Trichet’s ultimatum to Ireland was like an idle suicide threat – Interview in the Irish Independent

24/04/2016 by

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Yanis Varoufakis is at Terminal 3 in Heathrow, on his way to the Far East. It’s perhaps not the most ideal setting to pick the former Greek finance minister’s substantial brain – but then, airports are symbolic places for him; it was passing through another terminal, in one of his many trips during the European financial crisis, that he noticed “how easy it was for my mind to be infected with the sense that I was entitled to bypass the hoi polloi.”

Some “moneyed outfit” had forked out for a first-class ticket and Yanis, who’d previously been photographed sitting proudly in economy, felt his socialist principles compromised.

He realised “how readily I could forget that which my leftwing mind had always known: that nothing succeeds in reproducing itself better than a false sense of entitlement.”

So today he’s flying economy?

“Oh no”, he confesses. “I wouldn’t be able for it, I’m flying from there to New York and then on to San Francisco. If I flew economy all that way I would die. What worried me more than anything is the sense of entitlement. And so I thought, ‘if I ever get this feeling, shoot me’.”

Perhaps that’s what he means by “erratic Marxism.” Still, it might be unfair to hold someone who is now a pundit and academic up to the sackcloth-and-ashes standards of post bailout Greek politics. And anyway, steerage class wouldn’t befit a star, which Yanis became during the heady days of the financial crisis.

Fiercely intelligent, memorably naff (who could forget those headache-inducing shirts?) and notably suave, he has remained one of the most singular voices in European politics. He recently began working with Jeremy Corbyn and has been outspoken on everything from Brexit to the migrant crisis.

He has a new, well-written book, And The Weak Suffer What They Must? (a quote from his countryman Thucydides) which blames much of Europe’s problems on the design of the euro. And he is in demand as a speaker all over the world – he’s going to be in Ireland twice over the next few months, for instance, including the International Literature Festival in Dublin in May.

In some ways this is quite brave, as there are probably many here who wouldn’t need evidence of encroaching entitlement before they’d think about shooting Varoufakis. His resignation from the Greek parliament, after his countrymen delivered a resounding No vote in the bailout referendum, and after he failed to secure the concessions Greeks had wanted from the Troika, was mocked by many in this country.

One economist I spoke with here said that Varoufakis “basically had his bluff called and had a worse deal given to the Greek people because he implied they could get a better deal.” Brendan Howlin has said that Varoufakis “went off on his motorbike to his holiday island”, leaving poor and elderly Greeks going through dumpsters looking for food.


“That’s a completely and utterly laughable accusation”, he responds. “The only reason that I went into politics and stood for parliament was because my people were eating out of garbage bins for years before I was elected. I had to resign because I refused to sign on the dotted line of an agreement which absolutely guaranteed the continuation of the Great Depression and yet more people eating out of the garbage.”


There is a line in his new book, where he writes that in the context of the collapse of Bretton Woods in 1971, “Europe’s leaders overplayed a weak hand against a bold hegemon.” They would “now have to suffer the consequences.” Was it not the same story for the Greeks last year?


“When I was writing those words I was wondering if it applied to my situation and I think not. I remember sitting down with [Greek prime minister] Alexis Tsipras and I tried to impress on him the idea that we might be overplaying our hand, and that what happened to Ireland can happen to us.” The question then, Varoufakis says, was, ‘did Greece have any other option?’ “I believed then, and I still believe, that we did have. Unlike Ireland in 2009, we had a bunch of bonds purchased from the secondary markets – about $30bn. The whole quantitative easing problem which keeps Europe together and Ireland solvent would collapse if I, as finance minister, restructured by writing new contracts or postponing payment. So our hand was not as weak at it appeared, and we were not overplaying it.”

I’m not sure I follow his logic about the bond holders, but he does seem to be saying that Tsipras, who was has been re-elected since Varoufakis’ resignation, was simply weak.

“I’m not going to characterise him at all. I’m not in the business of using epithets,” he begins.


“What has determined our defeat was the strategy of the Troika, pushing a wedge between Alexis and me. To do this they tried a number of strategies; the first was a character assassination of me, a pack of lies basically; that I had no proposals, that I was personally difficult and provocative. I had gone into those negotiations saying that the programme which we had in Greece for five years was a failure, we lost a third of our national income.

“There had in my opinion been no greater failure in the history of macroeconomic management. What Ireland experienced was a walk in the park compared to us. Within my own party I was actually regarded as the right winger, a person prepared to make numerous concessions to the Troika regarding privatisation, pension reform and so on.

“What I was not prepared to do was to be compromised when it came to the sustainability of the Greek debt.”


He speaks warmly of Michael Noonan, but says that Irish government negotiations during the crisis were ineffective. “The threat by [Jean-Claude] Trichet to close the whole Irish banking system down was not credible. It is like when my little daughter says ‘I will hold my breath until I die’. He wasn’t going to do it.”


But how could we have taken that chance? And anyway in hindsight, with our economy having now turned the corner, does it not look like the government, broadly speaking, acted in our best interests?


“But there is a huge debt and there was a lost generation in Ireland”, he counters. “There are thousands and thousands of Irish men and women – mostly the younger and smarter ones – who have left your country for good. And they won’t come back because there are no decent jobs to come back to.”


Aren’t there? Does the “model prisoner”, as he’s called Ireland, not get the benefit of being able to attract the world’s big tech firms here precisely because we’ve shown the wisdom of playing by the rules?


“I think most Irish people know deep down that they’ve managed to attract the Googles and Facebooks of this world with a beggar-thy-neighbour tax policy, which is only successful for boosting GDP and violates the spirit, if not the letter of the law. It also violates the principles of universal fairness which we try to teach our children.”


The high principle of a comment like that makes you wonder if Varoufakis, as undeniably astute and intelligent as he is, was ever cut out for the grubby pragmatism of politics. A profile of him in the New Yorker noted that even in the teeth of the crisis, Varoufakis “still carried himself as an outsider: informal, ironic, somehow alone on the stage. His demeanour had sometimes given his tenure the air of a five-month-long TED talk.”

This in turn lent him a kind of rebel cool. In his home country, a new word was coined – “Varoufitses” – to describe women with a penchant for someone who looks like a nightclub bouncer but talks like a college professor. They weren’t alone. “Damn, the Greek finance minister is sexy,” Isabel Moreira, a Portuguese socialist member of parliament, wrote on her Facebook page.


His appetite for non-conformism began early. He began deliberately misspelling his name Yanis, spelling it with only one ‘n’ since national school. “I had an aesthetic problem with the double ‘n’,” he said. “So I decided to write my name with one. My teacher gave me a bad grade, which made me very angry, and I’ve kept writing my name with one ‘n’ ever since.”


Varoufakis grew up in relatively privileged circumstances – his father was once chairman of Halyvourgiki, a Greek industrial giant – but this did not stop him from becoming a devotee of the writings of Marx, who he said “was responsible for framing my perspective of the world we live in, from my childhood to this day”.


After doing his doctorate in England he spent a couple of years teaching there, but Margaret Thatcher’s third election victory in 1987 disturbed Varoufakis, and he left Britain for Australia, where he taught economics at the University of Sydney. He returned to Athens in 2000, a decision he said was partly down to an “abhorrence of the conservative turn of the land Down Under.”


Given his own background, and the fact that he was reported to have a home on one of the Greek islands, I expect him to have colourful opinions on the migrant crisis, and he doesn’t disappoint. “[Angela] Merkel opened the border to refugees in a moment of generosity which I applauded in an article in the Allgemeine Zeitung. She made me proud to be European. Soon after the conservative factions within her own coalition attacked her and following the Paris attacks, which of course had nothing to do with the refugees, the German position changed.


“The Austrian government began the process of closing borders and the process of the scandalous EU treaty with Turkey began. I take back all my plaudits of Merkel. The current European leadership will go down as a black spot in history.” Was she blindsided by the swing to the right in Germany? “I seriously doubt it. She is a consummate tactician and her survival instinct is the most powerful one she has.”


He’s working with Jeremy Corbyn, (“we talk, argue, collaborate”), so naturally we must discuss the potential Brexit. He’s likened the EU to the Hotel California: you can check out any time you like, but you can never leave. “Whether they vote to leave or not they won’t really have left, they’ll still be in the single market, for instance”, he says. “And really, for that you need to have common sovereignty of the executive and judiciary, amongst other things. And besides, if they do leave, they’ll get Boris Johnson as prime minister, so I’m trying to scare them with that too.”


He is married to Danae Stratou, an installation artist and his second wife, whose wealthy family, he says, gave rise to the suspicion that he is a Champagne socialist. “Looking at the world through her artist’s eye for all these years has been a huge benefit to me in my life, just as looking at the world through my economist’s eyes has been of help to her. I consider myself a very lucky person.”Clearly a selfless European, she tried to talk him out of those headache-inducing hippy shirts he wore in parliament. But if the Troika couldn’t break him, Danae didn’t fare much better. “The really loud one? She did try. She loathed it”, he laughs. “I love it. So you see: We agree to disagree.”


Yanis Varoufakis will appear at the Dublin International Literature Festival, which runs from May 21- 29. Tickets to all events available online via www.ilfdublin.com‘And The Weak Suffer What They Must?’ is published by Penguin Random

The greatest Irish economist was Swift

The biggest personal toll the financial crisis took on me was… “Witnessing the disconnect between the image and the person I really am. I am very mild and moderate and yet I was seen as part superstar, part obnoxious recalcitrant.”

The greatest Irish economic thinkers are… “The one that influenced with thinking the most was Jonathan Swift. A Modest Proposal was a satirical treatment of the nature and causes of Irish budgeting and a magnificent piece of economics.” (Varoufakis would also borrow the title for a book which he co-wrote.)

Australia (where he lives part of the time) worries me because… “It already has the world’s longest-lasting bubble. They’ve had such a long stretch of good luck they don’t believe the worst can happen.”

My own favourite investments are… “I don’t have any money to invest. I own a small, a tiny hut in the middle of nowhere which was left to me by my mother. My wife was the daughter of a wealthy industrial family. Their factory went bust in 1983, however.”

The most broke I’ve ever been was… “…I’ve been skint most of my life.”

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