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19 May 2017updated 29 Jul 2021 11:48am

Yanis Varou­fakis’s retelling of the Greek debt crisis will galvanise Eurosceptics

Adults in the Room: My Battle with Europe's Deep Establishment also reveals a curious bond between the former Greek finance minister and Norman Lamont.

By Tom nuttall

Halfway through this book my mind drifted to Arthur Dent, the hapless hero of Douglas Adams’s Hitchhiker’s Guide to the Galaxy series. Seeking enlightenment, Arthur is directed to a half-blind crone battling giant flies in a cave. She gives him a pile of paper and tells him to photocopy every sheet. Confused, he asks if this is her advice. No, she replies – it’s the story of my life. Do the exact opposite of what I did, and then you won’t end your life in a smelly old cave.

It is tempting to interpret Yanis Varou­fakis’s account of his tempestuous period as finance minister of Greece in the same vein. The “erratic Marxist” spent his brief time in office, in the first half of 2015, locked in battle with Greece’s eurozone creditors as he vainly attempted to convince them to release his country from “Bailoutistan”, the debtors’ prison it had occupied since 2010. Confronting his adversaries with grand reforms and exotic debt-swap proposals, Varoufakis encountered a dogmatic refusal to engage. He resigned amid capital controls (not yet lifted), a chaotic referendum and the Greeks’ final capitulation. Some will see his gambit as an honourable attempt to restore dignity to a nation battered by years of austerity. But few could argue that his efforts amounted to anything other than ignominious failure, though he finds little room here to interrogate his own decisions.

It is hard to gainsay Varoufakis’s critique of the bailouts. The fiscal measures they entailed sucked demand from a shrinking economy and saddled Greece with unpayable debt. But if Varoufakis was a reasonable economist, he made for an appalling politician. As his minutely detailed accounts of meetings of the Eurogroup (the 19 eurozone finance ministers) indicate, he treated the gatherings as quasi-academic exercises, in which he would subject his counterparts to hectoring. It is hardly surprising that few were minded to play along. Greece’s perilous situation – Varoufakis took office just a few weeks before the bailout was due to expire – left him with little time for the patient coalition-building that is the only way to get business done in Brussels. But a good negotiator calibrates his approach to the circumstances. Varoufakis merely lectured.

How could Varoufakis, representing a nation worth just 2 per cent of eurozone GDP, have hoped to win his detractors over? First, by the power of his arguments; this is not a man crippled by self-doubt. But if that failed, he had in his back pocket credible threats he thinks would have forced Germany, the European Central Bank and, by extension, the rest of the eurozone to offer Greece better terms. (One wacky scheme involved an electronic payments system that could have served as a temporary parallel currency, should the ECB have shuttered Greece’s banks.) Whether his outlandish plans would have brought Angela Merkel to her knees we will never know. Ultimately Varoufakis’s humiliation lies in the treachery of his own side: notably Alexis Tsipras, the prime minister, whose early promises to support him crumble, we are told, in the face of looming default and Grexit.

It is Tsipras’s referendum, on a final offer made by the creditors as a hard deadline approached, that does for Varoufakis. Outside observers saw clearly that the referendum was a gun pointed at Greece’s own head. No electoral mandate, however thumping (over 60 per cent of Greek voters followed their government’s suggestion to reject the bailout proposals), will nudge the other side into compromise if they hold the better negotiating hand – as Theresa May will soon learn. Greece’s mighty Oxi (“No”), celebrated by Varoufakis, led directly to Tsipras’s capitulation at an all-night summit in Brussels in July 2015, and the signing of a third bailout on worse terms than the creditors were previously prepared to offer. (A fourth is now heaving into view.)

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It’s not clear what audience ­Varoufakis has in mind for this carefully written but overlong book. Its value as a record for historians hinges on the minister’s often-questioned reliability as a narrator. The blow-by-blow accounts of his battles with the hated “troika” (the IMF, ECB and European Commission) are of nostalgic interest only to the small number of us who were immersed in the drama in 2015. Eurosceptics, at least, will find much to confirm their hunch that the EU is a bureaucratic monster incapable of brooking democratic dissent. And one curiosity of the book is the enduring bond Varoufakis forms with Norman Lamont, today a gung-ho Brexiteer. It is also fun to see Emmanuel Macron, then France’s economy minister, make the odd cameo as a pro-Greek rebel powerless to shape events.

Greece was the first sign that all was not well in the eurozone, and it remains the last country in the sickbed today (though Italy is looking a little green). Its detractors say that its governments never tried seriously to tackle Greece’s deep-rooted ills of clientelism, corruption and tax evasion. Their critics, like Varoufakis, argue that the crushing austerity forced on Greece made it impossible to do anything other than struggle to stay afloat. Lost in the middle are the millions of Greeks dumped into poverty or forced to emigrate by an endless recession in which GDP slumped by a quarter after 2008. Varoufakis’s input is useful in weighing the balance of blame for Greece’s woes. But when it comes to negotiating, his is an example of what not to do. 

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Tom Nuttall writes the Economist’s Charlemagne column

This article appears in the 17 May 2017 issue of the New Statesman, Age of Lies