I made my way back towards the motorcycle and to Danae, but before putting on my helmet and getting on the bike, I turned round and said, ‘I was roaming around Exarcheia decades before you were born. Are you now telling me that I cannot come back here? Are you banning me from my neighbourhood?’
He thought about it for a couple of seconds before responding: ‘You’re welcome to return when you’re no longer a minister.’
‘See you soon then,’ I replied.
As we set off on the motorcycle, I looked in my mirrors. The sixty or so suddenly looked more like guards ensuring our safe departure than attackers. When we arrived home and I was putting the motorcycle on its stand, Danae hugged me. I hugged her back, both of us trembling a little. The next morning a journalist who was usually critical of me wrote, ‘Last night, the anarcho-fascist hoodlums of Exarcheia were dealt their greatest defeat in thirty years by a woman: Danae Stratou.’
But now a more sinister kind of violence was coming our way.
PART THREE
Endgame
15 Countdown to perdition
After that night in Exarcheia, it took sixty-six days for the endgame to unfold. A political cartoon by the artist Yannis Ioannou sums them up vividly. In it Greece appears on her knees, her arms bound behind her back, struggling to escape. A menacing figure representing the EU, wielding an executioner’s axe, castigates her for refusing to stay still and place her head obediently on the block: ‘Will you at last show a modicum of responsibility?’
My own experience of those days is better encapsulated by a different cultural reference: Samuel Beckett’s play Endgame – which might also serve as the leitmotif of Europe’s establishment since the financial calamity of 2008 left it bereft of ideas as to how to sustain our societies yet unable to relinquish its grip on them – depicts a blind authoritarian barking orders at his servant, Clov, whom he took in as a child, in a grinding repetition of pointless behaviour, moving ever closer to an end that is both inevitable but elusive, simultaneously cursed and desired. For throughout May and June I was under no illusion that the game that Alexis and the war cabinet had chosen to play was already lost. We were merely going through the motions leading to an inescapable checkmate. The one illusion that did remain was my faint belief that Alexis would ultimately baulk at the humiliation the troika were planning for him and at the last moment choose to play another game – the one we had planned all along. That belief faded with every day that passed, but as long as it endured, however faintly, I would stay put. If nothing else I was not going to make it any easier for the creditors to replace the finance minister whose signature they required in order to renew Greece’s indefinite jail sentence.
I dedicated my remaining energy to four tasks: the campaign against tax cheats and gambling machines, preparing my presentations for the Eurogroup so that they were as immaculate as possible, developing the parallel payments system, including Plan X, and, top of the agenda, compiling our Plan for Greece. Jeff Sachs and I were already working on the last of these, and in addition to contributions from Norman Lamont, Larry Summers and Thomas Mayer, we had the help of Jamie Galbraith and fellow economist Mariana Mazzucato.
On 7 May I would be delivering a keynote speech in Brussels. It would be an opportunity to test the water with an early draft of the plan before presenting it at the next Eurogroup, which was scheduled for 11 May, at which point Jeff would start canvassing support for it at the IMF and elsewhere in Washington. I did not imagine for a moment that it would be welcomed with open arms by Wolfgang and his people, whatever its calibre, but there was a chance that a convincing plan would prompt other, less hostile, ministers to break ranks in its support. Before the speech in Brussels, I decided to fly to Paris and Rome, and then after the speech to Madrid, to see if my plan cut any ice there.
With foes like these who needs friends?
Having little to lose and knowing that the current impasse worried the French, Italians and Spanish too, I resolved to be frank and ask them directly to respond to a bold suggestion. I proposed that the Greek prime minister persuade the German chancellor that the only way forward was for them to take a joint Graeco-German proposal to the institutions. This would comprise, first, a package of reforms to be passed through Greece’s parliament by the end of May (including a revised fiscal plan, a simplification of VAT, major reorganization of the tax administration, severe limitations on early retirement, etc.), which would become the new ‘common conditionalities’ for completion of Greece’s current programme; and, second, a long-term Greek recovery contract between the EU and Greece (our Plan for Greece), which would itself comprise the debt swaps I had been proposing, a major investment initiative, a public bad bank to deal with the banks’ non-performing loans, many much-needed reforms in public administration and product markets and a programme for combating the humanitarian crisis.1
I argued that approaching Merkel with this plan was our only chance. It was a moderate proposal, containing everything that Greece needed immediately and in the longer run while maximizing the creditors’ chances of getting their money back, but above all this strategy would allow the chancellor to present it as her own idea. If she refused it, I argued, then no sustainable solution was possible. In that case, I said, let the chips fall where they may.
In Paris, on 5 May, I met Michel Sapin and Pierre Moscovici. They talked at cross-purposes, offering the usual empty promises of support and no ideas of their own, and when it came to the strategic question – of whether to approach Merkel in this way – they were neither in favour nor against. But there was another French politician I met that day who truly engaged with the plan, who told me it was a good one and who encouraged me to proceed with it: Emmanuel Macron.
In Rome, on 6 May, Pier Carlo Padoan had a major surprise in store for me. In the Eurogroup he was reliably conformist with one eye firmly trained on Wolfgang for his approval. In his own office, however, he revealed what I supposed were his true colours. ‘You must most certainly go ahead with this,’ he told me. ‘There is no time to waste. Your prime minister must call Merkel now, or at most by tomorrow, and press her on this. Do not wait until Monday [11 May, the day of the Eurogroup]. By then, if there is no action by Angela, Wolfgang will have the upper hand.’
I was astounded. But that was not all. To strengthen our argument that there should not be two sets of conditions for us to adhere to – which would have meant being unable to embark on our new agreement until we had satisfied the conditions of the current programme – but common conditionalities that covered them both, Pier Carlo advised us to make the case that the previous two troika programmes – those rejected by the Greek people when they elected us – were based on the logic of the IMF, whereas any new arrangement should depart from the IMF’s logic and come closer to the developmental logic of the World Bank. Pier Carlo’s only piece of criticism was that it was a mistake to refer to a ‘humanitarian crisis’. ‘They don’t like being criticized for having caused such a thing,’ he told me. He suggested using the term ‘anti-poverty campaign’ instead, advice that I adopted instantly. As I left his office for Fiumicino Airport, I was both pleased and aghast: pleased that there was intellectual life and honesty in at least one of Europe’s seats of power; aghast that Europe had conspired to ensure that neither ever showed its face in our common institutions, especially in the Eurogroup.
Having delivered my speech in Brussels on 7 May, I arrived in Madrid on 8 May to be received by my next-door neighbour at the Eurogroup table, Luis de Guindos. As the finance minister of a conservative Spanish government that was the sworn enemy of Syriza’s sister party in Spain, Podemos, Luis had never missed an opportunity in the Eurogroup to side with Wolfgang against me, but I had already gathered that this might well be due to tactical expediency rather than out of conviction. That day in his office he confirmed my suspicion. Over a simple but fabulous dish of paella, with a glass of excellent red wine to complement it, a disarmingly friendly conversation ensued. Not only was Luis quick to endorse my idea for breaking the deadlock, but when I told him of Pier Carlo’s similar reaction he shook his head appreciatively and said, ‘You, the Italians and we must band together.’
Intrigued, I encouraged him to come clean. ‘Are you telling me, Luis, that you are no longer interested in overthrowing our government? Was that not your not-so-secret desire?’
Luis thought about that for a moment. ‘Not any more,’ he said with a wicked smile.
‘What changed?’ I asked. ‘I was under the impression you had joined Wolfgang in seeking Grexit.’
‘What changed,’ Luis replied thoughtfully, ‘is that Podemos are no longer posing a threat to us the way they had been a few months ago. And, also, I now fear Grexit more than I did. I am not sure any more that we can contain it.’
Spain’s credit-fuelled mini-recovery was indeed fragile and incapable of surviving the shocks that Grexit would cause, and it was true that Podemos’s rise had stalled owing to internal divisions. Even though he would never come out and say so in public, a pact between Greece, Italy and Spain that averted Grexit and calmed the markets made sense from his perspective.2
On the flight home from Madrid I was plagued by the thought of missing the opportunity we now had before us. The French economy minister and the finance ministers of Italy and Spain had agreed wholeheartedly that Alexis should immediately call the German chancellor with my proposition. They would never take the lead themselves of course, but if Alexis did, they would support us, at least from behind the scenes.
By the time I landed in Athens, the Plan of Greece had been finalized. Jeff Sachs had beautifully edited the draft I had sent him a couple of days before; Norman Lamont had added some important vignettes; the people from Lazard had refined the debt-swap proposal, and Larry Summers had provided his endorsement. There were other contributions too, including sterling work on a debt sustainability analysis and a bad bank policy. Jeff suggested that the title of the paper should make it sound boring and modest, the way the IMF liked it, and it accordingly became A Policy Framework for Greece’s Fiscal Consolidation, Recovery and Growth. Co-signed by policymakers who combined exceptional pedigrees with experience of the highest levels of governance from across the political spectrum, it was a powerful weapon.3
That Saturday morning, two days before flying back to Brussels for the 11 May Eurogroup, I had my office print out copies of the Policy Framework, placed a few in my rucksack, got on my bike and headed over to Maximos to see Alexis. There I told him of the encouraging reception of my proposition in Paris, Rome and Madrid and handed him copies of the Policy Framework with firm advice that it was his only remaining weapon if not to win the war, at least to prevent annihilation.
Without even pretending that he wanted to read it, Alexis pushed the Policy Framework aside. ‘This is not the time to antagonize her,’ he said, referring to Merkel.
Words eluded me. In refusing the opportunity to adopt this document and proclaim it our government’s anti-MoU, he was wasting the chance to table a plan for Greece’s recovery devised by the Greek government for the Greek people with the able assistance of some of the world’s brightest and most experienced policymakers. Denied the prime minister’s stamp of approval, the Policy Framework was from then on nothing more than a Ministry of Finance green paper, handing the creditors a licence to ignore it altogether.
Alexis’s one act of resistance remained his threat to default to the IMF (while signalling behind the scenes to Merkel his readiness to roll over). The next IMF payment, totalling €765 million, was due on Tuesday, 12 May, the day after the Eurogroup meeting. But on Sunday, 10 May, just before another war cabinet gathering, Yannis Stournaras, governor of the Greek central bank, called to relate that €650 million had miraculously been discovered idling around in some forgotten account that happened to be stuffed with funds that we were allowed to use to repay the IMF. There was no way we could justify defaulting over the remaining €115 million. ‘Bastards! They have resorted to paying themselves to stop our default,’ was how Alexis put it.
‘The fact that they’re paying themselves rather than announcing a default by Greece should give you strength and courage, Alexi,’ I told him. ‘It shows the kind of power you have.’
My attempt to revive his spirits went unnoticed, and over the next few hours, as the war cabinet discussed new ways to succumb to the old programme, I remained quiet. Only towards the end of the meeting did I ask, ‘Tomorrow I have to fly to Brussels to attend another Eurogroup. What are my instructions?’ The answer I received was to fend off Wolfgang and his troops in the hope that Merkel would come to our rescue.
Wolfgang’s move
Keeping my friends close but my enemies even closer, I arranged to visit Wolfgang, along with Theocarakis and Chouliarakis, at the German delegation’s Brussels office an hour before the Eurogroup began.4 He received us with his two deputies by his side. Setting aside the usual preliminaries, he got straight to the point. ‘Look,’ he said, ‘it’s a mistake to believe anything the commission tell you. What can they offer you? They talk and talk and talk but it is all just talk. Pay no attention to them.’
On past experience he was right. What I had not expected, and what I now discovered, was that his advice to ignore the European Commission applied equally to his own chancellor. ‘I know that your prime minister talks to her all the time,’ he said. Growing visibly agitated, he asked, ‘Why is he talking to her all the time? What for? What does he expect from her? There is nothing she can give him!’ Perhaps realizing that he had exceeded the limits of propriety, he took a step back: ‘I was very pleased to have heard your prime minister mention the possibility of a referendum because that would be fantastic! But you must be very careful. You must make it very clear – very, very clear – to the Greek people what their choice is. Opinion polls say that they want the euro. You must tell them that if they want the euro they must have the MoU. If they don’t want the MoU then that’s fine, move on. Just move on.’
I retorted that membership of the eurozone could hardly be made conditional on consenting to failed policies that made one’s country unsustainable within that same eurozone.
He dismissed my argument immediately: ‘The MoU, the MoU as it is, with no changes. Or the drachma. You have to take the MoU if you want the euro. If you don’t want the euro, that’s another matter. The people of Greece must decide that question. That’s why I was happy to hear your prime minister speak of a referendum. You should set up this referendum. And, you know, if it takes six months for the Greek people to have plenty of time in order to make up their minds, that’s fine. We will fund you completely for six months.’
So there I had it. All the talk about the ECB merely following its rules in denying us liquidity was claptrap. If they wanted to, for political purposes they would fund Greece’s debt obligations ‘completely’. And not just for the two or three weeks that we had been requesting but for six whole months – which would amount to €11 billion!
