Yanis Varoufakis: what choices did he really have?

In the comments section of a post titled “Open Letter to Yanis Varoufakis & Dominique Strauss-Khan from Giulio Tremonti & Paolo Savona” posted on July 24, 2015 by yanisv that was published on the blog of Yanis Varoufakis, the following comments caught my eye:

“iGlinavos on July 24, 2015 at 20:43 said:

Sending Yani open letters does not work. If he hadn’t ignored mine (https://iglinavos.wordpress.com/2015/04/21/basta-yani-the-good-fight-has-been-fought-but-it-is-time-to-stop/) things would have turned out better for everyone.”

I had read the open letter that iGlinavos is referring to, soon after it was published on his blog and, although I thought that it was well written and raised some good points, I did not agree with the author’s point of view.

Dimitris Yannopoulos was the press officer for Yanis Varoufakis during the time when Yanis was the Greek finance minister. Dimitris responded to iGlinavos as follows:

“Dimitris Yannopoulos on July 25, 2015 at 03:25 said:


I don’t think Yanis ignored it and, given the time of writing (April 2015), your letter was quite topical and poignant – prophetic even.

But your argument made the “dilemma”, arising from the creditors’ refusal to budge, even more untenable than that which Yani thought he faced at the end of June:

“Sign on the dotted line” or brace for catastrophic “Rupture”, which he “didn’t have a mandate for”.

Indeed, you posed the dilemma facing “the people” at that “early” stage, in no less fatalistic terms:

“The people must choose whether to become a German protectorate to maintain a semblance of normality, or to revert to emerging economy norms with living standards akin to 1970s. There are no good choices here, but the choice is not yours to make.”

No wonder the choice you recommended to Yanis in your April “letter”, was almost identical to the cowardly cop-out stance taken by George Papandreou in late November 2011, which, BTW, so enraged the “Merkozy axis” that they swiftly brought up the illegal “Grexit option” for the first time – after publicly vilifying and humiliating GAP at Cannes:

“Sign, live to fight another day and call an election so those who face this horrible choice get to make it”.

In other words, bow to the creditors’ diktat to win their favour and save your hide “to fight another day”. But afterwards, feel free to give Merkozy the “finger” and leave the “horrible choice” to the people whose mandate you had just betrayed with your signature.

BTW, this shows why Tsipras’ decision to go for a referendum on July 5 without signing anything, was the honourable and prudent thing to do, declaring beforehand his intention to resign only in case of a YES vote.

But was that really the dilemma which Yanis confronted back in April, i.e. at “midterm” of the loan agreement’s 4-month extension?

No way. Nevertheless, you’re right, neither he nor Tsipras had a direct mandate for “Rupture” – meaning default and Grexit.

But the question is, did the “other side” in the “negotiation” set-up (the German-led Eurogroup/ECB/IMF Axis) have a mandate – let alone a right – to breach their February 20 Eurogroup Decision and launch an Act of War against Greece, which they actually declared (or “confessed” in no uncertain terms, to test Greek reactions) in mid-March?

They even gave this Hostile Act a name reminiscent of Abu Ghraib and Guantanamo: “Credit Asphyxiation” (by means of multiple ECB/BoG/ELA liquidity caps), threatening Athens with domestic default, slow-motion bank run and ultimately bank closure, i.e. the gradual implosion of the Greek economy that lasted four full months before the ECB resorted to a total ELA liquidity support ban on June 28.

Was there no other moderate, legitimate and timely reaction to such a reckless “crime against humanity”, as Yanis called it, than Sampson’s “Rupture” or a continuation of the negotiation charade?

To make the culprits think twice before bringing an economically ravaged country to its knees, all that was needed was the mere threat of a unanimous Appeal signed by all Greek Parliament MPs as well as Euro-MPs, parliament parties, the Prime Minister, the House Speaker and the Greek President, to their counterparts in the Euro-Parliament, European national parliaments, the European Court of Justice, the International Court at The Hague, the UN General Assembly, the UN Security Council or – why not? – the Self-Righteous Holy German Constitutional Court.

The Appeal would call for an immediate injunction and/or protection from historically unprecedented forms of blackmail against a helpless European nation deprived of all monetary “defense policy” instruments.

The Appeal could also have requested the EZ bailout “negotiations” to be placed under the aegis of any or all of the aforementioned institutions, especially the Conference of European Parliament Presidents that thrice attempted to assume that role but was vetoed each time by EP president Martin Schulz.

Now, thanks to the much maligned audacity of House Speaker Zoe Konstantopoulou, who formally denounced them before a Greek Parliament plenum, neither the Act of War, nor the subsequent Acts of blackmail, ultimatum, coup d’etat or the fresh troika MoU carnage etc. have been irrevocably legitimised by the Greek Assembly – leaving enough room for their summary annulment at a future date.

But their implicit legitimization for no less than four months was a real and major – if not the only – cause of the Greek negotiation failure.”

I find these sorts of comments very interesting, since it seems that we will be forever debating why Yanis failed to achieve what he set out to do. But let him speak for himself.

In an interview that was done soon after he resigned as Finance Minister, and conducted by Harry Lambert of the NewStateman, this is what Yanis had to say:

“…….the Troika never genuinely negotiated during his five months as finance minister. He argued that Alexis Tsipras’s Syriza government was elected to renegotiate an austerity programme that had clearly failed; over the past five years it has put a quarter of Greeks out of work, and created the worst depression anywhere in the developed world since the 1930s. But he thinks that Greece’s creditors simply led him on.

A short-term deal could, Varoufakis said, have been struck soon after Syriza came to power in late January. “Three or four reforms” could have been agreed, and restrictions on liquidity eased by the ECB in return.

Instead, “The other side insisted on a ‘comprehensive agreement’, which meant they wanted to talk about everything. My interpretation is that when you want to talk about everything, you don’t want to talk about anything.” But a comprehensive agreement was impossible. “There were absolutely no [new] positions put forward on anything by them.”

Varoufakis said that Schäuble, Germany’s finance minister and the architect of the deals Greece signed in 2010 and 2012, was “consistent throughout”. “His view was ‘I’m not discussing the programme – this was accepted by the previous [Greek] government and we can’t possibly allow an election to change anything.’

“So at that point I said ‘Well perhaps we should simply not hold elections anymore for indebted countries’, and there was no answer. The only interpretation I can give [of their view] is, ‘Yes, that would be a good idea, but it would be difficult. So you either sign on the dotted line or you are out.’

It is well known that Varoufakis was taken off Greece’s negotiating team shortly after Syriza took office; he was still in charge of the country’s finances but no longer in the room. It’s long been unclear why. In April, he said vaguely that it was because “I try and talk economics in the Eurogroup” – the club of 19 finance ministers whose countries use the Euro – “which nobody does.” I asked him what happened when he did.

“It’s not that it didn’t go down well – there was point blank refusal to engage in economic arguments. Point blank. You put forward an argument that you’ve really worked on, to make sure it’s logically coherent, and you’re just faced with blank stares. It is as if you haven’t spoken. What you say is independent of what they say. You might as well have sung the Swedish national anthem – you’d have got the same reply.”

“There were people who were sympathetic at a personal level, behind closed doors, especially from the IMF.” He confirmed that he was referring to Christine Lagarde, the IMF director. “But then inside the Eurogroup [there were] a few kind words and that was it: back behind the parapet of the official version. … Very powerful figures look at you in the eye and say ‘You’re right in what you’re saying, but we’re going to crunch you anyway’.”

Varoufakis was reluctant to name individuals, but added that the governments that might have been expected to be the most sympathetic towards Greece were actually their “most energetic enemies”. He said that the “greatest nightmare” of those with large debts – the governments of countries like Portugal, Spain, Italy and Ireland – “was our success”. “Were we to succeed in negotiating a better deal, that would obliterate them politically: they would have to answer to their own people why they didn’t negotiate like we were doing.”

He suggested that Greece’s creditors had a strategy to keep his government busy and hopeful of a compromise, but in reality they were slowly suffering and eventually desperate.

“They would say we need all your data on the fiscal path on which Greek finds itself, all the data on state-owned enterprises. So we spent a lot of time trying to provide them with it and answering questionnaires and having countless meetings.”

“So that would be the first phase. The second phase was they’d ask us what we intended to do on VAT. They would then reject our proposal but wouldn’t come up with a proposal of their own. And then, before we would get a chance to agree on VAT, they would shift to another issue, like privatisation. They would ask what we want to do about privatisation: we put something forward, they would reject it. Then they’d move onto another topic, like pensions, from there to product markets, from there to labour relations. … It was like a cat chasing its own tail.”

His conclusion was succinct. “We were set up.”

Days before Varoufakis’s resignation on 6 July, when Tsipras called the referendum on the Eurogroup’s belated and effectively unchanged offer, the Eurogroup issued a communiqué without Greek consent. This was against Eurozone convention. The move was quietly criticised by some in the press before being overshadowed by the build-up to the referendum, but Varoufakis considered it pivotal.

When Jeroen Dijsselbloem, the European Council President, tried to issue the communiqué without him, Varoufakis consulted Eurogroup clerks – could Dijsselbloem exclude a member state? The meeting was briefly halted. After a handful of calls, a lawyer turned to him and said, “Well, the Eurogroup does not exist in law, there is no treaty which has convened this group.”

“So,” Varoufakis said, “What we have is a non-existent group that has the greatest power to determine the lives of Europeans. It’s not answerable to anyone, given it doesn’t exist in law; no minutes are kept; and it’s confidential. No citizen ever knows what is said within . . . These are decisions of almost life and death, and no member has to answer to anybody.”

The referendum of 5 July has also been rapidly forgotten. It was preemptively dismissed by the Eurozone, and many people saw it as a farce – a sideshow that offered a false choice and created false hope, and was only going to ruin Tsipras when he later signed the deal he was campaigning against. As Schäuble supposedly said, elections cannot be allowed to change anything. But Varoufakis believes that it could have changed everything. On the night of the referendum he had a plan, Tsipras just never quite agreed to it.

The Eurozone can dictate terms to Greece because it is no longer fearful of a Grexit. It is convinced that its banks are now protected if Greek banks default. But Varoufakis thought that he still had some leverage: once the ECB forced Greece’s banks to close, he could act unilaterally.

He said he spent the past month warning the Greek cabinet that the ECB would close Greece’s banks to force a deal. When they did, he was prepared to do three things: issue euro-denominated IOUs; apply a “haircut” to the bonds Greek issued to the ECB in 2012, reducing Greece’s debt; and seize control of the Bank of Greece from the ECB.

None of the moves would constitute a Grexit but they would have threatened it. Varoufakis was confident that Greece could not be expelled by the Eurogroup; there is no legal provision for such a move. But only by making Grexit possible could Greece win a better deal. And Varoufakis thought the referendum offered Syriza the mandate they needed to strike with such bold moves – or at least to announce them.

He hinted at this plan on the eve of the referendum, and reports later suggested this was what cost him his job. He offered a clearer explanation.

As the crowds were celebrating on Sunday night in Syntagma Square, Syriza’s six-strong inner cabinet held a critical vote. By four votes to two, Varoufakis failed to win support for his plan, and couldn’t convince Tsipras. He had wanted to enact his “triptych” of measures earlier in the week, when the ECB first forced Greek banks to shut. Sunday night was his final attempt. When he lost his departure was inevitable.

“That very night the government decided that the will of the people, this resounding ‘No’, should not be what energised the energetic approach [his plan]. Instead it should lead to major concessions to the other side: the meeting of the council of political leaders, with our Prime Minister accepting the premise that whatever happens, whatever the other side does, we will never respond in any way that challenges them. And essentially that means folding. … You cease to negotiate.”

Varoufakis’s resignation brought an end to a four-and-a-half year partnership with Tsipras, a man he met for the first time in late 2010. An aide to Tsipras had sought him out after his criticisms of George Papandreou’s government, which accepted the first Troika bailout in 2010.

“He [Tsipras] wasn’t clear back then what his views were, on the drachma versus the euro, on the causes of the crises, and I had very, well shall I say, ‘set views’ on what was going on. A dialogue begun … I believe that I helped shape his views of what should be done.”

And yet Tsipras diverged from him at the last. He understands why. Varoufakis could not guarantee that a Grexit would work. After Syriza took power in January, a small team had, “in theory, on paper,” been thinking through how it might. But he said that, “I’m not sure we would manage it, because managing the collapse of a monetary union takes a great deal of expertise, and I’m not sure we have it here in Greece without the help of outsiders.” More years of austerity lie ahead, but he knows Tsipras has an obligation to “not let this country become a failed state”.

Despite failing to strike a new deal, Varoufakis does not seem disappointed.

“I no longer have to live through this hectic timetable,” he said, “which was absolutely inhuman, just unbelievable. I was on two hours sleep every day for five months. … I’m also relieved I don’t have to sustain any longer this incredible pressure to negotiate for a position I find difficult to defend.”

His relief is unsurprising. Varoufakis was appointed to negotiate with a Europe that didn’t want to talk, no longer feared a “Grexit” and effectively controlled the Greek treasury’s bank accounts. Many commentators think he was foolish, and the local and foreign journalists I met last week in Athens spoke of him as if he was a criminal. Some people will never forgive him for strangling a nascent recovery by reopening negotiations. And others will blame him for whichever harsh fate awaits Greece this week.

But Varoufakis seemed unconcerned. Throughout our conversation he never raised his voice. He came across as imperturbably calm, and often chuckled. His conversation wasn’t tinged with regret; he appears to be treating the loss of power as ambivalently as he treated its acquisition.

Now he will remain an MP and continue to play a role in Syriza.”

Here is the link to the complete article plus a link to the transcript of the actual interview: “Exclusive: Yanis Varoufakis opens up about his five month battle to save Greece” by Harry Lambert of the NewStatesman.


About Peter Smith

A "foot-soldier" in the wider Post Capitalism Movement. First task - keep spreading the words of change, hope & inspiration.
This entry was posted in Greece and tagged , , , . Bookmark the permalink.

One Response to Yanis Varoufakis: what choices did he really have?

  1. Pingback: Can a political leopard really change its spots? | Thoughts on European Politics & Economics

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s