16. SDOE was the Greek acronym, standing for Σώμα Δίωξης Οικονομικού Εγκλήματος.
17. To make it all possible, I appointed Michalis Hatzitheodorou head of the ministry’s General Secretariat for Information Systems. Having completed a PhD at Columbia in image processing, he returned to Greece to set up a small IT-service-providing company. With no connections to politics or the oligarchy, and with an adamantine character that I could vouch for personally (we had been friends since school), he was ideal for the job.
18. While she was France’s finance minister, Christine Lagarde had sent my predecessors in government a list of names of Greeks with accounts at HSBC Switzerland that a whistle-blower had leaked. Unlike the German, French and Spanish tax authorities, which used the information to ascertain tax evasion by their citizens and recover significant sums, previous Greek governments had been conspicuous by their refusal to act. This was not the only such list in circulation. But while it was important to look into such lists, I did not trust the tax office’s capacity or willingness to delve properly and effectively into them. Additionally, the lists were old (going back to 2004) and were mere snapshots of bank account balances and therefore of little use in uncovering actual income streams. Finally, without the cooperation of the Swiss authorities, which was wholly unforthcoming, it would be difficult to use what information we had to make any prosecution stick. The deal I made with the Swiss finance minister tackled the underlying problem – the holding of untaxed Greek income in Switzerland – while circumventing all these obstacles to doing so.
19. As these agreements take some time to complete, the Swiss finance minister and I shook hands on this deal on 28 April in my office.
20. Επιτροπή Παιγνίων.
21. Stergiotis stood up to OPAP, which went to great lengths to undermine my policies. He paid the price for doing so, with his term cut short once I was out of the ministry.
22.An Inquiry into the Nature and Causes of the Wealth of Nations, 1776, Book 1, Chapter 2.
Chapter 7: Auspicious February
1. The notion of ‘Bankruptocracy’ in Varoufakis, 2011, is relevant: a regime in which bankrupt banks rule based on the principle that the greater one’s losses, the greater one’s power to extract rents from the rest of society.
2. Collective bargaining was dismantled by the previous New Democracy–PASOK government at the behest of the troika, with the IMF leading the charge.
3. As explained in Chapter 5, ‘First contact’. The only difference between the situation of our newly elected government and Samaras’s was that our repayment was due not to the ECB but to the IMF.
4. See Varoufakis, 2016 for a historical and economic account of how the French elites’ determination to share a currency with Germany put France on a long path towards political and economic decline.
5. Aegina has a rich history going back to the Neolithic age and was the first Greek polis to mint official coins.
6. ELA would provide around €22 billion of liquidity. The people at Morgan Stanley, who for some reason saw fit to send me helpful updates on their views, informed me that in addition to this Greece’s four systemic banks had another €30 billion to play with courtesy of structured (or, as they call them in the trade, ABS/Covered) bonds at their disposal. They added that, in their opinion, the eurozone would not dare to choke us completely as Grexit would cost it dearly.
7. See http://www.bbc.com/news/world-europe-31083574
9. Explained more fully in Chapter 3, Note 36, and mentioned crucially in the confrontation with Jeroen Dijsselbloem in Chapter 6, ‘Ultimatum’.
10. To get Merkel to agree to the quantitative easing programme in spite of the wishes of the Bundesbank, one of the conditions that Draghi had to impose was that no more than a certain percentage of a government’s outstanding bonds/debt could be purchased by the ECB. If the new perpetual bond I was recommending had stayed on the ECB’s books, it would have limited the number of new Greek bonds that the ECB could purchase, thus limiting the positive impact of quantitative easing on the Greek government’s capacity to borrow again, afresh, from private investors.
11. Glenn’s email confirmed that the four Greek banks would be hit badly by Draghi’s move. ‘From what I see,’ Glenn wrote, the waiver removal would
involve some €27 billion of cash collateral (out of a total €41 billion of pre-waiver withdrawal ECB exposure) which will come at a cost of 1.55 per cent. The most affected would be Eurobank (roughly a 6–7 per cent hit to 2015 net interest income) and Alpha (6 per cent hit), while Piraeus (4 per cent) and National Bank of Greece (2 per cent) would be the least affected. Note, however, that banks have increased exposure to ECB after deposits outflows by I guess about €20 to €21 billion … hence the real impact could much higher than that. At this stage, only EFSF bonds will be still eligible for ECB funding.
12. The economic mantra of General Augusto Pinochet’s fascist regime in Chile and that of Schäuble’s wing of the CDU had many similarities.
13. Of course, when we did go to the institutions with our proposals, the institutions would also refuse to engage with them, demanding reams and reams of data instead. The purpose of this interminable data gathering was to avoid any response, positive or negative, to our proposals. Meanwhile the press would broadcast that I was arriving in Berlin, Brussels and Frankfurt with no proposals.
14. Alexis’s wreath-laying had been interpreted in Germany as a hostile gesture. By mentioning it during a speech in which I was praising the Germans for their successful purge of Nazism, I was trying to build a bridge. My point was that Greeks and Germans shared a common experience of Nazism and therefore a common aim: combating its economic underpinning, which was a permanently deflationary economy.
15. Willy Brandt was the SPD’s leader 1964–87 and West Germany’s chancellor 1969–74. During the latter period he had played an important role in marginalizing Greece’s right-wing dictators while at the same time giving sanctuary to fleeing Greek democrats.
Chapter 8: The frenzy before the storm
1. The title of his memoir about that work suggests those words stayed with him. See James K. Galbraith, Welcome to the Poisoned Chalice: The Destruction of Greece and the Future of Europe, 2016, Yale.
2. Without this small army of aides I would have been at the mercy of the ministry’s Council of Economic Advisers led by George Chouliarakis, who had already demonstrated himself and his team to be utterly unwilling and possibly incapable of doing anything beyond regurgitating the troika’s models and projections. With the clock ticking I thought it best to defer a confrontation until after an interim agreement had been reached at the Eurogroup.
3.https://www.nytimes.com/2015/02/17/opinion/yanis-varoufakis-no-time-for-games-in-europe.html?_r=0
4. Oscar Wilde, The Soul of Man Under Socialism, 1891.
5. I was paraphrasing John Maynard Keynes, who wrote of the Versailles Treaty: ‘[the German government’s] insincere acceptance … of impossible conditions which it was not intended to carry out – an acceptance which made Germany as guilty to accept what she could not fulfil as the Allies to impose what they were not entitled to exact’. See John Maynard Keynes, Dr Melchior: A Defeated Enemy, 1920 and Chapter 8 of Varoufakis, 2016.
6. Such evidence included the rehiring of the cleaners who had been dismissed from the Finance Ministry illegally (according to the Greek courts) as well as a few hundred state school janitors, and a pledge not to reduce pensions beyond the twelve separate cuts that had already reduced them by a stupendous 40 per cent.
7. Even though Dombrovskis was senior to Moscovici, he rarely took the lead. I suspect this was because his presentation skills left much to be desired. In any case, his real job was to watch over Pierre, rather than lead anything, let alone a discussion.
8. Recall that, well before our election, the Eurogroup had agreed that the ECB’s profits on the Greek government bonds purchased as part of the SMP programme should be returned at regular intervals to Athens, but as Wieser’s non-paper, sent to us via email by Thomas Asmussen, had made clear, the troika now intended to withhold that money. See Chapter 5, ‘First contact’.
9. Just before I entered the room, Glenn Kim had sent me a warning. According to his sources, Chancellor Merkel, unwilling to get involved herself, was inclined to let the European Commission find a solution to the new Greek drama, but the Spanish government was kicking and screaming. The reason was that they faced elections in which Syriza’s equivalent, Podemos, was threatening to do well. Glenn recommended that I keep an eye out for any sabotage Luis de Guindos attempted.
10. The Austrian and Belgian governments were internally divided in that they were headed by social democrats while their finance ministers came from the equivalent of Wolfgang Schäuble’s Christian Democrats.
11. Some member states’ constitutions or parliamentary rules require any EU decision with a potential impact on the state’s finances to be passed through their parliaments. This includes Germany, Austria and Finland. But in most member states, such as Italy or France, there is no need for a parliamentary vote.
Chapter 9: A moment to savour, darkly
