The Australian Magazine The Monthly published in its August 2015 issue an excellent interview of former finance minister Yanis Varoufakis. With the benefit of hindsight, he comes back on the circumstances of the crisis that took place in June-July, the cynicism of the Troika, the various views within Syriza. Here is the text in full, as well as the French translation to spread the word. A reference.
Down the road from my studio, in Melbourne’s northern suburbs, there is a small cafe next door to a tobacconist. Both are owned by Australians of Greek heritage. The week before the people of Greece voted on whether they wished to accept the new round of austerity measures demanded by the Troika (the European Commission, the European Central Bank and the International Monetary Fund) in order to release bailout funds, the shop owners plastered a series of black-and-white A4 sheets across their windows. Each sheet contained one bold word, OXI – Greek for “no”.
On the morning of 6 July I awoke before dawn, fired up the internet and switched on the television, both anxious for and dreading the news: the outcome would have consequences not only for Greece’s membership in the eurozone but also for the very definition of a united Europe. The referendum result was an overwhelming OXI. An hour later, still trying to identify why I felt this combination of fear and trembling and ecstasy as I watched images of the jubilant crowds in Athens, I realised that I was experiencing sensations that I had almost forgotten could exist: political hope and political optimism. The Greek nation had refuted an almost universal economic logic, one that exonerated the financial system responsible for the greatest economic catastrophe since the Great Depression. It was a logic that demanded that ordinary people pay for the miscalculations of the global markets, a logic that cleared the debts of the banks but allowed no such leniency regarding the crippling effects of debt on individual nations.
Within a week my hope and optimism had dissipated as Greece’s six-month-old coalition government, led by the left-wing Syriza party’s Aleksis Tsipras, seemed on the verge of accepting bailout terms that had been rejected by its own people. Yanis Varoufakis is on the phone. Greece’s charismatic finance minister had resigned his position immediately following the referendum result. Varoufakis, an economist with an extensive academic career, has dual Greek and Australian citizenship after a decade-long stint working at the University of Sydney. His outsider status in the European Union political club, his refusal to use technocratic language or conform to bureaucratic style, was a constant sore spot in the negotiations with the Troika. But in many ways, the strong referendum result can be seen as a validation of his tactics and directness. The first thing I ask him is how he felt on the night of the vote, and how he feels now, a week later.
“Let me just describe the moment after the announcement of the result,” he begins. “I made a statement in the Ministry of Finance and then I proceeded to the prime minister’s offices, the Maximos [also the official residency of the Greek prime minister], to meet with Aleksis Tsipras and the rest of the ministry. I was elated. That resounding no, unexpected, it was like a ray of light that pierced a very deep, thick darkness. I was walking to the offices, buoyed and lighthearted, carrying with me that incredible energy of the people outside. They had overcome fear, and with their overcoming of fear it was like I was floating on air. But the moment I entered the Maximos this whole sensation simply vanished. It was also an electric atmosphere in there, but a negatively charged one. It was like the leadership had been left behind by the people. And the sensation I got was one of terror: What do we do now?”
And Tsipras’ reaction? Varoufakis’ words are measured. He insists his affection and respect for the beleaguered Greek prime minister are undiminished. But sadness and disappointment are evident in his reply.
“I could tell he was dispirited. It was a major victory, one that I believe he actually savoured, deep down, but one he couldn’t handle. He knew that the cabinet couldn’t handle it. It was clear that there were elements in the government putting pressure on him. Already, within hours, he had been pressured by major figures in the government, effectively to turn the no into a yes, to capitulate.”
Out of loyalty to Tsipras, and to honour a promise he made, Varoufakis won’t name names. But he does tell me that there were powerbrokers within the fragile coalition government “who were counting on the referendum as an exit strategy, not as a fighting strategy”.
“When I realised that, I put to him that he had a very clear choice: to use the 61.5% no vote as an energising force, or [to] capitulate. And I said to him, before he had a chance to answer, ‘If you do the latter, I will clear out. I will resign if you choose the strategy of giving in. I will not undermine you, but I will steal into the night.’”
Though Varoufakis is circumspect, he makes clear that exiting the eurozone was something that he, Tsipras and their like-minded colleagues in the coalition would not countenance.
“We always thought that the European project, despite all its flaws … would be an opportunity for Europeans to get together, that maybe there would be an opportunity to subvert the original intentions and turn it into a kind of united states of Europe. And within that, to agitate for left-wing progressive politics. This was our mindset, how we were nurtured from a very young age.”
This mindset goes a long way to making sense of the compromised decision Syriza has made since the referendum. It was not being disingenuous in its commitment to Europe, for all the scaremongering in the mainstream European media. But for Varoufakis, honouring that pledge could not be conditional on accepting the suffocating terms of the proposed debt relief, the continuing social devastation being legitimised in the name of austerity.
“Tsipras looked at me and said, ‘You realise that they will never give an agreement to you and me. They want to be rid of us.’
“And then he told me the truth, that there were other members of the government pushing him into the direction of capitulation. He was clearly depressed.
“I answered him, ‘You do the best with the choice that you’ve made, one that I disagree with wholeheartedly, but I am not here to undermine you.’
“So then I went home. It was 4.30 in the morning. I was distraught – not personally, I don’t give a damn about moving out of the ministry; it was actually a great relief. I had to sit down between 4.30 and 9 in the morning and script the precise wording of my resignation because I wanted on one hand that it was supportive of Aleksis and not undermining him but on the other hand [to] make clear why I was leaving, that I was not abandoning ship. The ship itself had abandoned the course.”
I ask Varoufakis if there were members within the Eurogroup, the 19 finance ministers of the eurozone, who were agitating for a Greek exit. His answer is swift and blunt.
“Not the Eurogroup. The German finance minister, Wolfgang Schäuble.”
I want him to be clear on this, for the dominant media portrayal of the unfolding crisis is as a battle between the intransigent Greeks and a desperate Europe trying to keep the eurozone together. The reality is much more complex. I have wondered if the unworkable austerity conditions the Troika was demanding from this new left-wing Greek government suggested that, behind the scenes, members of the Eurogroup were preparing for a Greek exit. If this is the case, does it imply bad faith on the part of Schäuble?
Again, Varoufakis’ response is immediate.
“It wasn’t bad faith, it was a very definite plan. I called it the Schäuble plan. He has been planning a Greek exit as part of his plan for reconstructing the eurozone. This is no theory. The reason why I am saying it is because he told me so.”
Five years of austerity have seen the Greek economy contract by 25% and one in four Greeks unemployed, and debt conditions that economists from both the right and left argue can only mean increasing economic and social devastation. It strikes me that there is a desire to punish the Greek nation for the well-documented sins of its political structures, its clientelism and its corrupt public services.
But for Varoufakis the ruthlessness of the austerity measures is part of a political game the European Commission is playing in order to frighten other member states.
“This is Schäuble’s way of exacting concessions from France and Italy, that was what the game always was. The game was between Germany, France and Italy, and Greece was – not so much a scapegoat – we have an expression in Greece …”
We have been conducting the interview in English but on his hesitation I prompt him to speak in Greek. He answers, and though Varoufakis’ tone is that of an educated Athenian and he speaks English with the cosmopolitan accent of someone who has studied in the UK, and worked in Australia and the US, for a moment I hear my father’s voice; for a moment the rural and the urban conflate, the past and the present are one: The jockey strikes the whip for the mule to hear.
Then the urbane voice returns.
“It is a clear strategy for influencing from Paris and from Rome,particularly from Paris, the kind of concessions towards creating a disciplinarian, Teutonic model of the eurozone.”
Possibly because of that moment of dissonance, the switch between English and Greek, I am reminded that I am not a disinterested participant in this interview. Since 2010, I have been returning to my parents’ country to try to make sense of the experiences of family and friends, to comprehend the economic paralysis, and to be witness to its human costs. No Australian of my heritage is unaware of the deleterious effects of long-term state corporatism, of nepotism and corruption, in Greece. Many of us were lamenting the lack of serious reform in Greek politics long before the nation entered the eurozone in 2001.
Whatever the ideological differences, whatever the compromises and limitations of realpolitik, did Varoufakis’ fellow ministers in the Eurogroup, did the people he was negotiating with in the Troika, understand the extent of the humanitarian crisis in his country?
“It was a combination of indifference and self-interest. You have to understand, for some of them, the Greek [austerity] program was their life’s work, it was their baby. It was like Dr Frankenstein: a monster but nevertheless it’s your monster. It was something their careers depended on. For example, Poul Thomsen, who ran the Greek program on behalf of the IMF from 2010 to 2014, was promoted on the basis of that work to being now the IMF’s European chief. When these people look at the effects of what they have done – the people on the streets eating out of rubbish bins, the phenomenal unemployment – what kicks in is that normal process of self-rationalisation: either saying that it had to be done as there is no other way or blaming the Greek government for not carrying out the reforms sufficiently.”
Did they really believe austerity was the only way to keep Greece within the eurozone?
“It is a very cynical, utilitarian view that in order to forge the future you have to sacrifice unproductive people who are good for nothing. Now, the smarter ones – and there are very few smart ones – can see that this is all rubbish. They could see that the program they were implementing was catastrophic. But they were cynical. They thought, I know which side my bread is buttered.
“Interestingly enough, the finance minister of Germany is a man who understands this better than anyone. In a break during a meeting, I asked him, ‘Would you sign this, this agreement?’ and he said, ‘No, I wouldn’t. This is no good for your people.’ This is the most frustrating part of it, that at the personal level you can have this human conversation, but in meetings it is impossible to bring it up, it is impossible to have humanity inform policy-making. The policy debate is structured in such a way that humanity has to be left outside the room.”
Varoufakis has made clear that self-interest and careerism are at play within these negotiations. But if statespeople are making decisions based on policies they don’t believe in, isn’t there also cowardice at play?
“Let me try to answer as accurately as I can by saying this. Of my colleagues in the Eurogroup …” – he corrects himself – “former colleagues in the Eurogroup – I am no longer in the Eurogroup, thank God – it was often said it was 18 against one, that I was alone. It’s not true, it is not true. A very small minority, led by the German finance minister, pretended to believe – pretended to believe – that the austerity that was being forced on the Greeks was the only way out, was the best thing for the Greeks, and if we were only to reform ourselves along the lines of that austerian logic then we would be fine, that we are not getting out of the woods because we are lazy, we live off other people’s kindness, etc. etc. But they were a minority. There were two other groups that were more significant.
“One group consisted of the finance ministers who don’t believe in these policies but who had been forced in the past to impose them on their own people with great detrimental consequences. Now, this group was terrified of the prospect that we would succeed because they would have to answer to their own people … Why were they such cowards?”
“And there was a third group, France and Italy. These are important countries, frontline states of Europe, and the way I would characterise it is that their finance ministers neither believed in austerity nor had they practised it seriously. But what they feared was that if they sided with us, if they are seen to be sympathetic to the Greeks, they would encounter the wrath of the Teutonic group and maybe austerity would be imposed on them. They didn’t want to be seen supporting us in case they would be forced to suffer the same indignities.”
Varoufakis offers a precise and compelling account of the missteps of the eurozone, the lunacy of “creating a single common currency that was to be run by a central bank that had no state to back it, [and] states with no central bank to back them”.
“It was as if we were removing the shock absorbers from the euro area, the shock absorbers being the exchange-rate flexibility. The moment that banks stopped lending to places like Ireland and Greece, the bubble burst … In the old days the drachma would be devalued and the situation would be corrected. But we didn’t have the drachma, and so we had to replace the loans from the banks with loans from taxpayers.”
There was hubris in the structuring of the euro, a short-sighted euphoria prompted by the end of the Cold War and the victory of neoliberal ideology. Those mistakes have been compounded by a betrayal of any trans-European communal aspirations, the very notion of Europe that Varoufakis has tried to defend. This betrayal has reignited old nationalist stereotypes of a disciplined north and a slothful south, setting European taxpayer against taxpayer and shifting attention away from the financial elites that created this disaster.
But for all of Europe’s mistakes, there remain the noxious deficiencies of the Greek state itself. Many of us who supported Syriza hoped that the new government would begin dismantling the corrupt systems of patronage, whole-scale tax evasion and public-sector venality. In his writing, Varoufakis has referred to it as a “kleptocracy”, a state of thievery. What were the obstacles in confronting the kleptocracy?
“Huge! We had to confront an unholy alliance of vested interest and oligarchic practices, what I call the triangle of sin within Greece. Firstly, the banks, the bankrupt banks that are kept alive by the Greek taxpayers but without the Greek taxpayers having any say in the running of [them]. Secondly, the mass media, particularly the electronic media and the press, which were fully bankrupt. But they were controlled by the banks, which used bailout money to bolster the newspaper and electronic media to make sure the media is doing their dirty work in the form of propaganda. And thirdly, procurement, public-sector procurement. To give you an example, a motorway in Greece costs …”
He stops, again a correction.
“… cost, in the past, three times as much per kilometre compared to a motorway in Germany or France. It was not that people worked less hard or that the private companies were less efficient; they were plenty efficient. If you want to know why it cost so much, you just have to look at northern Athens and examine the villas in which the owners of these companies live.”
I remember being taken for a walk through Kifisia, one of Athens’ wealthiest neighbourhoods, in the late 1980s. The ostentatious houses were a shock. “What do these people do?” I asked my cousin. She said, resignedly, patting her back pocket, “We pay for them.”
Varoufakis continues. “On top of that, we had the Troika, which was in cahoots with this triangle.”
Is Varoufakis arguing that the Troika was hypocritical in its dealings with the Greek government over the past five years? That the new Tsipras government was held to a different standard than that applied to the coalitions led by Pasok or New Democracy?
“The Troika did challenge the previous governments of Pasok and New Democracy. They did that plenty of times. But not once did they threaten to switch off liquidity to them because the governments had failed to sufficiently tax the oligarchs, or because [they] had failed to tax the television channels, or failed to catch the big fat tax cheats with bank accounts in Switzerland. The Troika would only threaten to withdraw its liquidity if the lowest of the low of pensions were not cut, if the minimum wage was not cut. It only threatened those previous governments if they dared give a little bit of money to the poorest of Greeks.”
The rage that shoots through me is clear in my interjection, an obscenity.
In part, the rage comes from a fury at a country that has failed to restructure itself. I detest the bloated public sector that made employment contingent on who you voted for. I don’t want to excuse the rampant tax evasion practised across the Greek population. I am as appalled as anyone at a pension system that too was structured on patronage. Reform in these areas is necessary, essential.
The rage also arises because a lack of compassion, born from 50 years of systematic corruption, is now visited on those in Greece who can least afford it. I feel it here in Australia, with friends who curl their mouth in pious disdain at stories of tax evaders and 50-year-old pensioners. In the past five years Greece has undergone a radical experiment that has caused the economy to cease. There is no social-security safety net, and unemployment and working without payment have become the norm. Fine, the pensions were too generous. Let’s cut them. But if there’s no dole, no work, what do you want the 50-year-old to do? Starve? Let me assure you it is happening.
Varoufakis senses my fury. He says quietly, “The class consciousness of the Troika was mind-boggling.”
“Our state apparatus had been contaminated by the Troika, very, very badly. Let me give you an example. There is something called the Hellenic Financial Stability Facility, which is an offshoot of the European Financial Stability Facility [EFSF]. This is a fund that contained initially €50 billion – by the time I took over it was €11 billion – for the purpose of recapitalising the Greek banks. This is money that the taxpayers of Greece have borrowed for the purpose of bolstering the banks. I didn’t get to choose its CEO and I didn’t get to have any impact on the way it ran its affairs vis-à-vis the Greek banks. The Greek people who had elected me had no control on how the money they had borrowed was going to be used.
“I discovered at some point that the law that constituted the EFSF allowed me one power, and that was to determine the salary of these people. I realised that the salaries of these functionaries were monstrous by Greek standards. In a country with so much hunger and where the minimum wage has fallen to €520 a month, these people were making something like €18,000 a month.
“So I decided, since I had the power, I would exercise that power. I used a really simple rule. Pensions and salaries have fallen by an average of 40% since the beginning of the crisis. I issued a ministerial decree by which I reduced the salaries of these functionaries by 40%. Still a huge salary, still a huge salary. You know what happened? I got a letter from the Troika, saying that my decision has been overruled as it was insufficiently explained. So in a country in which the Troika is insisting that people on a €300-a-month pension now live on €100, they were refusing my cost-cutting exercise, my ability as a minister of finance to curtail the salaries of these people.”
Varoufakis, 54, left Greece after high school to study economics in the UK. In 1988, he left a position at Cambridge to take up an academic job at the University of Sydney. He tells me, laughing, that the people who recruited him thought he was a right-winger as he used game theory and mathematics in his published articles. “The left at Sydney Uni were actually dreading my coming.”
Knowing that Varoufakis has lived for periods among the Greek diaspora in the UK, the US and Australia, and spent time with that generation of immigrants who arrived in the 1950s and ’60s, I ask him if he thinks that during the decades of prosperity and the integration into the EU the Greeks had forgotten the trauma of emigration.
“Of course they had. During that period that I came to Australia and up to the beginning of the crisis, any Greek Australian that visited Greece felt a deep sense of betrayal. [Because] the Greeks were almost embarrassed by the Greek Australians. They reminded them of a past when Greece was poor, when Greece was the Albania of the 1950s.”
I mention that I recall being in Greece in the late 1990s and telling my cousins, “I am the Albanian.” I was appalled at the casual racism they were directing towards the eastern European migrants. I recall, too, the implication that my parents and other migrants of their generation were still peasants: salt of the earth, of course, but nothing to do with the new, cosmopolitan Europe. It was then that I realised I had a different history to those of the Greeks. Mine belonged to a history of immigration, not to Europe. Varoufakis agrees.
“But now that the Greeks have had that smack by history, we have realised that it was all a façade, that we are still a nation of migrants, that we never really made it into first-class European citizenship.”
The new wave of Greek emigration has certainly begun. On the high street near my home, there has been a resurgence in spoken Greek. It is 20-somethings, 30-somethings, 40-somethings: those fortunate enough to have been born here, those whose parents retained Australian citizenship. I ask Varoufakis to reflect on the similarities and differences between the two waves of immigration.
“In the 1950s and ’60s Greece lost a great deal of human capital, but it was unskilled labour. The great investment that has happened in Greece from the 1950s onwards has been in education. We have managed to become a supremely well-educated nation. In terms of our public sector, our private sector, we’ve done very little – even the environment we’ve managed to make a mess of, to deplete. But when it comes to human capital, we have created a great deal of it, and the tragedy of the current crisis is that we are exporting it. Young, well-qualified people whose education was paid for by the state primarily – and their families, but primarily by the state – are now offering their services all over the world, including in Australia. And this is a kind of loss that simply can’t be retrieved. Buildings you can rebuild, highways you can fix, but this depletion is irreversible.”
On the morning after my interview with Varoufakis, I receive a frantic call from a friend in Athens. She has not been paid for months and her husband is unemployed. They are terrified for their children’s futures. They both have university degrees; he has studied in the UK. Her voice is hushed, shamed. She apologises again and again. She asks me, “Please, please, is there any work possible in Australia? I am scared of what’s happening here, my friend. I am terrified of what’s coming.”
ABOUT THE AUTHOR CHRISTOS TSIOLKAS
Christos Tsiolkas is the author of five novels, including The Slap and Barracuda.
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