeks with several other New Democracy defectors. The party they created could only have been born in the sad madness of Bailoutistan. In its fierce opposition to the bailouts, it was located to the left of the PASOK socialists, the River and the New Democracy conservatives, but on social issues and foreign relations it took extreme right-wing positions, exuding ultra-nationalism, thinly veiled racism, intense sexism and homophobia.
As if that were not enough, Kammenos was prone to making allegations about politicians he disliked that had no basis in fact – reminiscent of those anti-Semitic conspiracy theories that bundle together small truths to create huge lies – and I doubt I had endeared myself to him when, in response to allegations he had made about George Papandreou and his family, I provided a deposition in their successful suit against him for defamation.23 The idea of serving in the same cabinet as Kammenos did not fill me with pleasure.
Alexis explained his decision to enter into a coalition with Kammenos simply and concisely. We had a choice, he told me. One option was to form quickly and painlessly a coalition government with the Independent Greeks, with Kammenos appointed minister of defence on condition that he did not interfere with any decisions pertaining to the negotiations or to social issues, where the Syriza progressive agenda would prevail. The second option was to enter into prolonged negotiations with the River in order to form a government that the troika could topple at any time. ‘It’s a no-brainer,’ he concluded.
As the following months revealed, Alexis was right. Kammenos and his colleagues kept their word and were fully supportive of our negotiating stance. Indeed, the first time we met Kammenos showed no animosity towards me. Quite the opposite, in fact. He hugged me and addressed me respectfully, promising his complete support for my strategy. Nonetheless, the sound pragmatic reasons for this partnership did not dampen my abhorrence for our partners’ blend of nationalism, xenophobia and commitment to a pre-modern link between church, army and state. Of all the difficult questions foreign journalists put to me in the ensuing weeks, the most painful were the ones about that uneasy alliance.
‘If you can dream – and not make dreams your master’24
Around 8 p.m. on 25 January 2015 we knew we had won handsomely. A few hours later we discovered that we were a mere two seats short of an absolute majority.25 The streets were thronged with celebrating crowds.
