‘Yes, I do,’ I replied. ‘Let’s shake on it.’ He gave me his hand and we shook.
Back in Athens it took a vast effort to convince Alexis’s people and the cabinet to endorse the new policy. My argument was that it would give people and businesses a huge breathing space, it would help establish a new rapport between the population and its government, and it would be the first time we had seen eye to eye with the IMF on a major reform. While I got the green light, it was clear that many were not happy. Chouliarakis was upset that his troika-sourced model had been set aside, as were others for whom the very existence of my team was the real problem.
On 18 May I was to be interviewed live on Greek television. Beforehand, I asked Alexis for permission to mention the new VAT policy as a sign of progress in the negotiations and of our plans to provide relief from excessive taxation. He agreed, and so I did. The day after the interview parts of the press attacked the VAT proposal as ‘unfeasible’ and ‘a figment of Varoufakis’s imagination’. My press officer and Wassily reported that the deputy prime minister’s office and Chouliarakis were briefing journalists against the announced policy. I told them that I could not be bothered any more with my comrades’ backstabbing: ‘I have an agreement with Thomsen and Alexis, and that’s good enough for me.’
Two days later I received a call from one of our Brussels Group representatives. He had been very happy with the deal Poul and I had struck and had been eager to seal it at the level of the Brussels Group. He sounded incensed. ‘The IMF has gone back on your deal. Their mission chief did mention that Thomsen and you agreed on two rates, but he claims that the top one should go from the current 23 per cent not to 15 but to 24 per cent. This is what their model says.’ The words of caution that Jeff Sachs had once shared with me rang true: ‘These people lie. Don’t trust them.’ Still I could hardly believe that Poul could have been so blatant.
The next time I saw him, we were passing one another in a corridor in Brussels. He had his eyes fixed on the floor, clearly keen to avoid a conversation. I stopped him. ‘Poul,’ I said, ‘what happened to our agreement on two VAT rates, one at 6 per cent the other at 15 per cent, plus a surcharge for cash? What’s this about a top rate of 24 per cent that my people report?’ He mumbled something incomprehensible about the revenues not being high enough. ‘We had a deal, Poul,’ I insisted.
Grinning mischievously, he said, ‘Will you give me the labour reforms?’11
This was no way to negotiate, I thought. Saying nothing, I walked away.
Despite the ridicule of the Greek press, I did not give in. For the whole of June my team and I repeatedly demonstrated the superior accuracy of our model and persevered in our arguments. The situation was truly absurd: a left-wing finance minister representing Syriza, the Alliance of the Radical Left, was arguing like a Reaganite Republican in favour of lower tax rates, including for business, against supposedly neoliberal functionaries insisting on increasing them. It was a sure sign that this negotiation had no basis in economics.
One day at Maximos Alexis congratulated me. ‘Your model has won,’ he said approvingly. ‘Brussels conceded that it is better than theirs.’ And then he added, ‘But, Yanis, they still insist on the same parametric reforms [in tax rates], and we decided to let them have them.’12 He reminded me of Anan 7, the leader of Eminiar in ‘Taste of Armageddon’, who demanded that his own people voluntarily enter the disintegration chambers because this is what the model he had agreed with the enemy required.
Clean break
Of the many disgraceful acts the previous government had perpetrated, two concerned the arts and our broader cultural milieu. One was the closure of ERT, the state radio and television broadcaster – our equivalent of the BBC. The other was the illegal removal from the directorship of the National Museum for the Contemporary Arts (EMST) of Anna Kafetsi, a curator who had made its establishment, completion and success her life’s work.13 When in opposition Syriza had pledged to reverse these outrages.
Despite their differing backgrounds, Sagias, a product of the ancien régime, and Pappas, who liked to present himself as Alexis’s radical alter ego and the guarantor of our defiance, were a crucial component of the majority in the war cabinet that defended our original covenant. The first time I got a whiff that Pappas and Sagias were going over to the other side was when they backed away from our commitments regarding ERT and EMST. During that cruel April Sagias dropped a bomb. In reply to an idle question regarding who would be appointed CEO of the reopened ERT, he mentioned Labis Tagmatarchis, the former CEO who had overseen my blacklisting from ERT in 2011.14
‘Is this the new era we’re planning for ERT?’ I asked. ‘Did we fight to reopen it only to restore Labis? Are we keen to return to the bad old days of direct government control over a lowbrow public broadcaster?’
Sagias shrugged his shoulders. ‘That’s what I heard,’ he said. ‘Don’t chastise me. Talk to Pappas.’
The next day, on the sidelines of a regular war cabinet meeting, I confronted Pappas, who was the minister of state with responsibility for the media. ‘Are you seriously considering restoring Labis to the ERT throne?’
‘Don’t be absurd,’ he replied. ‘As if I would go for him!’
Reassured, I asked him whom he was thinking of instead. Pappas mentioned George Avgeropoulos, a brilliant young documentary maker and former war correspondent. He struck me as being an excellent choice. That night I told Danae I felt bad about doubting Pappas – a mistaken regret, as it turned out.
Meanwhile, every time I bumped into our minister of culture I would enquire about Ana Kafetsi’s return to EMST. ‘When do you think we can have her back?’ I would ask.
‘As soon as possible,’ was his standard reply, occasionally peppered with encouraging statements such as ‘She’s the only one who can open the museum properly and who has what it takes to make it globally significant.’ Precisely my thinking, I thought.
In short order two announcements wrecked my illusions: Pappas issued a press release that Labis Tagmatarchis was to become CEO of the reopened ERT, and the Ministry of Culture announced that the acting director of EMST, who had replaced Anna Kafetsi by a Samaras government decree, would continue in her position indefinitely. Countless people contacted me, incensed that we had reneged on two commitments to the thousands who had gone to the barricades to demand a different ERT and to those around the world who had protested against Anna’s removal.
I was even more incensed than the public because I was aware of things that might not have been widely known. The acting director of EMST was Labis’s life partner, while Sagias himself had told me of his long-term friendship with Labis. Pappas was getting closer and closer to Sagias when he reappointed Labis ERT’s CEO and was known by all ministers to have the ear of the prime minister – including the minister of culture. Even if these appointments had been on merit, they seemed to me to be a warning of nepotism creeping into our ranks and of a cosying up to the regime we had sworn to replace.
It was no coincidence either, I thought, that they came at the same time as a crucial shift within the war cabinet, with Pappas and Sagias clearly drifting away from our covenant. And as Pappas and Sagias drifted away, the four-to-two majority that had backed the original battle plan – with Alexis providing the fifth vote in its favour at the end of each meeting – became a four-to-two minority, with myself and Euclid increasingly isolated.
Fake intelligence
Pappas and Sagias were not the only colleagues whose shift towards the troika was signalled by seemingly inconsequential choices over personnel. One afternoon in March, Yannis Roubatis, the chief of Greece’s national intelligence agency, approached me at Maximos with a request. He wanted, he explained, to put in a good word for the man who had been presiding over the Hellenic Gaming Commission, the regulatory authority overseeing gambling. ‘He is very close to the previous regime,’ Roubatis admitted, ‘but I believe he has found a way to keep that dodgy sector relatively clean. It would be a mistake to remove him just because he is not one of our own.’ I was determined to maintain continuity wherever possible, and Roubatis’s word would normally have sufficed, especially given our good relationship and the significant esteem I held him in.
However, at the ministry my team would not hear of it. ‘If there is one person you must remove, he is it,’ they said about the man whose services Roubatis wanted me to retain. After researching their claims and assessing the situation, I did remove him. This kick-started a personal campaign by the privatized national lottery corporation against me and the people I appointed to the new Hellenic Gaming Commission.15 It also coincided, perhaps accidentally, with the cessation of the helpful briefings that Roubatis had been giving me until then.
Meanwhile Pappas and Sagias’s behaviour towards me deteriorated markedly. Alexis’s decision on 27 April to accede to Dijsselbloem’s demands by dismissing Theocarakis marked a significant downturn, and they became increasingly impolite. Within a month their manner towards me had evolved into downright rudeness and aggression. One day on the sidelines of a war cabinet meeting I asked Alexis whether he had noticed it. Nonchalantly he said he had. And when I enquired if he knew why, he shocked me with his answer.
TSIPRAS: Sagias is convinced that you are in cahoots with Schäuble to take us out of the euro. And I think that he has convinced Pappas too.
VAROUFAKIS: Do you believe this to be so, Alexi?
TSIPRAS: No, but they are convinced.
VAROUFAKIS: Why? How? On what basis? If I have succeeded in anything it is at blocking Schäuble’s Grexit efforts on your behalf.
TSIPRAS: Roubatis has fed them information to the contrary.
While the rest of the war cabinet continued their discussion, I tried to make sense in my head of this astounding information. Roubatis is telling them I’m in cahoots with Schäuble? If so, our chief spook is peddling outright lies, I thought. Evidently, someone has influenced two of my war cabinet colleagues, who have in turn influenced Alexis. But I’m getting all this from Alexis. How can that be? If Alexis believes I’m Schäuble’s stooge, why is he telling me? Surely he would use this information to bait me before getting rid of me? Then again, if Alexis does not believe this, why doesn’t he side with me against Sagias and Pappas? Could it be that Alexis is lying and Roubatis did not accuse me of collaborating with Schäuble? I needed to find out the truth.
I got my chance the night before the Eurogroup meeting of 11 May. The war cabinet had decided the strategy that I should take with me to the meeting and was in the process of adjourning. Roubatis happened to have joined us for the last quarter of an hour of discussions. As we were getting up to leave, Alexis turned to me and said in front of everyone, ‘Be calm tomorrow. Don’t lose your cool.’
I smiled and in a calm voice said, ‘I am always ultra-cool during Eurogroup meetings.’ Looking at Roubatis, I asked Alexis, ‘Have you been told otherwise Alexi?’
Alexis glanced at Roubatis but said nothing.
‘You did lose your cool at Riga, Yani,’ Roubatis said.
‘No, I did not. Not for one moment did I lose my cool. If you have been telling my colleagues otherwise,’ I said to Roubatis, pointing at the others in the room, ‘either you have been misinformed by your agents or you are lying.’
Back at my office I downloaded from my phone onto my computer my recording of the Riga Eurogroup. I copied it onto a USB stick and gave it to my secretary with instructions that the stick be reproduced and delivered personally to the members of the war cabinet, with a note from me: ‘Here is what really happened.’ Interestingly, none of them ever mentioned it to me. To this day I do not know whether they even bothered to listen to it.
Countdown to perdition
With little support from my ministry’s key departments, such as the tax office and the Council of Economic Advisers, I was now wholly reliant on a small team of advisers. The strength of their models and their tenacity were nonetheless a great source of annoyance to those who had worked harmoniously with the troika from the start as well as to those who had now chosen, mid-course, the path to surrender. One of those advisers was Elena Panaritis.
