I reminded him that when I had given the same answer to the same question three days earlier, he had replied, ‘This is very good.’ Jeroen brushed my reminder aside. The Greek programme, he mused, was like a horse. It was either alive or it was dead. If it was alive, we had to climb on it and ride it to its destination. If it was dead, then it was dead. Not knowing what to make of his metaphor and unwilling to adopt it, I tried to reason with him.
There was a reason, I explained, why the previous government had fallen on its sword and called elections so early in its term. And there was a reason why Antonis Samaras had been sent to the opposition benches by the voters who had elected us instead. And the reason was simple: it was simply impossible to complete the second Greek programme, and the voters understood that. ‘If it could have been, Jeroen, you and the previous government would have completed it,’ I remarked.
For a moment he seemed lost for words, so I continued: the troika’s own numbers showed that even if the programme was completed and Greece received the few billions left in the second bailout kitty, we would still be €12 billion short. Where would I find a missing €12 billion? Think of the effect this unanswered question is having on private investors, I urged him: it reinforces their resolve not to lend to the Greek state again until a serious restructuring of our debt has been effected. And think of the broader picture too, I implored him: the government’s debt repayments in 2015 alone amounted to 45 per cent of all the taxes it hoped to collect; meanwhile, national income, measured in euros, continued to fall, and everyone was anticipating an increase in taxes to meet the repayments. No investor in their right mind invests in an economy where demand is shrinking and taxes are rising.
There were only three options available to us, I said. One was a third bailout to cover up the failure of the second, whose purpose was to cover up the failure of the first. Another was the new deal for Greece I was proposing: a new type of agreement between the EU, the IMF and Greece, based on debt restructuring, that diminished our reliance on new debt and replaced an ineffective reform agenda with one that the people of Greece could own. The third option was a mutually disadvantageous impasse.
You do not understand, Jeroen told me, his voice dripping with condescension. ‘The current programme must be completed or there is nothing else!’
It was an astonishing statement. The head of the eurozone’s finance ministers was refusing to engage with a simple funding issue. He was making it impossible for me not to ask, ‘But where will the missing €12 billion come from, Jeroen? Am I wrong that the second programme can only be completed if a third one is first negotiated? Can you see any way that would render its completion financially feasible without a new programme that can only be agreed to after exhaustive negotiations between all nineteen finance ministers [in the Eurogroup]? Is there any doubt that I will not be able to complete this programme even if I were willing to violate the mandate that the Greek voters gave me to renegotiate it?’
Jeroen refused to engage with my questions and the underlying facts. Apparently he had not come to Athens to discuss numbers or financing. One could only assume that he had come instead in the expectation that I would perform an instant U-turn – a quick victory allowing him to board his jet at Athens airport with my oath of allegiance to the programme, to the Eurogroup and to the creditors in his briefcase.
The fact that the president of the Eurogroup was so deluded as to think this was a possibility is a fascinating comment on the recent history of the European Union. It reveals how experience has taught functionaries operating on behalf of Europe’s deep establishment to expect newly elected government ministers, prime ministers, even the president of France, to buckle at the first whiff of an ultimatum backed by the ECB’s big guns.11 Since 2008, when the only thing keeping most eurozone member states’ commercial banks open was the Eurogroup’s goodwill – which Mario Draghi’s ECB needed in order to issue the official waiver that allowed him to accept the banks’ junk collateral in return for cash – several governments had succumbed to policies they detested: the Baltic states, Ireland, Cyprus, Spain, Portugal, all had been beaten into submission.12 In fact, Dijsselbloem had boasted that the way Cyprus had been treated in 2013, soon after he had taken over the Eurogroup presidency, was the ‘template’ for future crises. It was the threat of bank closures that had done it – this was the ace he carried in his sleeve on the day of his visit to me – and now he played it.
There was an alternative to committing to completing the programme, he told me. I was glad to hear it, I replied hopefully. Turning his eyes to meet mine, he said purposefully, ‘You and I hold a joint conference where we announce that the programme has crashed.’
I replied that the word ‘crash’ was not exactly soothing for markets and citizens. What do we replace it with? I enquired.
A shrug of his shoulders and a look of faux puzzlement was his response.
‘Are you threatening me with Grexit, Jeroen?’ I asked calmly.
‘No, I have not said this,’ he protested.
‘Can we please be frank here?’ I said. ‘There is too much at stake to pussyfoot around. You did say that if I insist on renegotiating the programme, the programme crashes. This means one thing and one thing only. And we both know what that is.’
It was of course that the ECB, either centrally or through the Central Bank of Greece, withdrew its waiver and refused to accept the collateral of Greek banks any more, forcing them to close. At that point our government would have no option but to issue its own liquidity. And if the impasse continued our nominally euro-denominated liquidity would, at some point, turn into a new currency. This was Grexit.
‘So, you are giving me an ultimatum,’ I continued. ‘You are in effect telling me: commit to a programme that cannot work or you crash out of the eurozone. Is there any other reading to what you just said?’
The president of the Eurogroup shrugged his shoulders again and grinned.
‘It is a sad day for Europe when the Eurogroup president presents a freshly elected finance minister with an impossible ultimatum,’ I said. ‘We were not elected to clash with the Eurogroup, and I am not interested in clashing with you. But nor were we elected to abdicate during our first week in office by espousing an impossible programme that we came in with a mandate to renegotiate.’
Our eyes met in mutual recognition of the impasse. The only thing left to do was to agree on what each of us would say during the press conference scheduled to follow our meeting, so as to conceal the deadlock and thus prevent it affecting the financial markets. He proposed a first draft; I made a couple of corrections; we agreed. I suggested that, after the speeches, it would be best to take no questions. He countered that we had better take a couple. Answering journalists’ pointed questions would give him the opportunity to jangle the markets’ nerves just a little – enough to accelerate by a notch or two the bank run that the troika had kick-started weeks before. Loath to be portrayed as muzzling the press, I agreed.
The press room was packed. Once the TV feeds had been established and the noise subsided, I began with predictable niceties consistent with my narrative of a new beginning in Greece’s relationship with its creditors and the Eurogroup. Every word had been agreed beforehand. He too respected our agreement and did not stray from the script as we laid a veneer of boring normality over the meeting. Then came the questions.
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
