When I got back to my room, I took the resignation letter I had been planning to submit to Alexis that day, tore it up and put the pieces in the bin. Now we had a referendum to fight. If necessary, I would draft another letter in a little over a week’s time. I then set about preparing my speech for the following day’s Eurogroup meeting and drafting an official letter requesting a one-month extension of our loan agreement to allow the referendum to take place.
After several hours, I looked out of the window and realized it had got dark. I decided to step outside for some fresh air and something to eat. In the hotel lobby I bumped into Glenn Kim, slightly surprised that he was still in Brussels. Always happy to see Glenn, I invited him to join me. Immediately I sensed reluctance. ‘I have a meeting to attend,’ he said.
‘Really?’ I replied. ‘Who with?’
‘With Chouliarakis, Wieser and Costello.’
Over the past weeks, despite initial resistance from some within Syriza to Glenn’s involvement in my team, Sagias had recognized his skills and enlisted his help in drafting their concessions to the troika. Embarrassing as Glenn’s reply was for both of us, it was the presence of Wieser and Costello at this meeting that really disturbed me. I bade him goodnight, said nothing else and walked out into the street.
I then called Chouliarakis and calmly asked him what the meeting was about and whether I had failed to make myself clear earlier that day.
‘It’s no big deal,’ he said. ‘We’re just meeting to exchange ideas.’
Without another word, I hung up and dialled Alexis’s number. His secretary answered and told me that he was about to start the cabinet meeting. ‘It is imperative that I speak to him,’ I persisted. When Alexis came to the phone, I told him how Chouliarakis was disregarding his explicit instruction to avoid any contact with the troika.
For the first time ever, Alexis raised his voice at me. ‘I’ve had enough of your animosity towards Chouliarakis,’ he said. ‘If you continue I shall have to put the phone down on you.’
Fed up and exasperated, I said, ‘Go ahead! Put the phone down on me, Alexi!’
He did. Two minutes later he called me back to apologize, blaming his outburst on stress. ‘As for Chouliarakis, it doesn’t matter any more,’ he added. ‘Soon I shall be announcing the referendum.’
Over my solitary dinner I thought things over. However much I wanted to escape this cesspit, I had two jobs to do: first, see through the next day’s Eurogroup and, second, return to Athens to ensure that the no campaign got the best possible support in the referendum. Alexis was issuing a call to arms. For the first time the Greek people would be given the opportunity to express their will. This was no time for introversion or squabbling.
On the morning of Saturday, 27 June, just before the Eurogroup, Euclid and I met Dijsselbloem, Wieser and Michel Sapin. Unsettled by the announcement of the referendum, they pushed me to have it cancelled. I explained the rationale that lay behind the decision: we did not feel we had a mandate from the people of Greece either to clash with our European partners or to sign an agreement that made no sense, not just to us but to the German finance minister, to another five finance ministers and indeed to the staff of the IMF. Jeroen then took me to task for the recommendation we were making to the Greek people when they came to cast their votes.
DIJSSELBLOEM: You recommend they say no.
VAROUFAKIS: The sovereign power is the electorate. It is not the government, not the minister. We get our marching orders from the electorate.
DIJSSELBLOEM: Political parties campaign …
VAROUFAKIS: Of course. And that is not the subject of this discussion. What we are going to campaign for is our business. What you need to know—
DIJSSELBLOEM: But it shows your intentions.
VAROUFAKIS: Your view of our intentions as politicians, Jeroen, is neither here nor there. Just like my views about your intentions as a politician are neither here nor there. It is between yourself and your electorate.
At that point Sapin objected that we would be asking the Greeks to vote against the tough parts of the deal, such as austerity, without acknowledging its advantages. I asked what advantages he was referring to. ‘The debt measures, investment help and so on,’ Sapin replied. Euclid pointed out that these had never been on the table, as our creditors had refused doggedly to put them there, and Jeroen stepped in again.
DIJSSELBLOEM: Let us look at political feasibility. Build trust, and then even the toughest ministers after the summer will be prepared to discuss this. If they have gained some confidence that the programme will be back on track.
VAROUFAKIS: I accept that. I understand that. But do you understand that confidence is a two-way process? That the Greek population does not have confidence in the Eurogroup to deliver this? The Eurogroup does not have confidence in Greek governments, but trust has broken down on both sides of the equation, Jeroen. You need something binding on the table and so do we.
The ensuing conversation did not get us much further, so I suggested we leave it for the time being and resume our discussions in the Eurogroup a few minutes later, with everyone present.
The Eurogroup does not exist!
The Eurogroup Meeting of Saturday, 27 June 2015 will not go down as a proud moment in European history. Our request that the Greek people be granted a brief window in which to decide whether to accept or reject the institutions’ proposals was denied. As the extension of the loan agreement, which I had secured on 20 February, expired on 30 June, the rejection of our request for another extension meant that the ECB would be within its rights to refuse the Greek banks more liquidity via the Central Bank of Greece’s ELA facility. In other words, the Greek banks would not reopen on Monday.
Interestingly, the idea that a government should consult its people on a problematic proposal put to it by the institutions met with incomprehension and was treated with a disdain that bordered on contempt. How could we expect normal people to understand such complex issues? I was asked by Italy’s Pier Carlo Padoan.
‘We are strong believers in the capacity of the people, of voters, to be active citizens,’ I replied. ‘And to make a considered analysis and take decisions responsibly concerning the future of their country. This is what democracy is all about.’
The fact that I had to make this point and the negative reaction to it from almost everyone in the room reflected badly on European democracy and its institutions.
After our request had been rejected, the Eurogroup president broke with EU tradition to make two extraordinary announcements. The first was that he would issue a communiqué without Greece’s consent, violating the Eurogroup (and EU) convention that unanimity was required. The second was that, later that day, he would reconvene the Eurogroup without inviting Greece’s representative in order to discuss the ‘next steps’.
At that point I asked the secretariat, which sat at a table behind Dijsselbloem and Wieser, ‘Is the Eurogroup president at liberty to issue communiqués when there is no unanimity and also to exclude finance ministers at will from Eurogroup meetings?’ There was a short adjournment while some of them made phone calls and others consulted thick volumes.
After a while, Jeroen called us back to order and a member of the secretariat addressed me: ‘Minister, the Eurogroup does not exist in law, as it is not part of any of the EU treaties. It is an informal group of the finance ministers of the eurozone member states. Thus there are no written rules about the way it conducts its business, and therefore its president is not legally bound.’
On my way out, as I was waiting for the lift I bumped into a worried-looking and unexpectedly friendly Mario Draghi. ‘What on earth is Jeroen doing?’ he said.
‘Damaging Europe, Mario. Damaging Europe,’ I replied.
He nodded, looking even more concerned. We took the lift down and then parted silently.
17 Lions led by donkeys
Back in Maximos that night, the war cabinet convened. As soon as Euclid and I entered the room, I reminded them of the agreement which they had repeatedly sworn to uphold: if the ECB were to close down our banks, we would respond by haircutting the SMP bonds owned by the ECB, activating the euro-denominated parallel payments system and announcing our intention to return the Central Bank of Greece to the full control of the Greek parliament. I told Alexis that the moment had now come; on Monday the banks would be closed. Would we now implement the countermeasures that we always said we would?
‘We don’t have to rush into them,’ I said. ‘Just signal them today. My proposal is that we announce today that we shall defer Draghi’s SMP July and August repayments by a couple of years. Also, we can announce the activation of the parallel payments system for the week after the referendum. And the change in the law regarding our central bank for next month. That way we signal that we are not rolling over but also that we want to leave them an opening to come back to us with a decent proposal soon.’
Dragasakis spoke against my proposal with uncharacteristic energy and speed. He dismissed it as dangerous bluster, using a Greek word that denotes a lion’s roar. ‘I veto this,’ he said ‘I propose that we do not antagonize Draghi but proceed consensually with him.’
No one else spoke. Everyone was looking at Alexis. He walked over to the bay window; he was smoking a cigar – a relatively recent habit. After a few moments he turned towards me, took another moment and said, ‘We will go with Dragasakis, Yani.’
I looked around the room to see that only Euclid was on my side. I was in a minority of two.
The discussion then moved on to the management of the greatest nightmare a finance minister can face in peacetime: the indefinite closure of the country’s banks. It was essential, I argued, that we make clear who was responsible for this calamity. Ever since our election, we had bent over backwards, even accepting concessions that we knew to be impossible to implement, in order to keep the banks open; Stournaras and Draghi, in contrast, had done everything in their power to create and fuel the bank run that had precipitated the closure. We should not do them the favour, I argued, of letting ourselves be portrayed as the government that chose to deny its citizens access to their deposits. I therefore proposed that we let the banks open on Monday morning as usual, so that when the counters ran out of cash the managers would be forced to close down their branches themselves. At that point we should be outside, protesting with the people against the troika.
Naively, I had anticipated agreement. This time not even Euclid was on my side. If banks opened only then to run out of cash, it was argued, we risked civil disorder inside and outside the branches. There was something in this argument, but the risk, I thought, was grossly exaggerated and various measures could be taken to mitigate it, whereas failing to protest publicly against the bank closures and instead allowing them to be presented as our idea was a catastrophic political error. I told them that to close the banks by government decree would mean losing the blame game domestically, which meant defeat at the referendum.
It was as we were leaving Maximos that the realization hit me hard: this was, in fact, their intention. But it was not they who would take the blame; it would be me.
As we made our way out, Dragasakis approached me looking surprisingly friendly. ‘Tomorrow you must convene the Council for Systemic Stability,’ he said. ‘I will not be able to come but I am sure you can handle it well.’ The Council for Systemic Stability is a body that no finance minister ever wishes to convene. It only meets when the banks must be closed down in an emergency. From day one of our government, Dragasakis’s office had issued a series of decrees that removed all powers over regulation of the banks from the finance ministry and placed them instead under his control as deputy prime minister. Now that the war cabinet had decided, at his behest and against my express opinion, that the government should convene the Council for Systemic Stability in order to shut down the banks, he would not even attend the meeting, let alone chair it. He was confident I would swallow the poison he had handed me because my only alternative, being in a minority of one within the War Cabinet, would have been to resign as finance minister, and he knew that I would not contemplate doing so for fear of causing a rift among those who supported the no campaign. Unspeakably cowardly as it was, the strategy of making me convene the Council despite my passionate opposition to the idea worked. To this day sections of the Greece press refer to me as the man who closed the banks.
Alongside my own deputies, the members of the Council for Systemic Stability included Stournaras, his deputy at the Bank of Greece and the CEOs of Greece’s commercial banks. I began the meeting with an explanation of how we had come to our current predicament. In my speech I made it clear that Stournaras was one of the driving forces behind the calamity. Stournaras did not seem to mind at all. In fact, he radiated happiness and was extremely friendly towards me.
That night, once the meeting was over, my team and I embarked on the gigantic job of devising a formula to determine how much cash the ATMs should release, working out what to do for the 85 per cent of pensioners who did not possess debit or ATM cards and deciding which imports to finance with the little liquidity that was left in our central bank. Like the Hydra’s heads, new problems sprang up wherever one was dispatched. At 1.40 a.m. that Monday I received a text message from Stournaras: ‘Dear Yani, thank you for the exquisite collaboration.’ Knowing him well, I think the appreciation he conveyed was just as genuine as his evident glee at the success of his project to undermine our government, ever since Samaras appointed him to the governorship of the bank twelve months earlier.
For my part, the adrenalin coursing through my blood helped me fend off despair and work ceaselessly with my team until 9 a.m. Normally, this was when the banks opened; instead, our television screens were filled with scenes of endless queues at ATMs as the Greek people attempted to withdraw the sixty euros we had calculated was the most each account holder was allowed if we were to survive until the morning after the referendum on 5 July. It was at this point that I was informed that over the weekend, before the decree imposing limits on withdrawals had been announced, MPs had emptied the ATMs located in Parliament House five times over. I was scandalized that the people’s representatives should abuse their access to Parliament House’s ATMs, which were evidently re-stocked more diligently than all others were. So when a Bloomberg correspondent asked me if I had lined up to withdraw some cash at an ATM, I replied that I had not had time but that in any case I did not think it appropriate. It was soon reported in the press that I, the man who had closed the banks, thought myself too important to queue up with the rest of the population.
Later that week I was interviewed for the New Yorker by a journalist to whom I had granted special access, including to our apartment and members of my family. During dinner with friends at which the journalist was present, I described the irony and the sheer pain of having to shut down the banks on behalf of a war cabinet that had turned against my strategy for keeping them open. ‘I don’t wish this fate on my worst enemy,’ I said. Realizing that I had cast a depressing cloud over the party, I tried to brighten the mood a little and joked, with light-hearted self-pity, that a cruel screenwriter dramatizing these events would have had me say to Danae, ‘Honey, I shut the banks’ – a reference to the Hollywood film Honey, I Shrunk the Kids. The New Yorker piece featured that reference, to which the Greek media gave their own special spin: ‘Varoufakis celebrated as he closed the banks, telling Danae, “Honey, I shut the banks!”’
My image and the distortions that were meant to destroy it are unimportant in themselves, except that, in tarnishing me, my enemies were damaging the no campaign and the brave people who took it upon themselves to save our collective dignity by supporting it. They were indeed lions led by donkeys. And the donkeys came in a variety of colours. I recall being approached in parliament by a Syriza MP, a member of the pro-Grexit Left Platform, who was displeased with me. This was hardly surprising given that he had spent months criticizing me for not implementing capital controls and not getting us out of the eurozone. What was surprising was the reason for his anger now that capital controls were in place: owing to the restrictions on wiring money abroad, he was now unable to pay the mortgage on his house in London. ‘But you were in favour of the drachma and of capital controls,’ I exclaimed. ‘If I had done what you were imploring me to do, how would you be paying your London mortgage? In drachmas?’ This was not the kind of leadership our people deserved.
