Feb 26 2018

A few notes on “Adults in the room”, by Yanis Varoufakis (and why it is important to read it).

Premise: Yannis Varoufakis was Finance minister in Greece for six months after Syriza won the national elections in January 2015. He was the spearhead of the bailout negotiations until he was forced to resign when his plan to restructure the debt was rejected by the EU and eventually by Alexis Tsipras’ Greek government cabinet.

If you are interested in European politics, this is a must-read. Yannis Varoufakis provides an insider view of those infamous months that, despite a bit of naïve self-portrait as spotless hero, is essential to have a picture of the complex economic and human dynamics that control today the European project in particular and the political-economic world in general. Actually, I suggest to read it even if you are interested in politics anywhere else. It doesn’t matter how much you think you already know about what happened during the worst months of the Greek crisis: the white rabbit hole always gets deeper than expected.

Here are my take home messages, which are in part motivated also by my personal (and of course way less dramatic and relevant) political experience in Italy.

  • Politics over economics, OR, nobody really cares about rational or optimal solutions. In his meetings and multilateral sessions, Varoufakis reports his gradual understanding that being “right” on economical-mathematical terms is almost completely irrelevant. His pledge for a plan that includes restructuring the debt is perfectly rational and many seem to agree with him on multiple occasions (e.g. Christine Lagarde, director of the IMF, is reported working with him on such hypothesis). However, a political decision is mainly grounded on ideology, which makes technical and economical non-viable plans become perfectly rational. Greece was considered as both a test-tube and a means to an end. The point was to crash a government that was looking for alternative policies and by doing so send a message to bigger economies (Spain, Italy and France) that no negotiation would be allowed, at any cost. The Greek economy was at best a casualty in a bigger conflict.
  • Winning alone is close to impossible, OR, how easy it is to develop a sieged mentality when you are in fact besieged. The Greek government looked for a solution almost anywhere in the world, hoping to find money to buy (!) them more time to negotiate. However, they were pressed by the German Government and Wolfgang Schauble (the German finance minister), meaning that (Varoufakis reports) even the Chinese government backed down from their proposed intervention in terms of Greek state bond acquisition. After knocking on all government doors, east and west, it became clear that no help would have been provided, because… see point 1. I am surprised though, it seems the Greek government never tried something else. Syriza was of course seen as a potential enemy by most governments in the EU, each worried that their own left-wing parties could win a future election and kick them out of office. Therefore why not trying to put pressure on these governments from within their own countries? E.g. why not pressuring the Spanish government with an alliance with Podemos? Why not trying to talk with the Linke (or maybe even the SPD) in Germany? I don’t think it would have worked easily, but once everything else failed, it seemed like a necessary step.
  • You are entitled to have allies, OR, you are not entitled to have friends. This keeps surprising me, despite the fact that even politicians that have been around the block a few times keep doing the same mistake, so why not Varoufakis, who came from an academic background? Politics is about power and interests, not friendship: those who want to help only because they have established a friendly relationship cannot be relied upon. They do flip if stronger powers or different interests make them. In Varoufakis account this happens multiple times on multiple fronts and he feels betrayed every time.
  • The world is full of happy stooges. The “eastern block” ultra-conservative governments in the EU are portrayed by Varoufakis as unable to express any thought that is not dictated by the German government, up to a point that it becomes almost comical when Shauble and Merkel find themselves disagreeing on key policies. Difficult to be surprised here. However I was a bit surprised by the southern block, which had in theory (rationality again!) all the reasons to help the Greek effort so to have more space for future negotiations of their own. Spain, Italy, Portugal are instead out of the picture. Even France, which could have been a strong player and initially seemed to take a lead, eventually backs down (on this matter the activism of Emmanuel Macron positively surprised me). Due to my perspective, I was avidly curious to know how (ir)relevant the Italian stance had been. Pier Carlo Padoan (Italian Finance minister at the time) is missing from the story with the exception of a couple of anecdotes. In an initial meeting, he suggests Varoufakis to do “like we did”, that is to say, to give away something important to appease Schauble. The Italian Government gave away the workers’ rights to show their good intentions. Because that’s what those rights were for: to prove a point. Finally, in discussing whether or not the Greek people should decide with a referendum on an agreed plan, Padoan is quoted stating candidly: “how could we expect normal people to understand such complex issues?”. Varoufakis is offended by the idea that the general population cannot be properly informed and decide, considering that this is the basis for any democracy. I agree with Varoufakis that Padoan is de facto proposing the end of a democracy, but I also look at this statement from the other perspective. There is something grotesque in a bunch of finance ministers perceiving themselves as some kind of super-humans who are part of the very few initiated in having a real grasp of such complicated matter. I mean, finance!? Seriously?

For those interested in a review:

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