Back at Maximos, I suggested that ministers should travel to all of Greece’s major cities and islands to campaign for a no vote. Despite assurances that it would be done, nothing transpired. Instead, Pappas and Dragasakis’s office were leaking fake stories about me to the press, while Wassily showed me evidence that my own ministry’s Council of Economic Advisers, still chaired by Chouliarakis, was campaigning openly for yes. My greatest concern, though, was that the stance of the war cabinet prohibited me from explaining to the electorate what a no vote actually meant. It was essential, I thought, to make clear that a no vote would be an instruction to the government not to leave the eurozone but to hold firm in order to broker a new agreement within it – one that freed us from debtors’ prison, recovered our dignity and ended the downward spiral. If Mario Draghi and Angela Merkel refused us this, a no vote meant haircutting the ECB’s Greek bonds and starting a euro-denominated parallel payments system that would buy us and the creditors space and time to return from the brink of Grexit. And if Wolfgang’s Grexit strategy were to prevail, the euro-denominated parallel payments system could potentially turn into the foundation of a new national currency.
If we spoke openly to voters and explained the strategy in full, I felt certain our hand would be strengthened because Draghi and Merkel would be forced to take notice and a proper compromise would surely be found. For as ECB Vice President Vítor Constâncio confessed in the autumn of 2015, the ECB would never carry through the threat of Grexit. But the majority view in the war cabinet prohibited me from saying any of this. The best I could do was to proclaim our determination not to play with Grexit but also not to fear it or buckle when threatened with it, and leave the rest for the voters to infer.
Occasional boosts to my spirits came from abroad. On the day the banks closed a good American friend sent yet another letter to Christine Lagarde, which his office copied to me. ‘In my view,’ wrote Bernie Sanders, ‘the Greeks have every right to vote no in the referendum. By threatening to force Greece out of the euro, German Chancellor Angela Merkel, French President François Hollande and Italian Prime Minister Mateo Renzi are playing a dangerous game with the stability of the global financial system as well as the very fabric of European democracy.’
That same day, at a meeting in Maximos to discuss the plight of Greek pensioners, many of whom were distrustful of technology and preferred to visit the – now closed – banks in person to withdraw their pensions, Alexis looked at me happily. ‘Juncker called to say that he accepts your debt swap proposals. You scoundrel, you got what you have been going on and on about for years. You got your debt restructuring. But the price Juncker is asking is that they crush us on social issues: VAT, islands, pharmacies, labour relations, privatization – they’re demanding everything.’ He showed me Juncker’s non-paper and asked, ‘Is this a basis for reopening the negotiations?’
I read it quickly. ‘Yes, it is,’ I said. ‘It opens a new window to a sustainable future and puts the second bailout behind us.’
That was the last I heard of Juncker’s proposal. Whether it was killed off directly by Merkel, who could now see that we had capitulated, or indirectly by Dragasakis, Sagias and Chouliarakis, who had given up on debt restructuring long before, I shall never know. What I did know was that, had we stuck to the strategy we had originally agreed, Brussels would have met us halfway.
But of all the moves made by politicians seeking to salvage Europe’s honour during that week, the most interesting and genuine arrived as a text message on Black Sunday, the day before the banks shut down.
Macron’s gesture
Emmanuel Macron, economy minister of France, texted me at around 6 p.m. on Sunday, 28 June to inform me that he was attempting to convince President Hollande and Sigmar Gabriel, Germany’s social democratic vice chancellor, to find a solution. ‘I do not want my generation to be the one responsible for Greece exiting Europe,’ he said.
Less than a minute later I replied, ‘But of course. Just know that we need an agreement that offers respite for the long run and a prospect that this situation will not be repeated in a few months.’
Emmanuel agreed. He would talk to his president and get back to me. ‘Sustainable solution is key, I agree with you,’ he said, proposing that he travel to Athens the next day, incognito, to have dinner with me and Alexis and to hammer out a deal between Athens, Berlin and Paris.
After midnight, while we were in the thick of preparations for the bank closures, Emmanuel wrote again to inform me that President Hollande was planning to issue a statement in the morning announcing the reopening of negotiations. ‘Would Alexis agree to go to Paris on Monday evening or Tuesday morning?’ he asked. I implored him to come to Athens himself instead. With the situation in Greece so volatile, Alexis could not leave the country for open-ended talks.
‘OK,’ Emmanuel said. ‘I am ready, and I am sure that Alexis, you and me could find a deal … I will convince the president tomorrow. We have to succeed!’
Deeply appreciative, I texted him: ‘I always felt that you and I could see eye to eye. The difficulty will be to find a solution that is viable for us and acceptable to Wolfgang.’
On Monday, 29 June, the day he was meant to come to Athens, Emmanuel called, asking for a favour: could Alexis contact President Hollande to let him know that he was ready and willing to receive Emmanuel in Athens as the French president’s emissary? I called Alexis, explained the opportunity that was being presented to us, and he agreed. An hour later, however, Alexis called me back, understandably cross. ‘What’s going on? Hollande’s office replied that they have no idea about a possible mission by Macron to Athens. They referred us to Michel Sapin. Is he pulling your leg?’
When I relayed this exchange to Emmanuel, his explanation shocked me. ‘The people around Hollande do not want me to come to Athens. They are closer to the Berlin Chancellery than to our government. They clearly blocked Alexis’s approach. But let me have his personal mobile phone number. I shall go to the Élysée personally in an hour to speak with him [Hollande] and ask him to call Alexis directly.’
Some hours passed, but Hollande never called Alexis. So I texted Emmanuel: ‘Do I take it there has been no progress? And that your trip has been cancelled?’
A dejected Macron confirmed that he had been blocked by his president and the president’s entourage. ‘I will push again to help you, Yanis, believe me,’ he promised. I believed him, and of course I understood exactly how he felt.
Three months after my resignation, in October, Emmanuel invited me to visit him at his ministerial office even though I was not in government any more. He told me that at a summit meeting before his failed attempt to mediate with Alexis he had used my line that the troika’s deal for Greece was a modern-day version of the Versailles Treaty. Merkel had heard him and, according to Emmanuel, ordered Hollande to keep Macron out of the Greek negotiations. Merkel’s spell was every bit as powerful as I had imagined.
A very Greek farce
It is both absurd and lethal for a finance ministry to lack the support of its central bank. One of the absurdities during that awful week, as we struggled to make very little liquidity last as long as possible, was that I did not even know how much liquidity there was in the system. But the fact that the Bank of Greece was headed by the governor who had started the bank run and who was plainly ecstatic the night the banks closed made me suspect it was under-reporting the amount of available cash.
After performing some research, to which Jeff Sachs contributed, I discovered an interesting if unusable piece of information: not only was there more liquidity in the system than the Bank of Greece was reporting, there was also €16 billion of ECB-owned cash stashed in the vaults of its branches around the country. It was there as a consequence of the previous cash crisis, which had taken place in the summer of 2012, when the ECB had organized hundreds of cargo flights into Athens from Frankfurt in order to keep Greece’s ATMs stocked with banknotes. To prevent the need for another airlift, the ECB had been building up cash reserves in Greece, just in case.
That day, on my daily visit to Maximos, I found Alexis in his office entertaining Alekos Flabouraris, a minister without portfolio in the government and something of a father figure to him. As usual, I briefed the prime minister on everything of consequence that day, primarily the rate at which cash was leaking out of the ATMs. I also mentioned the €16 billion stash.
Alexis’s eyes lit up. ‘What? There is €16 billion in cash lying around and we are not using it to stuff the ATMs and make them function normally?’
I explained that we could not touch the money. Confiscating it would be theft. ‘But, Yani,’ protested Alexis, ‘if my child is starving, and I have no money, I have a moral right to steal a milk carton. Is this not similar here?’
‘Since when did theft become part of the Left’s arsenal?’ I asked.
Flabouraris leaped to his protégé’s defence. ‘We have every right,’ he bellowed, ‘to get that money to stop the people’s suffering.’
As the conversation unfolded, another minister joined us, Panagiotis Lafazanis, the leader of the Left Platform, a declared enemy of the eurozone and a passionate Grexiteer. He asked what was going on. Alexis and Flabouraris informed him that I had discovered €16 billion in cash. Flabouraris told Lafazanis that he and Alexis, unlike me, believed the situation justified our tapping into this cash, currently languishing in state-owned vaults. I tried to calm them down and, in view of Lafazanis’s pro-Grexit position, to explain what our real options were.
If we wanted to stay in the eurozone, I told them, we could not possibly confiscate the ECB’s money. If, on the other hand, we wanted Grexit, then there was something useful we could do with the cash without being branded thieves: we could nationalize the €16 billion, stamp the notes with special ink to invalidate them as euros and rebrand them as new drachmas, put them in the ATMs and use them as a new currency. We would have to apologize to Mario Draghi, explain that we were in a national emergency and ask him to tell us what the paper value of his €16 billion cash was so that we could compensate him.
I also reiterated my own view, which was that we should do none of this but instead activate the electronic parallel payments system that I had been preparing. This would extend our fiscal space within the euro even if we did ultimately reach a good agreement with the troika, and if there was no agreement, it would buy us time or, in the most extreme scenario of Grexit, serve as the foundation of a new digital national currency.
Naturally Lafazanis liked the idea of using Draghi’s €16 billion as the foundation for a new drachma and agreed, were we to do so, that the ECB should be compensated for the production costs of the bills. But as he lacked the power to persuade Alexis to pursue Grexit, the idea was academic. As for Alexis, he soon forgot about the €16 billion but continued to block the activation of my parallel payments system, holding to Dragasakis’s veto of a few days before.
Months later, a conservative pro-troika newspaper published as fact the false and libellous rumour that Lafazanis had planned to storm the Bank of Greece’s vaults, arrest Stournaras and steal the cash. Some of the reports even portrayed me as a party to this conspiracy. Its purpose was clear: vilify anyone who had sincerely supported the no campaign in order to present Alexis, by contrast, as a sensible man who at the last moment saw the light and saved Greece from rogues in his own party. The fact that it was Alexis and Flabouraris who had momentarily toyed with the idea of storming the Bank of Greece’s vaults never reached the public’s attention.
Gazing into an abyss: comrades in retrospect
‘If thou gaze long into an abyss, the abyss will also gaze into thee.’ Nietzsche’s disturbing dictum captures what it was like to peer into my comrades’ souls. After an academic career in which success largely depended on my own efforts, I had found myself on the front line of a war, depending on comrades to guard my flanks and rear. Deciphering their thinking in order to gauge whether they had my back or not was the hardest thing I had to do.
Friends and critics criticize me for having seen things in Alexis that were not there. I think they are wrong. His desire to liberate Greece from its vicious cycle was there. His intelligence and capacity to learn quickly were self-evident. His enthusiasm for the deterrent I had proposed and the debt relief I was prioritizing was real. His appreciation of what I brought to his team was genuine. When he had instructed me, in front of our cabinet, to fly to Washington to tell Christine Lagarde we were going to default, the enthusiasm had been authentic. The reason I had seen all these things in him was that they were there. My mistake was to miss other things that were bundled up with them: his back-up plan, which would inevitably annul my work; his frivolity; his tendency to melancholy; and lastly his intense desire to prove to a sceptical world that he was no shooting star. When he instructed me, on our first day in office, to remain ready to hand over the keys of our offices to the opposition rather than capitulate, he was not lying. The part of him telling me that was speaking the truth. This is why I was brought to tears by his words. This is why I believed him.
I believed him also, despite his distressing U-turns, because of the inhuman pressure he was under. During that first week of July, with the banks closed and while I was giving everything I had in the campaign for a no vote, I presented him with the final version of Plan X – the contingency plan that he had asked me to compile in case Grexit was forced upon us. As I was handing it over, he asked me, ‘Is it doable?’
I answered him honestly: ‘Read it and weep.’ The transition to a new drachma would be so painful as to be debilitating. Plan X outlined the pain, blow by blow. As he sank into his seat, I reminded him that Plan X was there to have but not to use, unless Schäuble got his way with Merkel. But I did recommend that we activate immediately the euro-denominated parallel payments system, which was the opposite of Plan X: a system that would allow us, in the event of a no vote at the referendum, to stay in the eurozone long enough for Merkel and Draghi to have the chance to come back to us – as Juncker had done already – with an agreement that included our minimum demands of debt relief and an end to self-reinforcing austerity.
Alexis looked at me serenely and asked, ‘What are the chances that they will come back to us with something decent, Yani?’
At that critical juncture in our country’s history I was obliged to answer with the greatest possible precision. I told him that the probability they would do so was 100 per cent if they acted rationally. But, I warned, as Dan Ellsberg, the great American economist and Pentagon strategist turned pacifist whistle-blower, had emailed me a few weeks before, ‘Keep in mind that the ruling class can be self-destructively mad; not just pretending!’
‘Powerful European leaders have a track record of being bad at serving their interests, of falling prey to irrational urges,’ I said. And given that irrationality breeds unpredictability, I estimated that a more sensible probability – that Chancellor Merkel would opt for the mutually assured damage of Grexit rather than a mutually advantageous deal – was around fifty-fifty.1
Watching him buckle under the pressure of that probability made me want to forgive, legitimize and rationalize his unforgivable, unethical and irrational slip-ups. There were many of these, but two above all: his retreat from our firm agreement, on which we had based our original strategy, that a continuation of the nation’s insolvency through a new bailout would be worse than Grexit, however painful Grexit might be; and his rejection of my plea to address the nation with the dignified surrender speech I had prepared for him, instead of organizing a referendum that he secretly hoped to lose.
During the referendum campaign I issued a statement to the press that if yes were to win I would resign. ‘As a democrat,’ I said, ‘I shall respect the people’s choice to have their government accept the creditors’ terms. But, at the same time, I have no obligation to sign and implement that agreement myself. If yes wins, I shall resign and let my successor do it.’ The fact that none of my government colleagues, Alexis and Euclid included, committed themselves to doing the same told me everything I needed to know. In essence, the difference between my Syriza comrades and me was that I concentrated all my strategizing against the troika. In contrast, after that cruel day, 27 April, when Alexis decided to burn Theocarakis and sideline me, even as I was attempting to persuade him that neutralizing his finance minister in the face of the ruthless Eurogroup and the formidable forces of Merkel–Schäuble was self-defeating, he was busily strategizing how best to sacrifice me.
If there was callousness in Alexis, I did not discern it. I think its apparent absence was due to his capacity to do something that I believe the rest of his entourage could not: reflect upon himself. I remember one May afternoon when we were in his office at Parliament House, well after he and I had clashed over the concessions he was making to the troika. Before I had the chance to challenge him on whatever doomed tactic he was currently proposing, he told me, ‘I was reading an article by Stavros Lygeros [a political commentator] just now. The rascal has me all sized up. He likened my situation to swordfish fishing. I have taken the hook but I am too strong for them to pull me out of the water. So they bide their time. They pull me in for a while and then give me more line. Then they pull me back in. And they will carry on doing this until I am exhausted. Once they sense my weakness, they will pull me out in one violent move.’
The others, like Dragasakis and Chouliarakis, could never have fooled me. I would never have believed their subterfuges nor joined any cause they espoused. With Alexis it was different. He had to talk himself into crossing his own red lines, which is the opposite of never having the intention of keeping to them. I can imagine Alexis saying to himself, like Shakespeare’s Richard III, ‘And therefore, since I cannot prove a lover, / To entertain these fair well-spoken days, / I am determined to prove a villain’, except instead of ‘lover’ it would be ‘insurgent’, and instead of ‘villain’ it would be ‘insider’. Alexis’s actions were not banal, to adopt Hannah Arendt’s sense of the word; he struggled hard to reconcile himself to them and to find peace. It was, I am convinced, that inner voice of his that was both his strength and his downfall, both the usurper of our common project and the reason why I believed him almost to the bitter end.
The puzzlement Alexis’s inner voice caused me was compounded by my friend Euclid – a rare hybrid: an academic from a milieu close to mine but also a party apparatchik. Euclid and I met in the English language, to borrow another of Arendt’s phrases.2 We shared the same jokes, the same cultural references, the same radical Europeanism, the same understanding of ‘Blighty’. He liked to pretend that he was politically to my left, acting as my left-wing conscience whose job was to pull me into line and prevent me from drifting into bourgeois tendencies and suspect friendships, such as with Norman Lamont, something I enjoyed letting him do. His dislike and scorn for Alexis and Pappas, which were reciprocated by them, coupled with the fact that I had had to fight hard to have him included in the cabinet, made me feel safe in his company.
When Alexis broke with me on 27 April under Merkel and Dijsselbloem’s pressure, he told the world that Euclid was the newly appointed coordinator of our negotiating team. The media relayed the news around the globe and heralded Euclid as our chief negotiator. Of course, neither he nor I had any real influence over the timeline of concessions Alexis was making. When Euclid found out about Alexis’s surrender to new austerity – the acceptance of a decade of 3.5 per cent budget surplus targets – he was just as shocked and livid as I had been. Until the end we frequently found ourselves at Maximos or in some Brussels room, staring at each other in bewilderment while Sagias and Chouliarakis edited drafts of the SLA, wondering what our role was. A sort of gallows humour developed between us: I would ask him what on earth was going on, and he would answer, ‘Are you confusing me with someone in the know?’
However, we differed in a crucial respect: Euclid was a Syriza functionary, and I was not. By appearing to perform his allotted role as chief negotiator and thereby allowing the world to think that any kind of negotiation was actually taking place, he lent the hideous negotiation process legitimacy. I clung on in the hope that after a rupture Alexis would require my expertise with the parallel payments system and debt restructuring while determined to resign the moment it became clear that I would be asked to sign an unsustainable agreement. Lulled by the assumption that Euclid and I were of one mind, that we were somehow interchangeable, I failed to foresee quite what being interchangeable would lead to – that Euclid would ultimately become the person used by the establishment to sign the loan agreement, which they knew I never would sign.
Until the referendum I did not see that this could happen, even though I had noticed two incongruities which should have alerted me. The first was that when just the two of us were talking, Euclid would be magnificently witty and accurate in his disparagement of the rest of the war cabinet, Chouliarakis and Alexis in particular, but during war cabinet meetings his interventions were meek, verbose and unrecognizable as views that supported mine. Frequently he would not back me up at all. The second was that in our private exchanges he would habitually agree with my assessment of the day’s events, but when I proposed that we react before it was too late, he would advise me to bide my time and warn against developing a bunker mentality. One day I had had enough. ‘When in a bunker,’ I said emphatically, ‘a bunker mentality may be helpful. Given that they are trying to get me, it is not paranoia to think that they are trying to get me!’
After it was all over it took me some time to diagnose the cause of my failure to read my two comrades: Alexis’s inner dialogue and Euclid’s hybridity had blocked my sensors very effectively. It took the referendum outcome and their sudden metamorphosis to unblock them. It was a transformation portrayed by Syriza’s ideologues as true radicals behaving truly responsibly, but to me it is best summed up by the ending of George Orwell’s Nineteen Eighty-Four.
He was not running or cheering any longer … He was in the public dock, confessing everything, implicating everybody … The long-hoped-for bullet was entering his brain … O cruel, needless misunderstanding! O stubborn, self-willed exile from the loving breast! Two gin-scented tears trickled down from the sides of his nose. But it was all right, everything was all right, the struggle was finished. He won the victory over himself. He loved Big Brother.
