Poul was not happy that Christine was warming to my proposal and tried to kick the ball off the pitch. ‘What we need is to get started in Athens to build on what I agree has been a better technical process,’ he said dragging us onto his favourite subject: the troika’s return to Athens.
It was my turn to frustrate him. ‘I am afraid, Poul,’ I said, ‘that your people in Athens behaved appallingly, trying to build up [their] career[s] by emulating what you had been doing there as the IMF’s Greek mission chief since 2010.’
Christine intervened, laughing, ‘Oh no, no, no … I cannot agree with this,’ she said unable to contain her amusement. ‘I have to support my team!’
‘Of course you have to support your team,’ I acknowledged, laughing too, ‘like I have to support mine!’
Poul interrupted the laughter in his customary humourless style: ‘I think … to get back to work—’
Only this time he was interrupted by Christine, who added, ‘On an accelerated way.’ (Meaning a faster negotiation process.)
I then cut in with my own challenge: ‘Poul, you talk about getting to work on a comprehensive programme, but let me put to you the awful truth: nobody wants to talk with us about Greece’s sustainability and get down to work to make it happen.’
‘We want to talk about it,’ said Christine.
‘Your people in Athens and your people at the Brussels Group are not interested in a serious discussion,’ I said.
‘You speak like Keynes now,’ she replied.
I could not help laughing again. Choosing not to respond to her comment, I continued: ‘The way your people are conducting the conversation is as if they are either pushing us out of the eurozone or wishing to keep us in as a zombie. Angela Merkel’s position is clear. She wants a pseudo-solution that muddles through, does nothing to resolve our insolvency but keeps Greece in the eurozone. Wolfgang Schäuble’s is even clearer. He does not want a solution within the eurozone. He wants Greece out of the eurozone. We are merely collateral damage of his attempt to discipline the rest of the eurozone. And this is a grave danger to Europe.’
After another minute or so of disagreement, Christine eventually conceded the point. ‘Making an example of Greece is not smart,’ she admitted, justifying my hunch that, unencumbered by Thomsen, Schäuble and others, she and I could have found common ground.
In a bid to show my appreciation, I then said something that triggered the following exchange.
VAROUFAKIS: I am happy to accelerate but we need to find a solution to the liquidity problem … When I do not know whether I shall be in default in a fortnight it is very hard to sit around the table with a clear mind to plan for 2025. The idea that we will complete this review before the last drop of liquidity runs out is absurd. Consider this: we would not be here today if our monies from the ECB’s SMP profits were passed on to you on our behalf, as I have proposed. No liquidity, no progress. It’s that simple.10
LAGARDE: You must press Mario Draghi on this. He appreciates the speeding-up over the past ten days of the discussions. Press him on this.
VAROUFAKIS: The IMF can press him too. You cannot expect your money back while Mario is drying us up.
LAGARDE: We talk all the time. But this is a resolution that he needs to reach by himself, after hearing his own team.
VAROUFAKIS: I think you need to pressurize him, Christine, too. We are doing our bit. But given that we have an IMF redemption coming up which we cannot meet without defaulting to our people, the IMF must decide: do you think a post-mortem is more desirable than a moratorium? Isn’t it better to prevail upon the ECB to do its job? There is a dereliction of duty here by the ECB.
LAGARDE: But they are not lenders of last resort, as they will tell you.
VAROUFAKIS: They were to the Samaras government in July 2012. If Mario does not want to be tainted as a politicized ECB president then he must apply the same rules. We are not asking for special treatment.
A fascinating debate on what had to be done to take our default to the IMF off the table was reaching its natural conclusion. I had to exploit that unique opportunity to present the crux of the problem to the only interlocutor that I could communicate with properly.
VAROUFAKIS: Let’s get serious here. You folks – Mario, Angela and you – have to give us a road map. I am leaving Wolfgang out because we know where his map would take us. We cannot just drift into the unknown on the basis of hearsay that something may happen one day to render Greece viable. We need to have an adult conversation with clear markers on dates so that on 13 April or thereabouts the liquidity tap is turned back on. I cannot go back to Athens to say to my cabinet that we agreed that something magical might happen at some point before we reach the cliff’s edge. I cannot energize my colleagues without someone picking up the phone and giving us some assurances that we have a process that comes with [the] liquidity provisions necessary to salvage the negotiation process.
LAGARDE: But there is a clear link between the two.
VAROUFAKIS: Yes, but we need more than that. We need an indication that the process will be timely.
Poul stepped in to put me back in the dock, unwittingly I hope, unless he had eavesdropped on my last conversation with Alexis. ‘Not paying on the ninth is not the solution,’ he said, ‘if that is what you will tell your colleagues in Europe.’
‘I never said that,’ I protested.
Christine intervened in my favour. ‘He did not say that,’ she confirmed.
‘What I did say,’ I clarified, ‘was that if we do not get any liquidity provisioning then we will be forced to default independently of our will.’
Returning to my request for an ‘adult conversation’, Christine counter-proposed: ‘But it must be a grown-up conversation without drama, without journalists chasing me, no game[s], no improvisation – we are very boring people. It has to be very technical, boring. We have not been able to have that conversation. It is just beginning now. We are prepared to do it day, night, on the weekend, no matter where. We would prefer to do everything in Athens. But from an optics point of view [from the perspective of public perception in Greece] we can have some of it in Brussels. What you are proposing, a little less shallow than your list of reforms [meaning if they were fleshed out further], is actually to meet the objectives of the initial proposal.’
We were on the right path. To broaden that path as far as possible, I suggested that we start our new collaboration with a small step: both in Athens and at the Brussels Group, from now on we should divide our discussions thematically, so that a deadlock over one issue did not prevent progress elsewhere. Christine very much liked the idea, and Poul seemed happy too. It was progress. We had established the basis for a common understanding of the questions if not the answers.
For the first time we were faced with the opportunity of having a serious discussion about what reforms each of us thought were pressing. I invited Christine to have a first stab.
‘Can I? Can I?’ she asked excitedly. ‘I know that this is anecdotal, and you might find this trivial—’
‘Not the pharmacists, please!’ I interrupted. ‘Is this what you were going to say?’
‘Why not?’ she replied. ‘I find it just amazing that in the Wall Street Journal you defended the pharmacists. I thought, Not Yanis! I found it amazing that you support their monopoly of baby foods and cosmetics – which I know causes problems, from when I was finance minister. And I had my fights.’
I knew of the IMF’s obsession with Greek pharmacies. These invariably small family-owned businesses were protected by a law that permitted only pharmacy school graduates to own one and prohibited the sale of non-prescription drugs by supermarkets. But that, of all possible subjects that needed tackling, the managing director of the IMF, faced with a European country on the brink of default, wanted to discuss this one? I had to pinch myself. I explained that the pharmacies’ monopoly over the sale of baby foods and cosmetics had already ended, and that what I opposed was not the end of their monopoly over certain other commodities but the proletarianization of thousands of owner-pharmacists via the takeover of the pharmacy sector by one or two multinational chains.
Giving me the benefit of the doubt on this matter, Christine then took me to task for our tax arrears instalments measure – part of my Humanitarian Crisis Bill aimed at bringing the 40 per cent of Greek citizens back into the tax system by allowing them to pay even very small instalments each month – which she ‘found shocking’:11
LAGARDE: I cannot believe that you would introduce this rescheduling of tax payments without discriminating between those who cannot pay and those who organize themselves so as not to pay.
VAROUFAKIS: Let me explain the practices of rich defaulters. When charged they take the tax office to court and get a court hearing for 2022. In the meantime we cannot touch them. So what we are doing is giving them the opportunity to start repaying little by little while organizing out-of-court settlement procedures. At that point we can force things to a head and confiscate available funds of strategic defaulters.
LAGARDE: That’s fine.
VAROUFAKIS: But to be told that what we did is a unilateral move and [be] ordered to take it back, when we have 3.6 million people owing less than €3000 to the state that they can’t pay – who are dying to become part of the formal economy again by starting to pay small sums little by little—
