It was not clear what we were waiting for, but Jeroen and Thomas Wieser were now engaged in conversation, with Lagarde contributing occasionally and various functionaries providing assistance. Moscovici, on the other hand, had been excluded. He hovered around, occasionally sending a friendly smile towards me.
At one point Wolfgang came back into the room. ‘They are toying with us,’ I said to Chouliarakis. ‘The more they do this, the more adamant I am becoming that it would be a mistake to compromise.’
Eventually Christine approached me one more time to say, calmly, that she thought we had made a mistake. Then Jeroen tried his luck one more time: would I take this last opportunity to agree to the draft communiqué? he asked. Would he accept my original proposal to insert ‘amended’ before ‘programme’, an idea that he had liked before Wolfgang shot it down? I replied.
We had confirmed that the impasse was final. Ministers were beginning to move towards the doors. I waved to Dragasakis and Chouliarakis that it was time to leave. As we were going, one of Schäuble’s cheerleading team asked in a concerned voice, ‘Is it your plan to leave the euro?’
‘Not at all,’ I replied. ‘But this does not mean that we shall accept conditions that cannot be fulfilled under the threat of expulsion.’
Another minister from the former Soviet bloc opted for a more aggressive stance: ‘You just ran out of money,’ he said spitefully.
‘Well, that’s OK,’ I replied with a grin. ‘The Beatles taught me long ago that it can’t buy me love anyway.’
In the corridor I noticed that Dragasakis was walking unsteadily. I rushed up behind him, took his left arm and helped him to the bathroom. His face was white and covered with sweat, his eyes unfocused, his breathing irregular. I waited outside and was relieved when he emerged much steadier on his feet and with a surer smile. As we made our way towards the Greek delegation’s office I reflected that the human cost of the day’s charade was out of all proportion to what had been achieved. The finance ministers of nineteen European countries, the leaders of the ECB, the IMF and the European Commission, not to mention deputies, countless translators and support staff had just wasted ten hours blackmailing one minister. What a waste of human potential, I thought.
Once in our office I briefly updated Alexis on the phone. ‘Put on a brave face,’ he said. ‘People are celebrating in the streets and supporting us. Cheer up!’ A secretary showed me a tweet from his account with a picture of a rally and the message: ‘In the cities of Greece and Europe the people are fighting our negotiation battle. They are our strength.’ Indeed, as I was to find out the next day, thousands of cheering people had gathered in Syntagma Square while I was holed up with the Eurogroup. They were dancing and waving banners proclaiming BANKRUPT BUT FREE and STOP AUSTERITY. Simultaneously, and even more touchingly, thousands of German demonstrators, led by the Blockupy movement, were encircling the ECB building in Frankfurt in solidarity with us. A German supporter of a completely different stripe came to mind: the secret service officer at Frankfurt airport.
The meeting might have ended but my work was far from done: hundreds of reporters were waiting in the press room. Jeroen was sure to use our refusal to agree to a communiqué as a means of accelerating our bank run by ensuring the news was broadcast around the globe. My task would be to perform with sufficient aplomb for the public and the markets not to despair at the misbehaviour of the ‘adults in the room’. That was why Alexis had been trying to raise my spirits.
On my way to the press room the security staff helped me run the gauntlet of cameramen who took no prisoners in their pursuit of the revealing close-up shot. Once inside the small, packed room, it was down to me to drive a large wedge between the way I felt and the way I appeared. My insides felt crushed by the stress, and I feared the tension would cause my voice to break or, worse still, produce a tear or two. But when the moment came, I found to my astonishment that within me there lived a stranger, one who was capable of rising to the task of facing a media circus, even of drawing strength from it. This encounter with the stranger within was truly a surprise.
This Eurogroup was never meant to settle any issues. I was invited because I am the new kid on the block, so to speak. I was given a wonderful opportunity and a very warm welcome to present our views, our analysis, our proposals, both regarding substance and regarding the road map. And since we are meeting again on Monday, I think it is perfectly normal and natural that we should simply move to the Monday meeting.
Friends and critics have censured me for deceiving the public. I have been asked many times: why did I not spill the beans about what actually happened in there? Why did I not expose their blackmail and contempt for democracy? The answer I give is: because the time had not yet come. Our mandate was to reject any oath of allegiance to the existing programme, to the previous governments’ MoU, to any new loans or austerity measures. Our purpose was to go to the wire without any intention of backing down. I had accepted the finance ministry on the understanding that we would respond to behind-the-scenes threats with our own deterrence plan. Our mission, in other words, was neither to declare war nor to surrender at the secret threat of war. Moreover, it was imperative to call Jeroen’s bluff – that the train would leave the station that very night – by waiting until the next morning.
A journalist asked me if it was true that the prime minister had called during the Eurogroup to back me and Dragasakis in our decision to scuttle a communiqué. I wanted to reply that both Dragasakis and I had been wavering in the direction of accepting and that I owed Alexis a debt of gratitude for supporting me during a moment of weakness, but of course I could not say anything of the sort. Instead, I said, ‘No one scuttled anything. This meeting was about getting to know each other and to create a road map for the future.’ Another journalist interjected to ask for my impression of my first Eurogroup experience. ‘It was fascinating!’ I replied. ‘I particularly enjoyed the very different views I sampled tonight.’
The media reporting of the impasse did not go entirely the troika’s way. The New York Times summed it up nicely: ‘With Greece about to run out of money and in need of German support for emergency funds, Mr Varoufakis appeared to be outmanned and outgunned. Nonetheless, he was the one who delivered the ultimatum in the meeting: renegotiate Greece’s €240 billion bailout deal or risk a mutually destructive disaster.’
It was 3 a.m. by the time the embassy car dropped me off at my hotel. The night was dark. Brussels looked bleak. The rain was falling hard on the hotel awning, making an almighty racket, a northerly wind driving it almost horizontal. But this was exactly what I had been dreaming of for hours. Instead of heading to my room, I walked out into the downpour, meandering through the empty streets. How the human mind forges vistas of pleasure out of pure bleakness is a fascinating mystery.
9 A moment to savour, darkly
Early next morning Pappas, Dragasakis and I met Alexis in his hotel suite. The European Council summit was beginning that night with all eyes on the Ukrainian crisis. Chancellor Merkel and President Hollande had been immersed in negotiations in Kiev and Moscow and would be arriving in Brussels exhausted, their minds full of the Crimea, Putin and war – pressing matters far removed from Greece’s travails.
We faced a risk but also an opportunity. From 2011 I had been advising Alexis that Angela Merkel was the key to any resolution of the Greek drama. Since I had become a minister, journalists had repeatedly asked me who Greece’s best allies were within the EU. My response was always a single word: Merkel. ‘Not President Hollande or Prime Minister Renzi?’ they would ask. ‘No,’ I would reply. ‘Chancellor Merkel is the only politician who can recalibrate Europe’s policies on Greece.’ And so I advised Alexis to approach Merkel that very evening with a direct request to end the stalemate in the Eurogroup, where Wolfgang Schäuble ruled supreme.
The tension between Angela Merkel and Wolfgang Schäuble was well documented. Schäuble dominated the Eurogroup with his control over Dijsselbloem and his bloc of cheerleading finance ministers, mainly from Eastern Europe. Only Merkel had the authority to contain him. As I was to discover later, the person she relied on for this task was Thomas Wieser, probably the only deep establishment functionary equidistant from her and the German finance minister. But to get Merkel temporarily to break Schäuble’s stranglehold over the Eurogroup and thus allow for the possibility of a negotiated settlement, which Wolfgang would not contemplate otherwise, she would need a powerful incentive. Being seen to be giving Greece a chance or being magnanimous to our people would not cut it. But what would?
The answer I had been peddling since 2012 was Mario Draghi. Angela Merkel would surely intervene if Draghi were to convince her that the stability of the eurozone depended on it. And what would make Mario do such a thing? Successfully convincing him of our determination to haircut his SMP bonds if he closed down our banks, putting his whole quantitative easing programme in jeopardy.
Alexis understood. He would approach Merkel during the summit. As a brief, I wrote down our minimum conditions for him on hotel stationery: first, end the liquidity squeeze to create the space for proper negotiations; second, replace the troika process with a new Brussels-based institution that would allow Greek ministers to talk directly to the European Commission; third, end the toxic language of ‘extending’ and ‘successfully completing’ the current Greek programme; fourth, end the escalating austerity with a deal for a small primary budget surplus not to exceed 1.5 per cent of national income in any year.
As we were discussing his approach, Alexis’s phone rang. ‘It is Dijsselbloem,’ he whispered. Apparently Jeroen was offering to come over to our hotel for a chat. When he arrived, the rest of us retired to an adjacent room, leaving Alexis alone. After only ten minutes, Alexis came into the room where the rest of us awaited with a smile on his face. Jeroen wanted to make peace and had offered a new adjective: instead of ‘amended’ or ‘adjusted’ he was proposing that we commit to a ‘modified’ or ‘updated’ programme. I advised Alexis to insist on there being mention of the humanitarian crisis too.
Meanwhile, Jeroen was in the corridor speaking on his phone. He looked like a primary school pupil being reprimanded by a severe teacher. ‘Wolfgang has shot him down once more,’ I whispered to Pappas.
Before Alexis could get back to Jeroen with his further request, the clearly upset Dutchman confessed that ‘modified’ would not work either, made his excuses, promised to return with more suggestions and headed for the lift. As he passed me I asked him the question I had been aching to put to him ever since he had arrived at the hotel: ‘What happened to that train, Jeroen? Have we not missed it after all? Has it reversed back into the station perhaps? Is it leaving again?’
Naturally he did not answer. How could he? The president of the Eurogroup had been caught out. The threats he had issued repeatedly during the previous night’s shameful ambush had evaporated in the morning’s faint Belgian sun.
That afternoon Jeroen was back. This time he proposed to Alexis that the two of them issue a joint statement saying that the Eurogroup and the Greek government would proceed to discuss the technical parameters for moving on from the current programme in accordance with the new government’s plans. It was a complete climbdown. A few minutes later I emailed Jeff Sachs with the news: ‘We scored a tiny triumph today – our refusal to budge under enormous pressure yesterday led them to retreat fully from the insistence that we submit an application for extending the current programme as is.’
How had this come about? We found out when Alexis shared some information he had received from a Greek foreign ministry source. On arrival in Brussels, exhausted from her Ukrainian odyssey, Merkel had called Jeroen hoping for good news on Greece. When she heard of the stalemate she had apparently got cross and instructed him, as Eurogroup president, to find an accommodation – forthwith! Which is what he had proceeded to do.
A tiny triumph indeed. But it also established a pattern that would in the end prove lethal: Alexis’s over-reliance on Merkel’s goodwill and Jeroen’s practice of speaking directly to Alexis. There was of course nothing wrong with eliciting helpful interventions from the German chancellor or with direct exchanges between Jeroen and Alexis that unblocked negotiations. What would ultimately be calamitous was the combination of two side-effects of our success: one was the confidence which Alexis gained, against my expressed doubts, that Merkel would continue to mediate on our behalf regardless of whether we were prepared to deploy our deterrent; the other was the manner in which that initial meeting between Dijsselbloem and Alexis developed into a wedge that would eventually estrange the premier from the only minister who could, and would, trigger that deterrent.
Inside the troika’s lair
It was the afternoon of Thursday, 12 February when Dijsselbloem returned to offer Alexis the joint statement. The next Eurogroup meeting, at which a breakthrough was needed, was scheduled for the following Monday. That left us with three days in which to build the bridge that we had been advocating.
The German chancellor wanted our technical team to meet the troika’s in order to begin discussion of our government’s proposals and priorities. It was agreed that they would meet over Friday and Saturday in Brussels, leaving only Sunday for the politicians to conduct their last-minute deliberations before the Eurogroup. That gave me less than an hour in which to decide on the composition of the team we would send to confront the troika’s seasoned mercenaries, if they were to make it to Brussels for the commencement of negotiations the following day. Working the phone frantically from my hotel room, I ensured that our best people were contacted and the travel arrangements made.
Meanwhile the troika was able to draw on hundreds, if not thousands, of support staff working at some of the world’s best-resourced institutions – the IMF, the ECB and the European Commission. Their point men – and they were all men, at least in that first meeting – had years of experience of pushing their ‘special adjustment programmes’ and ‘bailout’ agendas down the throats of weak governments, Greek ones included. By contrast, our small team comprised George Chouliarakis, chair of the ministry’s Council of Economic Advisers, and four young experts that Dragasakis had also enlisted before the election. They had only recently been brought together and had next to no experience or support network behind them, so I asked two experienced negotiators to join them: Elena Panariti, the only person on our side with inside experience of the IMF, and Glenn Kim, who had of course been instrumental in the design of Europe’s bailout fund. Despite the firepower that Glenn and Elena brought to bear, Dragasakis’s team viewed them with suspicion. Moreover, we still lacked serious backroom support. To ameliorate this I arranged for a technical adviser from Lazard and Jamie Galbraith to sit in a room adjacent to the negotiations, where they could run calculations and draft proposals. Lastly, I called Euclid to ask him to come to Brussels with our team to provide political supervision. After a few protests he agreed to drop everything and come.
On Friday morning we all arrived at the European Commission building for the two-day ‘consultation’. The security guards at the entrance gave us the third degree, delaying our entry by half an hour. Once inside, we were taken to a seminar room, where the people from the troika awaited. Among them were some familiar faces: Declan Costello (an ‘un-Irish Irishman’, as an Irish ambassador once described him) and of course Klaus Masuch, the ECB representative who had done so much to turn the people of Ireland against that institution.1 The troika’s representatives recognized a familiar face – Glenn’s – and immediately protested.
When I asked what the problem was, they were initially lost for words. Costello eventually said, ‘But he is not Greek!’
‘So?’ I asked. ‘Since when is the Greek government constrained to include in its negotiating team only Greeks? Isn’t your side multinational?’
Their rejoinder was revealing. ‘But we know him. He has been involved in debt-restructuring exercises. We cannot be seen to be negotiating with a debt-restructuring expert.’
‘As I have no right to veto your team members, you will have to accept mine,’ I replied.
Our greetings at an end, and as I was the only person of full ministerial rank in the room, I began proceedings with a statement of our joint purpose.2 My closing remarks were:
