Book review: A whistleblower’s tale

Adults in the Room: My Battle with Europe’s Deep Establishment, Yanis Varoufakis, 2017, Bodley Head, £20

Yanis Varoufakis, a British-trained economist who taught for many years in Australia, Britain and Greece, was Greece’s finance minister for 162 days during Syriza’s first few months in office in 2015. His duties were anything but ordinary. With his country effectively bankrupt, Varoufakis’s mission was almost exclusively to negotiate with the creditors, the troika of the EU, IMF and the ECB. His aim was to achieve a form of debt relief and a sustainable way out of the crisis, even if he had to accept austerity. This account is his personal testimony of the negotiations with the troika and the Eurogroup, something which is very significant given that no minutes of the negotiating meetings in the first six months of 2015 were kept. It’s a whistleblower’s tale, not least because he wants to defend himself against a possible legal case in Greece, where some are accusing him, among others, of “closing the Greek banks and drowning Greece deeper into its debt trap.

Varoufakis argues that he made a “pact of steel” with the Syriza leadership before he left his professorial post at the University of Texas to become officially involved with the new Syriza government-in-waiting. Syriza, Varoufakis maintains, accepted his plan and negotiating tactics with the troika, which included guarantees for substantial debt relief and a certain acceptance of austerity as long as the country’s rate of growth was higher than the interest rate for borrowing for the year to come. Should the creditors not budge, Varoufakis tells us, he was given the go ahead by Alexis Tsipras, Syriza’s leader and Greece’s PM since January 2015, to work out a contingency plan.

The first leg of this contingency plan involved the European Central Bank’s remaining Greek debt, the SMP (securities market programme) bonds amounting to 29bn euros. A threat on the part of the Syriza government to reduce the value of these bonds unilaterally would have been a key deterrent against the ECB closing the Greek banks if the negotiations failed. The second leg of the contingency plan was a “parallel payments system”. If the ECB closed the Greek banks, then the Syriza government would have activated a parallel banking system to be set up using taxpayers’ identification numbers.

Varoufakis narrates how members of the troika, especially the German Chancellor, Angela Merkel, isolated him from Syriza’s leadership and, especially, from Tsipras and explains how some within the government and the party pushed for his marginalisation and eventual replacement replacement.

Thus, his debt relief idea and negotiating plan were undermined from both within and outside his government. The fascinating narrative apart, Varoufakis makes some very interesting observations. When he sought the tax code numbers in his ministry that he needed to implement his contingency plan, he realised that they were controlled by the troika’s personnel in Greece. This surely shows the degree of ordoliberal-imperial integration which the EU, under the leadership of Germany, has achieved.

Ordoliberalism – the German/Austrian brand of neo-liberalism badged as a “social market economy – is a rule-based form of a strong public institutional policy that defines market freedom through monetary discipline. Once the rules are set they cannot be bent by democratic politics, negotiation or social struggle. The Greek referendum of 5 July 2015 meant nothing to Germany’s finance minister, Wolfgang Schäuble. In the ordoliberal world, economic affairs are to be depoliticised and reduced to purely technical norms and processes. In effect, in that famous phrase, there is no alternative.

Varoufakis’s account, as well as his previous work on globalisation and the EU, seem to downplay this important aspect of German and European politics and the way they relate to the declining position of the IMF (and the USA) in European and global affairs. Reading between the lines, he seems to have over-estimated the influence of the IMF on Germany. The IMF’s position on the issue of debt was – and remains – that Greece needs substantial debt relief to make any austerity programme viable. Varoufakis, effectively, was adopting the IMF line but Germany and its staunch allies in Greece inside and outside Syriza won.

The closest Varoufakis gets to broaching this confrontation with ordoliberalism is when he describes a dinner occasion in his flat with a “troika” emissary, “without a missive”, as he puts it. Towards the end, one of his Greek co-diners asks the emissary, Thomas Wieser, if he is any relation to the right-wing Austrian finance minister, Friedrich von Wieser, whose thinking had shaped the minds of libertarians, such as Ludwig von Mises and Friedrich von Hayek. Thomas’s answer is in the positive. Weeks later, when Varoufakis experienced once more the troika’s brutal force, he happened to recall one of von Wieser’s most memorable lines: “Freedom has to be superseded by a system of order”. This is where we are at in Greece and Europe. But do not call it democracy.