‘Yanis must now answer a couple of points raised in the context of the necessity of agreeing all measures with the institutions,’ came Jeroen’s twopenn’orth. ‘That’s the basis on which we work.’

As I pressed the button that activated my microphone, my mind was racing. What should my reaction to this shocking violation of our agreement be? How do I pick up the gauntlet? To buy myself some thinking time, I began by addressing all the relatively minor points mentioned by Dobrovskis, Moscovici, Draghi and Lagarde. With every word, the agony grew.

Accepting the ridiculous proposition that the 20 February agreement did not commit us to replacing the Memorandum of Understanding with our reform list would have been tantamount to accepting the reinstatement of the MoU in full. It would annul everything we had fought for. It would have been to accept everything Wolfgang Schäuble had demanded in our very first Eurogroup meeting and everything that Jeroen Dijsselbloem had tried to push down my throat at our first encounter. Above all, it would have constituted an unforgivable betrayal of our people: those who had trusted us recently, as well as old warriors like Glezos and Theodorakis, who had already rushed to denounce me for the capitulation now staring me in the face.

While talking about privatizations and fiscal targets, two options were competing in my mind. One was to end the teleconference respectfully, stating that the Greek government was withdrawing from negotiations at the Eurogroup level because the institutions’ leaders had rendered them irrelevant with their attempt to reintroduce the full-strength MoU. The second option was to remain in the process but to contest the institutions’ interpretation of the 20 February Eurogroup agreement and to state for the record that the Greek government well and truly rejected the MoU’s reinstatement in accordance with that agreement’s spirit and letter.

The moment of truth was approaching. It was a choice I had to make on the spot, with only Chouliarakis looking on. It was the hardest decision I have ever had to make.

Mea maxima culpa

It was clear in my mind that withdrawing from the process would trigger the closure of our banks the following morning, Wednesday, 25 February 2015, one month exactly after our election victory. With only four days left before Greece’s loan agreement expired, the ECB would undoubtedly have pulled the plug on them. Immediately after ending the teleconference, therefore, I would have to rush to Maximos with the dismal news and with a firm recommendation to activate our deterrence plan immediately. This would mean announcing the date when the SMP bonds would be haircut, the establishment of electronic IOUs via the tax office’s website and an amendment of the law governing the Bank of Greece. It was a tough call. But I should have made it.

Instead, disastrously, I opted for the softer alternative. When the critical moment arrived during my speech, this is what I said:

I heard from all three institutions that [our] list is not a replacement for the MoU and that this list will simply be grafted upon the MoU … Now, as you know, we spent three Eurogroup meetings discussing the imperative of combining the programme with our government’s imperatives. And I was – this government was – under the impression that we are making a fresh start … We shall insist … that the review be completed on the understanding that this government’s list of reforms is the starting point.

Looking back, this was appallingly timid. While I correctly stated that the 20 February agreement had suspended the MoU and replaced it with my reform list as the basis for the review, I should have made the continuation of the process conditional on a reaffirmation of this principle. Of course, had I insisted on such an affirmation I would most probably not have got it. And then I would have had to withdraw from the teleconference, thus triggering the rupture. But my thinking at the time – the reason why I refrained from doing so – rested on three conjectures.

First, the reaffirmation of the MoU was purely verbal. It had taken place in the context of a Eurogroup teleconference that was not about to issue a communiqué and whose remit was only to approve my list. The only agreement on paper remained that of the 20 February Eurogroup, which privileged my reform list, making no mention of the MoU, while also creating space for a negotiated end to austerity and also to debt restructuring.5 By not withdrawing from the teleconference I was not actually endorsing the return of the MoU in any shape or form.

Second, our government was only twenty-seven days old. Setting up the parallel payments system necessary to deal with the closure of the banks and preparing for the hardship shuttered banks would bring simply required more time.

Third, any decision by me to end the process during that teleconference would have been taken without either the prime minister or the cabinet’s consideration. My statement as finance minister that we rejected the institutions’ attempt to reinstate the MoU sufficed for the time being. The government, united and steeled by the creditors’ connivance, would, and should, take collective responsibility for the decision over the precise timing of our withdrawal from the negotiations.

The first two conjectures were valid. The third was not. Had it been, the decision I made during that teleconference would since have been vindicated. If our side had stood firm, as I assumed it would, and calmly chosen the right moment to retaliate, I would not be writing these lines overwhelmed by regret. Alas, we did not stand united against the troika’s attempt on 24 February to reimpose the MoU. We were divided and ultimately we were ruled.

Did I have sufficient information at the time to predict this? I did not have a great deal, but with hindsight I think I had enough. The cosiness between Chouliarakis and Costello revealed by that Word document should have alerted me to the divisions among us. Blinded by my unwillingness to contemplate any alternative, I was unable to imagine that my deputy’s actions were due to anything other than a failure of judgement. It suited me to ascribe that incident to his lethargy and introversion. However, there was something else motivating me – something more than a justifiable reluctance to be paranoid. Something like fear.

At the press conference on the night of 20 February I had celebrated the agreement as a major turning point. I was not wrong. Wolfgang Schäuble had been defeated, if only temporarily, in a straight fight in his own backyard. As Luis de Guindos and Jeff Sachs had noted, it was a game-changing success. Our government and people latched on to it as a godsend. We had won 120 days of something like normality and the right to negotiate a substantially new reform agenda, new fiscal targets and debt restructuring. It was a moment to savour. Had I come out of the teleconference on 24 February with the news that all bets were off, that the dream of an honourable compromise had evaporated and that the banks were closing down forthwith, the disappointment would have been unbearable. Psychologically I failed to rise to the challenge of accepting that burden.

The problem with errors is that, like crimes, they beget new ones. My failure to pull the plug on the 24 February Eurogroup teleconference was to be compounded with an even greater one a few days later.

Snookered

My first concern was to brief Alexis on the troika’s reversal and the decision I had made. We met in the prime minister’s office in parliament, where I put him in the picture. The creditors had duped us, I told him. They were trying to put the MoU back on the table and it would take a concerted effort to keep it off. ‘Unless we remain ready to activate our deterrent and to default on the IMF and the ECB, they will drag us back into their process, defang us, exhaust us and, by the end of June, hang us out to dry,’ I told him plainly.

Alexis listened carefully before telling me that I should not worry. If they wanted to go down that road, they would soon be made to think again. It was precisely what I wanted to hear. And so I continued with my efforts to keep the process on track.

Now that the Eurogroup teleconference had formally approved my reform list, our government was obliged to issue a formal request to its creditors for the extension of its loan agreement from 28 February to 30 June, as had been agreed. The onus was on me to send the creditors that formal request. The problem lay in the format that the request would take.

The following day, Wednesday, 25 February, George Koutsoukos, my chief of staff, presented me with a template of the letter I should send to the European Commission, the ECB and the IMF requesting the extension.

‘Where did this come from?’ I asked.

‘From Dijsselbloem’s office,’ Koutsoukos replied.

I read it quickly. It was unacceptable. While I was happy to use certain key expressions required by the creditors, I was not prepared to sign on the dotted line of a letter written wholly by them. Our government’s commitment to recovering Greek national sovereignty compelled me to insist that we should compose the letter and that it should reflect our purpose and rationale in requesting the extension to the loan agreement. Koutsoukos fully agreed but warned me that Brussels had made it clear they would not tolerate any amendment of their draft.

With the letter in my hand I dashed to Maximos for a meeting with Spyros Sagias, our cabinet secretary. He was as appalled and enraged by the creditors’ stance as I was. We talked to Alexis, who concurred: my letter to our creditors could not be authored by the creditors. It was not a matter of symbolism but of essence and sovereignty. Over the next two hours Sagias and I sat in an office adjacent to the prime minister’s drafting a new letter of our own. I then returned to the ministry to have it sent to Brussels for their response.

Thomas Wieser, president of the Eurogroup Working Group, would provide this feedback, so I asked my representative on the Working Group, George Chouliarakis, to pass it on to him. Afterwards I went home to freshen up, pick up Danae and head off for dinner at the Chinese ambassador’s residence, the purpose of which was to calm the troubled waters of our government’s relationship with Beijing.

Early next morning, Thursday, 26 February, a message from Thomas Wieser awaited me at the ministry: the deadline for amending the letter requesting the extension of the loan agreement had lapsed. Either I signed the letter as sent to me or it would not be considered.

‘Lapsed?’ I asked Koutsoukos angrily. ‘When did it lapse?’ Koutsoukos did not know. ‘Find out before noon,’ I told him.

While Koutsoukos made his enquiries, I made my way on foot to the Bank of Greece, where my former friend Governor Stournaras was giving a speech on the occasion of the annual meeting of the central bank’s shareholders. Determined to respect the institution, I felt it was important to attend. Any hope that equivalent respect might be shown to the government I represented soon disappeared. Listening to Stournaras I realized it was the kind of speech that Antonis Samaras, the former prime minister, would have made had he defeated us on 25 January: a paean to the previous government’s policies, a repetition of the lie that Greece had been recovering prior to our election, a total espousal of the troika’s agenda and a series of veiled threats against the government. It was as if Stournaras was rehearsing for an interview in front of a panel made up of Schäuble, Dijsselbloem and Draghi. A sad day for the notion of central bank independence, I thought as I was leaving, regretting that I had wasted two precious hours.

Back at the ministry I called Koutsoukos and Wassily to my office to get to the bottom of Wieser’s missive. After further enquiries I was told that the deadline for amending the letter had passed three days ago – on 23 February, the same day I had had to submit my list of reforms.

Within minutes I was back at Maximos with Alexis, Sagias and Pappas. ‘They have gone too far,’ I said. ‘Telling me on 25 February that I could amend the letter’s content but that the deadline to do so had lapsed two days earlier on the 23rd was a declaration of war. I cannot sign this letter after having been set up in this manner.’ They all agreed. Alexis suggested that I contact Wieser to make it clear to him that, given their behaviour, I would not be signing the letter and would reveal their dirty tricks to the world.

From the ministry, I composed a suitable message for Wieser: ‘You informed me on 25 February of an opportunity to amend the letter by which I shall request the loan agreement’s extension, while ensuring that this opportunity expired two days earlier. Naturally, I cannot proceed on this basis.’ Koutsoukos passed it on to Brussels. Two hours later he brought me Wieser’s reply: a letter had been sent to me on 21 February informing me of the deadline of the 23rd.

‘Did we ever receive that letter?’ I asked Koutsoukos, Wassily and my secretaries. None of them had seen any evidence of it. ‘Call Wieser’s office now,’ I told them. ‘Let them know that we did not receive their letter of 21 February and consequently are demanding a copy showing who the recipients were in Athens.’

It was late in the afternoon when the reply came. Wieser’s office informed mine that the email of 21 February with all relevant information regarding the extension request process had been sent to five Greek officials: Chouliarakis, in his capacity as my Eurogroup deputy and Eurogroup Working Group representative; Dragasakis (deputy prime minister); Stournaras, as governor of the Bank of Greece; the head of my ministry’s public debt management authority; and the head of the banks’ bailout fund, the HFSF. I asked to see the email. It was there in black and white: dated 21 February, it was indeed addressed to those five people. I was flabbergasted. My accusation that Brussels had set the deadline retrospectively had been conclusively refuted.

Of the five people on Wieser’s mailing list, there were two I could not hold responsible: the chief of the public debt management authority and the chief of the HFSF, who were tangentially involved and simply being kept in the loop by Wieser. As for Governor Stournaras, he was the troika’s local functionary in more ways than one. If I relied on him for information in my struggle against the creditors I deserved everything I got. This left me with two comrades who had both the constitutional duty and the political responsibility to pass the message on to me: Chouliarakis and Dragasakis.

First I called Dragasakis. Had he received the email? He could not recall. ‘My office is copied to so many emails that we lose count,’ was his reply. I was not convinced. His staff would have fully understood the significance of any email from Wieser, and this one especially.

‘Did I not tell you weeks ago?’ said Wassily. ‘Dragasakis has been setting you up every step of the way. Only this morning his people were briefing journalists that you were in the clasp of the troika.’ Even if that were true, I lacked any evidence to accuse the deputy prime minister of intentional mischief.

With Chouliarakis things were very, very different. As my Eurogroup deputy, his job was to be my line of communication with Thomas Wieser and the rest of the troika. It was his precise remit to pass on to me even the most insignificant message from the creditors, let alone an email of such monumental importance. When I challenged him, he too claimed that the message had got ‘lost’ in his in-box.

‘How can such an email get lost in your in-box, George?’ I asked, barely able to believe what I had heard. Just as he had two days earlier when I had confronted him with Costello’s creation of the Word file, Chouliarakis reacted as if he had nothing to be apologetic about, as if nothing much had happened.

‘You have not heard the last of this, George,’ I said with utmost self-restraint before rushing back to Maximos to deal with the crisis he had caused.

This thing of darkness I acknowledge mine

At Maximos, Sagias and Alexis were up in arms. They understood the political cost of the trap that Chouliarakis had landed us in. Accepting the creditors’ words in full and without any emendation in a request of this nature was pure poison: it would suggest that we had not wrung the extension from them on our terms, but that the troika had chosen to impose it on theirs; it would vindicate those who were arguing that the troika was calling the shots and that our attempts to wrest back Greek sovereignty were pathetically misguided. (When I later told Sagias how Dragasakis and Chouliarakis had reacted when confronted by me, he smiled bitterly, touched the side of his head with his right index finger as if to say ‘I told you so’ and reminded me of his prediction, during our first days in office, that Dragasakis was aiming to undermine Alexis.) Sagias advised me in the strongest terms to sack Chouliarakis. ‘Get rid of him immediately!’ he said, adding a variety of unpublishable expletives. I was determined to, but first we had to deal with the situation at hand.

Alexis was highly reluctant for me sign the creditors’ letter, and, with his lawyer’s hat on, Sagias thought it extremely risky for me to do so without any formal political backing. The normal course of action would have been to put the letter to parliament. However, Alexis could not bring himself to do this. Asking parliament to approve a letter to the troika written in full-blown troika-speak would upset our own MPs, play into the hands of the Left Platform, who were already accusing us of capitulation to the creditors, disappoint our voters and enthuse the opposition, who would take great pleasure in crowing that we had joined them in yielding to the creditors. Either way, we were in a bind. If I did not sign the letter, either because I refused to or because parliament rejected our request to authorize it, the banks would close and the three-month extension would be lost. On the other hand, if I did sign the letter we would be playing straight into the hands of our enemies. Somehow we had to reach a decision, and we had to reach it before the sun rose over Mount Hymettus on Friday morning.

That Thursday night lasted an eternity. Ministers came and went, party functionaries ebbed and flowed through the prime ministerial offices, the surrounding hall and rooms, but none of the briefings and meetings and discussions threw any new light on our predicament. Throughout, Sagias and I sat in Alexis’s office exchanging unpromising ideas, occasionally pacing up and down trying to square the circle.

Among those who visited us that night was Stathakis, the economy minister. He became so angry at Chouliarakis for having landed us in this mess that he took me to task first for hiring him – I reminded him that he had been appointed directly by Dragasakis, somewhat against my wishes – and then for not having fired him over the Word document involving Costello. Again, I had to remind him that even then I would have been too late as Chouliarakis’s misdeeds had been contemporaneous: he had failed to pass Wieser’s email on to me the same day the Costello document affair had been exposed. In any case, I told him, we had a serious problem to solve before firing Chouliarakis. Stathakis concurred and, nodding repeatedly, took his leave. Watching him head home, I felt horribly envious. Thankfully, adrenalin did its duty and within moments I regained my sense of purpose.

The night was growing heavy and Alexis seemed lost. ‘I cannot take this letter to parliament. The Left Platform will slaughter me and the opposition will ridicule me,’ he kept repeating. I suggested that we try an innovative solution: the truth! We should brief our MPs on exactly what had happened. ‘We have nothing to be ashamed of,’ I insisted. We would simply tell them that Wieser had sneakily informed only a few people of the deadline and that we had found out only after it had lapsed. We could use it as an opportunity to re-confirm with our MPs, including our Left Platform comrades, the government’s collective commitment to our strategy: buy time to give the negotiations a chance but be ready to pull the plug at a time of our choosing if the creditors continued to impose the MoU and reject debt restructuring.

Alexis was unimpressed. This would divide the party and our MPs, he said. ‘Briefing them on what happened would reveal that some on our side knew about the letter but failed to tell us.’

Sagias agreed. We could not afford a public display of disunity or accuse members of the government of incompetence – at least not without firing them too. ‘Is this the time to begin turning against each other in public? When the creditors are encircling us from all directions?’ He had a point. And so the night grew longer and our mood darker.

I could not let the black hole consume us. Someone had to fight against it. In a split second I made a decision: I would relieve Alexis of this burden and take the blame squarely on my shoulders. I was the ideal scapegoat for Syriza criticism and the perfect target for the opposition. Given Alexis’s commitment to stay the course that we had been plotting together, national interest dictated that the extension be secured. Personal cost was irrelevant.