‘No, Alexi, I’m not interested.’ I told him. ‘You met me years ago because I turned Greece’s debt into the dragon to be slain, and because of my proposals for how to slay it. I live, breathe, think and dream of debt restructuring, of a reduction in surplus targets, an end to austerity, tax rate reductions and the redistribution of wealth and income. Nothing else interests me. To take on the economy ministry to manage the EU’s structural fund handouts, just so as to remain minister, is not something I want to do. Do you recall why I moved from America? Because you asked me to help you to liberate Greece financially. I ran for parliament not because I was dying to be an MP but because I did not want to be a technocrat, an unelected finance minister. I thought that that way I would be more useful to the cause. Now, given your abandonment of that cause, I have no reason to be a minister. It’s OK. Let someone else do it. I shall be in parliament, where I will help to the best of my ability.’
‘You can have some other ministry – maybe culture, which you and Danae know so much about?’ he said laughing. ‘In any case, there will be many posts in the future where you can help.’
‘You’re again confusing me with someone who cares about positions, Alexi. There’s only one thing I care about, and you know what it is!’
‘Let’s sleep on it, let’s think about it.’
‘There’s nothing to think about,’ I said. ‘There’s no time. You have a lot to do.’
When I saw Danae afterwards, she asked me what had happened. ‘Tonight we had the curious phenomenon of a government overthrowing its people,’ I said.
Minister no more
Back at the flat, I narrated my discussion with Alexis for Danae and her camera and slept for a couple of hours before writing my seventh and final resignation letter. After proofreading it a few times, I posted it on my blog under the title ‘Minister No More’. It was one of the hardest pieces of prose I had ever had to compose.
On the one hand, I had a duty to warn the people, the Greek demos, that their mandate was about to be trashed. On the other hand, I felt an obligation to preserve whatever progressive momentum there was within our government and within Syriza. At that stage I still believed strongly that comrades like Euclid, with clout in the party that I lacked, would not sign up to the surrender document Alexis and Dragasakis were preparing. Losing a second finance minister in a month or two, if Euclid refused to become complicit in another harsh and hopeless bailout, might cause a rupture within the government and the party. This in turn might lead to new elections, which could further undermine the chances of our honouring the wishes of the 61.3 per cent. I needed to signal both my defiant commitment to the no vote but also to issue a call for unity. The result was the following text.
Like all struggles for democratic rights, so too this historic rejection of the Eurogroup’s 25 June ultimatum comes with a large price tag attached. It is therefore essential that the great capital bestowed upon our government by the splendid no vote be invested immediately into a yes to a proper resolution – to an agreement that involves debt restructuring, less austerity, redistribution in favour of the needy and real reforms.
Soon after the announcement of the referendum results, I was made aware of a certain preference by some Eurogroup participants, and assorted ‘partners’, for my … ‘absence’ from its meetings; an idea that the prime minister judged to be potentially helpful to him in reaching an agreement. For this reason I am leaving the Ministry of Finance today.
I consider it my duty to help Alexis Tsipras exploit, as he sees fit, the capital that the Greek people granted us through yesterday’s referendum.
And I shall wear the creditors’ loathing with pride.
We of the Left know how to act collectively with no care for the privileges of office. I shall support fully Prime Minister Tsipras, the new minister of finance and our government.
The superhuman effort to honour the brave people of Greece, and the famous no that they granted to democrats the world over, is just beginning.
In hindsight, I should have sounded a much louder alarm bell about Alexis’s intentions. That I did not reflects my misplaced trust in many people in the government – Euclid primarily – to carry out the task of preventing a recapitulation of the Samaras government. But I am not sure that a clearer warning would have made much difference. Everyone I have spoken to since that morning understood very well what had happened the moment they heard I had resigned on the night of our triumph.
As well as the creditors and their groupies, there was one other person who was unconditionally happy at my decision. On hearing the news that I had resigned, my daughter Xenia, who had come from Australia to see me two weeks before but had hardly laid eyes on me, gave me a sleepy early-morning look and said, ‘Thank goodness, Dad. What took you so long?’
You did that, didn’t you?
Over the days that followed I watched Alexis’s surrender evolve at breathtaking pace. Unwilling to be a dividing force within a party and a government that might still rebel against its own annulment, I kept quiet for a couple of weeks, but there was no rebellion. Paving the way for the third bailout, at a eurozone summit meeting on 13 July Alexis acceded to the troika’s demands by signing his own version of the Treaty of Versailles, which he condemned as a coup against democracy while promising to honour it. During the ensuing days, the more he demonstrated his determination to do as the creditors prescribed, the harsher the attacks against me became.
For weeks I was ridiculed for clashing with the troika without a credible deterrent, but when, as I described in Chapter 4, ‘A parallel payments system’, I eventually let it be known that I did in fact have a well-planned deterrent, which Alexis had prevented me from activating, suddenly those who had laughed at my foolishness accused me instead of treachery.8 The charge of national traitor, first laid against me in 2010, turned into a fully fledged campaign to convene a special court to try me for high treason.9
At the time of writing I still stand accused of having intentionally delayed an agreement with the troika in order to bring about bank closures, so that, in cahoots with Wolfgang Schäuble, I might engineer a parallel currency leading to Greece’s exit from the euro. Imagine if the soldiers who returned from Dunkirk in June 1940 had been met in Britain with the accusation that they were responsible for the Second World War, while Berlin was celebrated for its rational restoration of order.10 It was a comical turnaround: treason charges for me, adulation and respect for those who had done their best to shut down Greece’s banks and push us to the brink of Grexit.
The motives of the troika and Greece’s domestic oligarchy are obvious. Debt is creditor power, and unsustainable debt gives creditors exorbitant power. The Greek Spring challenged the right of creditors and their domestic agents to govern a debtor nation. The 61.3 per cent who voted no had to be discredited as a people led astray by opportunists, and since Alexis had now repented, that left me in the troika’s sights.
Troika functionaries like Klaus Regling and Yannis Stournaras argue seriously that I cost the Greek economy around €100 billion. These are the same people responsible for piling so much debt on bankrupt Greece with the bailout loans of 2010 and 2012 that by 2015 the only solution was to haircut our debt by €100 billion. I told the Greek people this explicitly, and they elected us to do just that. But the troika was unwilling to admit its culpability, so they crushed our government in order to roll the debt over instead. It was the same story within Greece. The very political parties, bankers and media owners who had demanded that I sign the troika’s agreement protested at the tax increases the agreement entailed. The same people who had orchestrated the bank run blamed me for the bank run. The journalists who had ridiculed me for being removed from the negotiations in April blamed me for the stalling of negotiations in May and June. The same people who want to see me in the dock on charges of high treason for gambling with Greece’s place in the eurozone are full of admiration for Mario Draghi and Wolfgang Schäuble, the two men who jeopardized the integrity of the entire eurozone by closing down Greece’s banks. Friends ask Danae and me how we cope with the opprobrium, especially from within Greece. My answer is that I can only consider it an honour to have the antipathy of such people.
Having said all that, it is time for a confession. Although I am immune to the slings and arrows of the troika, which I fully expected, having former colleagues – my parliamentary comrades who stayed in government and assented to the third bailout – do the same is hurtful.
It began with silence. When opposition MPs delivered fiery speeches condemning me for having brought the country to its knees, Syriza MPs would stare at the ceiling and say nothing. Then some of them began to join in, confessing it had been a great error to have entrusted the finance ministry to me. Then former cabinet colleagues began to tell tall stories that contradicted one another. In one account I was eager to push Alexis into surrendering to the troika in February 2015, while in another I was responsible for a futile clash with the creditors that same month. Then some even went so far as to endorse the call for me to be tried in a special court. For the most part Alexis and Euclid would let these allegations run for a while, before intervening, suspiciously belatedly, to rule out charges against me by damning me with faint praise. Whatever I had done, they would say, at least I was not a crook; it would absurd to blame everything on Varoufakis, they would insist.
One explanation for this behaviour is that those same MPs and ministers were voting in favour of bills they knew to be calamitous and whose passage annulled everything they had stood for since entering politics. When a person believes one thing but chooses or is forced to advocate its opposite, the result is cognitive dissonance. Eventually, in order to endure the internal conflict, one is forced, like Orwell’s Winston Smith, to change one’s mind. But the emotional fallout from such stress must somehow be vented; someone else must take the blame. Since I had been chosen to perform the role of scapegoat by the victorious trinka, I was the obvious choice for my defeated comrades too.
But of course this is not the whole story. I recall something my father said to me when he realized that, at a young age, I was becoming enthusiastic about left-wing politics. ‘When I was in the concentration camp as a communist,’ he said, ‘I knew that, had our side won the civil war, I would be in the same camp only with different guards.’ Since my resignation, when witnessing the nastiness and blatant untruths of my former comrades, I have been reminded of my father’s prescience.
Drawing up a final balance sheet for the Greek Spring of 2015 may seem like a tall order. It is not. On Thursday, 23 July 2015 I had two experiences that place this book’s story in its rightful context.
That day I had two appointments to keep in the late morning with the international media. The first, around mid-morning, took place at an office in a dilapidated old arcade near Syntagma Square. When I left, there were cameras waiting downstairs in the arcade and journalists asking for a statement. As I was speaking, a middle-aged man began to abuse me, accusing me of having destroyed his business by shutting down the banks. I tried to enter into a conversation with him but he was only interested in shouting abuse, so I said my goodbyes and headed towards the exit of the arcade, where my motorcycle was parked. The man followed me to my bike, continuing to abuse me. The news bulletins that night were full of the story: ‘Varoufakis hounded by irate businessman whose living the former minister destroyed’.
A little later I had a second appointment inside the National Gardens, just behind parliament – for a photo shoot with a German magazine about to publish a major interview with me on the Eurogroup and the state of Europe. A little way from where the shoot was taking place, a couple of young boys were playing. I noticed their modest clothes and the fact that they were unsupervised. The younger boy, who looked about five years old, remembered having seen me on television but could not put a name to me. He called to his older brother, who seemed around eight, to ask who I was. The older boy recognized me at once and approached. Surprisingly, it was to thank me. ‘Do you know who this guy is?’ he asked his brother while pointing at me. ‘He is the guy who gave our mother her plastic card. It lets her buy stuff from the supermarket. Two hundred euros a month!’ he said, proud to have remembered the number. Turning to me again he asked, ‘You did that, didn’t you? Did you really?’
‘We tried our best,’ I replied and hugged the boy. No one was there to witness this scene except the German photographer, who didn’t understand our exchange in Greek, which made the whole thing so much more satisfying.
That same night I was at home chatting with Danae and a journalist friend, with the TV on in the background. When the footage of the stricken businessman accosting me was replayed, our friend pointed out something interesting. ‘Did you notice that while the camera filming the scene is stationary, and the two of you are moving away from it, your voice fades but the businessman’s doesn’t?’ I said that it seemed so. ‘Can’t you see? The businessman was wired for sound. You were set up!’
‘Not for the first time,’ I replied, somehow relieved.
Once our friend had left and Danae had gone to bed, I checked my emails and stumbled upon one sent by the Spanish journalist who had brought Lambros, the homeless translator, into our flat just before my election in January 2015. In it she said that Lambros had used the bill I had passed to get assistance with his rent. This was the same bill that had provided the boys’ mother with her card and the very same bill that Declan Costello and his troika cohorts were so upset by and so eager to kill off. The Spanish journalist’s email finished: ‘Lambros wants me to tell you that he is moving into his new apartment tomorrow, and that he is very proud of you, and that you have his support more than ever.’
When all was said and done, how could I consider myself anything other than undeservedly privileged?
Epilogue
In mid-August 2015 Alexis and Euclid brought the third bailout loan agreement and its accompanying MoU to parliament. Convening at 9 p.m, we received more than a thousand pages – which read as if translated from troika-English into Greek by something like Google Translate – to sift through overnight before the vote scheduled for early the following morning. Sitting in parliament that long night – a night that resembled a wake more than a debate – I studied the MoU.
The full horror was evident from its first page, in which the Greek authorities committed to agree to everything the creditors demanded, with no reciprocal commitment from the troika to agree on anything in return – a pledge of utter subservience that no court of law would ever recognize as binding. Incensed, I worked through the night to produce an annotated version of the MoU.1 By 9 a.m. 118 Syriza MPs and 114 pro-troika opposition MPs had accepted our new sentence to debtors’ prison. I was one of 32 Syriza MPs who voted no, while another 11 abstained.
Predictably, the repercussions were devastating. All taxes soared. VAT rose on everything: food, hotels, books, pharmaceuticals, utility bills. Businesses tiny, medium and large saw their taxes and social security contributions increase and, staggeringly, were forced to prepay immediately 100 per cent of the following year’s estimated taxes. The small sum paid to pensioners receiving less than the standard €300 per month was cut, while the majority of pensions were curtailed. All the state’s remaining assets were put up for sale as part of a new fund to be controlled directly by the troika. The catalogue of horrors was endless. They were the kind of measures you impose on a weak economy if you want to crush it.
A few months later, at a conference in Italy, Jens Spahn, Wolfgang Schäuble’s deputy, reprimanded me for saying that the third bailout was an example of latter-day gunboat diplomacy. ‘But your parliament voted in favour of it with a large majority, didn’t it?’ he pointed out. Sure it did, I replied. Except that consent without the freedom to say no is a form of slavery, as feminists and civil right campaigners taught us long ago.
Shortly after my resignation I received two dismaying phone calls. One came from Panagiotis Danis, with whom we had set up the finance ministry’s team of untouchables charged with the algorithmic hunt for tax cheats. ‘They are about to pull the plug,’ he told me, ‘just when we were about to catch hundreds of thousands of large-scale evaders, raking in billions for the state.’ I looked at the MoU. Buried in its verbiage there it was: a provision for the troika-dominated tax office to absorb Danis’s team and thus defang it. Exercising my prerogative as a member of parliament, I made a speech warning against this travesty. ‘We created a fantastic opportunity to strike at the heart of tax evasion, to collect very large sums and to give our people a sense of justice. Do not sacrifice it on the altar of the MoU,’ I said. Euclid listened in silence from the ministerial benches. My fellow Syriza MPs looked at me as if I were the village idiot, incapable of shutting up about inconvenient truths. Nothing was reported in the press. By the autumn Danis had resigned, after submitting his report to Alexis. The tax-evading oligarchy, aided by its best friend the troika, had got away scot-free.
The other phone call came from Antonis Stergiotis, my appointee to the regulatory body overseeing the gaming industry – whose appointment had coincided with my estrangement from Roubatis. He told a similar story: the industry lobby, in collaboration with the deputy prime minister’s office and with the acquiescence of the finance ministry, was pushing him out in order to rescind the measures we had put in place to halt the spread of thousands of video lottery terminals. By the end of the year Stergiotis was gone and so were the constraints we had imposed upon those trying to profit from the desperation of our impoverished population.
Liberal establishment?
Despite the pride I retain in having played a part in the Greek Spring and the real, albeit brief, scare it gave Greece’s irresponsible and inhumane creditors, our defeat came at a great cost. The economic bill for that defeat was footed, of course, by Greece’s weakest and neediest. Its political price, meanwhile, was paid by progressives around the world, whose hearts sank when they saw Syriza succumb to the dogma of TINA – There Is No Alternative – with the same enthusiasm that Orwell’s Winston Smith realizes he loves Big Brother. But a defeat is always easier to bear if one can recognize it as but one episode in a larger struggle.
‘Observing the European Union’s attempts to deal with the crisis is a bit like watching Othello – one wonders how our rulers can be so deluded … In this titanic battle for Europe’s integrity and soul, the forces of reason and humanism will have to face down the growing authoritarianism.’ I spoke these words in 2013 in a speech entitled The Dirty War for Europe’s Integrity and Soul.2 A little less than a year after my resignation the people of Britain voted to leave the European Union. Then in November 2016 Donald Trump romped into the White House. Xenophobic Eurosceptics were appearing everywhere – in France, Germany, the Netherlands, Italy, Hungary, Poland. The scandalous treatment of the refugees landing on Greece’s shores was a symptom of the same change. Meanwhile, commentators and those in authority began to fret about this unexpected challenge to the liberal establishment.
Having just emerged from an intense engagement with that very establishment, ‘liberal’ is the last adjective I would use to describe it. Once upon a time the liberal project was about the readiness to ‘pay any price, bear any burden, meet any hardship, support any friend, oppose any foe, in order to assure the survival and the success of liberty with hope and justice’, to use JFK’s stirring words. An establishment that used truth-reversal so casually to annul a democratic mandate and to impose policies that its functionaries knew would fail cannot be described as liberal. Impoverishing Jill to keep Jack in his place is the opposite of liberalism. Something other than liberalism, or even neoliberalism, had taken over the establishment without anyone noticing.
The third MoU that I read and annotated that night in parliament begins with the words ‘Greece has requested support from its European partners, to restore sustainable growth, create jobs, reduce inequalities, and address the risks to its own financial stability and to that of the euro area. This Memorandum of Understanding (MoU) has been prepared in response to a request of 8 July 2015 from the Hellenic Republic…’
The victim was being forced to pretend that it had requested its punishment and that the creditors were only responding generously to that request. Just as an unnamed US officer in the Vietnam War had claimed that a particular town had to be destroyed in order to be saved from the Vietcong, our country’s fiscal waterboarding was celebrated as a sensible way of bringing a lost people back into the fold. In a sense, Greece experienced collectively the same treatment that Britain’s poor receive when they go to claim their benefits at Jobcentres, where they must consent to their humiliation by espousing ‘affirmation’ phrases such as ‘My only limitations are the ones I set for myself.’3
In the bonfire of its illusions that followed the financial crash of 2008 and the subsequent euro crisis, Europe’s deep establishment lost all sense of self-restraint. I witnessed first hand what I can only describe as a naked class war that targeted the weak and scandalously favoured the ruling class. It came to my attention, for example, that some of the employees in my ministry, specifically the chair, CEO and members of the board of the Hellenic Financial Stability Facility (HFSF), were collecting what I considered to be outrageously high salaries. To economize but also to restore fairness, I used the powers vested in me by law to announce a salary cut of 40 per cent for these posts, reflecting the average reduction in wages throughout Greece since the crisis had begun in 2010. The CEO, who had been paid €180,000 in a country where a high court judge earns not more than €60,000 and the prime minister €105,000, would now receive €129,000 – still a large sum by crisis-ridden Greece’s standards. Did our creditors, usually so keen to shrink my ministry’s outlays on wages and pensions, embrace my decision enthusiastically? No, they did not. Instead, Thomas Wieser wrote to me repeatedly on behalf of the troika to demand that I reverse the decision. Why? Because these salaries went to functionaries that the troika considered their own. After I had left the ministry, those salaries were raised by up to 71 per cent, the CEO’s salary being bumped up to €220,000.
