Every Hero has a Story

“There are times when you say, ‘I’m not going to sign something I disagree with.

And stuff the consequences!” ~ Yanis Varoufakis



Former Greek Finance Minister Yannis Varoufakis



On July 4th, the night before a referendum asked the Greek people to decide how far their debt-ridden government should accommodate the demands of its main creditors—the “troika” of the European Union, the European Central Bank, and the International Monetary Fund—Yanis Varoufakis, the country’s minister of finance, sat outdoors at an Athens restaurant, wearing a T-shirt with an outline of Texas on the front. In January, Varoufakis, an economist who had been teaching at the University of Texas at Austin, abruptly entered Greek politics, becoming the public face of the country’s defiant negotiations with European leaders.

After months of fatigue, he had slept for much of the day, and he was in a good mood. Varoufakis, who is fifty-four, had the peace of mind of someone who was certain of an election result and already savoring the satisfactions to follow. His government, the left-wing Syriza party, would lose. The people would vote “yes”—that is, in favor of making more concessions than Varoufakis and Alexis Tsipras, the country’s forty-year-old Prime Minister and the leader of Syriza, had said that they could stomach. Varoufakis would resign as a minister, and would never again have to endure all-day meetings in Brussels and Luxembourg, listening to other European finance ministers scold Greece for its disobedience. And he would no longer need to marshal scant supplies of discretion to disguise the fact that he and Tsipras had, in recent weeks, lost significant faith in each other. Varoufakis had not given up his hostility toward the troika, or the economic arguments underpinning that hostility, but he spoke as if Syriza’s weeklong campaign of slogans and street protests in support of ohi—“no”—were already archived in Greece’s long history of resistance to external aggressors. A “yes” vote, Varoufakis declared, was “inevitable.”

He was with his wife, Danae Stratou, an artist whose work mainly involves installations and photography, and his friend James Galbraith, an American economist who is a professor at the University of Texas. Galbraith had been acting as an unpaid adviser on an informal international team that included Jeffrey Sachs, an economist at Columbia University. According to Varoufakis, Sachs had been sending “missives for the past two weeks, saying, ‘Demand debt relief. You need it. If it’s not granted, then default.’ ”

It was ten o’clock. Far fewer tourists were about than on a typical July evening, and at the restaurant Greek voices were low. When a passerby took Varoufakis’s hand—the minister preferred a right-angled bro-shake with Greeks—he kept shaking it with an almost violent intensity. It had been a disorienting few days, during which Greeks often described an event or a conversation as having taken place a while ago, before realizing that it had happened only yesterday. Aristides Baltas, a philosopher of science who is currently serving as the minister of education, told me that time had become “dense.”

At the end of the previous week, negotiations between Greece and its troika creditors had stalled, and Tsipras called the referendum. On June 28th, the European Central Bank declined to increase the level of day-to-day credit available, under a program called Emergency Liquidity Assistance, to Greece’s ailing private banks; they were almost out of cash, after months of a slow-motion bank run. Greeks were hoarding euros at home. Varoufakis set in motion what he called “a tragic mechanism” to restrict withdrawals. (The next night, a Monday, he told Stratou, on returning from work, “Honey, I shut the banks.”) Greeks could now withdraw from A.T.M.s no more than sixty euros a day. A shrunken economy shrunk further, although it was still possible to make unlimited electronic transfers within Greece. Determined to empty bank accounts, for fear that deposits would be devalued or lost, Greeks paid their bills: Varoufakis spoke of “huge” sums flowing into the tax office.

The government had made contingency plans for a temporary alternative currency, in the form of electronic I.O.U.s. On June 30th, Greece missed a payment to the I.M.F., joining three other countries in arrears: Somalia, Sudan, and Zimbabwe. Three days later, Klaus Regling, the head of the European Stability Mechanism, which was managing the debt that Greece owed to the countries of the E.U., e-mailed Varoufakis to remind him that, because of the missed I.M.F. payment, the European Financial Stability Facility had the option of asking for immediate repayment of E.U. funds. “I personally owe €142.6 billion,” Varoufakis said. “It’s my name on the contract.” He recalled that his response, delivered with war-weary humor, and some contempt, was a two-word quotation of the King of Sparta: “Molon labe,” or “Come and get it.” On the night of July 3rd, Varoufakis was mobbed as he passed through a crowd of tens of thousands of Greeks, to a final rally for the “no” cause. Walking behind him, I saw a man in his seventies kiss Varoufakis’s shoulder.

After months at the center of a global political spectacle, Varoufakis still carried himself as an outsider: informal, ironic, somehow alone on the stage. This demeanor had sometimes given his tenure the air of a five-month-long ted talk. At the restaurant, Varoufakis’s commentary on the recent tumult, and on the likely catastrophic events to come, sometimes seemed amused almost to the point of blitheness. He asked after Galbraith’s children, then noted that, a few hours earlier, a member of Germany’s parliament had visited his apartment, confessing, “I don’t believe in what we’re doing to you.” The legislator was a Christian Democrat—the party led by Angela Merkel, the German Chancellor, who had it in her power to ease Greece’s crisis. On departing, the legislator said, “I know you’re an atheist, but I’m going to pray for you.”

Varoufakis made a call. Speaking Greek, he greeted Euclid Tsakalotos, a colleague and friend, as “comrade,” then speculated about Tsipras’s behavior in the event of a “yes” vote: “The wise guys in Maximos”—the Prime Minister’s residence—“have become nicely settled in their seats of power, and they don’t want to leave them.” Varoufakis seemed to be suggesting that Tsipras would not resign after losing the referendum. There would be a “strategic restructuring,” Varoufakis said, and then elections. As for himself, he said, “After tomorrow, I’m going to be riding into the sunset.” He spoke the last four words in English.

“If you need anything in the building, just call the super. This is the only known photo of him.”

A Roma boy came to the table, selling roses. “Varoufakis!” he said, amazed. “I saw you on the news.” Varoufakis allowed himself to be teased for his habit of carrying a backpack, which, he was told, made him look like a schoolboy. He laughed and paid five euros for a rose, which he gave to Stratou. As the boy left, he shouted “Varoufakis! Varoufakis!” at a vender’s volume, and, a few tables away, the minister’s plainclothes security detail—two chic young men who bore a resemblance to George Michael at the time of “Faith”—turned around.

Galbraith told Varoufakis that his instinct was wrong about the referendum results. “No” would prevail, despite the bank closures. Many Greeks had nothing left to lose, and many others had hedged their financial assets, perhaps by buying a car. “Maybe,” Varoufakis said.

Stratou glanced at her phone. “Jamie, you might be right,” she said. She showed Varoufakis her screen. A survey was showing “no” with a lead.

“Don’t underestimate your countrymen—the most utterly fearless group of people,” Galbraith said.

Although a “no” victory would complicate Varoufakis’s immediate political future, he allowed himself to marvel at the Greek electorate’s willingness to accept immediate economic hardship. Syriza had given Greeks no palpable relief since taking power, yet the party’s positions still had popular support. “What the hell is going on?” Varoufakis asked.

The waiter brought a metal jug of wine. Galbraith raised his glass and, freighting an old shared joke with new emotion, quoted Che Guevara: “Hasta la victoria siempre ! ” (“Ever onward to victory!”) Varoufakis laughed.

Greece’s Ministry of Finance occupies a concrete-and-glass mid-rise building overlooking Syntagma Square. Outside the entrance is a protest encampment set up by former ministry cleaners who were laid off two years ago. On nearby streets, cardboard boxes have been pushed against upper-floor windows: office space has become storage space. At ground level, storefront shutters, decorated with political graffiti, stay shut all day, or open only to reveal makeshift outlets for one-euro snow globes and dishcloths.

The minister’s office, on the sixth floor, has a wide view of the square, beyond which stands the Hellenic parliament, a former royal palace. When I met Varoufakis at the ministry, a few days before the referendum, we talked over the sound of Communist trade unionists chanting below: “The people will speak!”

In the fall of 2009, George Papandreou, the leader of pasok, the traditional party of the center-left, became Prime Minister. For years, the state had borrowed recklessly from reckless banks in Greece, Germany, and France. Papandreou’s government announced that the previous administration had published a wildly inaccurate estimate of that year’s likely deficit. Instead of six to eight per cent of gross domestic product, an alarming enough figure, the deficit would be 12.5 per cent. Greece was already known to have severe, long-standing economic weaknesses: tax evasion, corruption, oligarchic habits, a failure to make products that other countries desired. The country’s credit rating plummeted, along with its reputation for statistical candor.

Varoufakis, then a professor with a side career in online punditry, made the case for defaulting with the banks. “I said that we are insolvent, and we have to embrace our insolvency,” he recalled recently. The case against defaulting on banks was reinforced by memories of the collapse of Lehman Brothers, in 2008, and its global consequences. The government raised taxes, froze wages, and cut pensions. The economic argument for austerity—for reducing public spending in difficult times—rests on the idea that investors will be comforted by such displays of discipline. But Greece remained unable to borrow at affordable rates. In April, 2010, Papandreou declared the Greek economy to be “a sinking ship” in need of international aid. Two weeks later, a hundred thousand anti-austerity protesters descended on Syntagma Square. Three people died when a petrol bomb was thrown into a nearby bank.

That May, the troika institutions agreed to lend Greece a hundred and ten billion euros. Germany’s direct contribution was more than twenty billion. That bailout, and a subsequent additional loan of a hundred and thirty billion euros, came with three kinds of obligation: Greece needed to privatize state assets, such as Athens’s port; reform institutions and practices perceived to be inefficient, including its health-care and welfare systems, in ways likely to result in mass dismissals; and adjust its budget through further tax increases and spending cuts, to the point where Greece’s income significantly exceeded its spending on everything but its repayments. In an economy without growth, such a surplus becomes a measure of austerity. The target was 4.5 per cent of the country’s G.D.P.

Criticism of these arrangements, largely shaped by Germany’s demands, is now widespread, and unites Paul Krugman, the economist and Times columnist, Norman Lamont, the Conservative former British Chancellor of the Exchequer, and analysts at the I.M.F. The bailouts turned an unmanageable private debt into an unpayable institutional debt. Although the new loans were largely long-term and low-interest, they carried provisions that intruded on the everyday spending decisions of the state and, in the opinion of many observers, crushed hopes of economic growth. Writing at the time of the first bailout, Varoufakis described it as punitive—a rerun of the Versailles Treaty, this time with Germany as the enactor, rather than the victim, of economic retribution.

In April, 2012, Dimitris Christoulas, a retired pharmacist living on a meagre pension, shot and killed himself beside a cypress tree in Syntagma Square, leaving a note that described the Greek administration as “a Tsolakoglou government”—a reference to the puppet Prime Minister during Greece’s Nazi occupation. Christoulas’s death became a focus of national rage. The cypress tree became brocaded with staples from generations of political flyers.

By last winter, when Greece’s fourth Prime Minister in four years called a snap election, the debt exceeded three hundred billion euros. Measured against G.D.P., Greece had more than double the government debt of Germany or America. If, by then, Greece’s economy was showing modest signs of recovery, few could feel it: youth unemployment had reached sixty per cent. Varoufakis wrote that his country was being subjected by the troika to “a fiscal waterboarding” enabled by supine Greek leaders. He told me that these politicians “never negotiated.” Troika representatives sent orders by e-mail, and the Greeks “just executed them.”

Varoufakis, a mathematical economist with a modest academic reputation, had become a popular writer in Greece. When the snap election was called, he interrupted his professorship at the University of Texas, flew home to Greece, and launched a ten-day election campaign whose sole expense was the cost of gas for his motorcycle. He was running for parliament, with the aim of becoming the finance minister in a Syriza government. The vote was held on January 25th. Syriza doubled its number of seats in parliament, and Tsipras formed a government in coalition with a small right-of-center party that shared its opposition to the troika’s terms. Varoufakis was elected with a larger share of the vote than any other candidate, and he was named the finance minister. His only previous experience of representative office was as the (white, Greek) leader of the Black Students’ Alliance at the University of Essex, a British institution, in the late seventies. Privately, he asked himself, “What have I done?” On his blog, he borrowed some thoughts of defiance—and, by implication, certain failure—from Dylan Thomas. “Greek democracy today chose to stop going gently into the night,” Varoufakis wrote. “Greek democracy resolved to rage against the dying of the light.”

A few years ago, Varoufakis told Yorgos Avgeropoulos, a documentary filmmaker, that the difference between a debt of ten thousand euros and one of three hundred billion euros is that only the latter gives you negotiating power. And it does so only under one condition: “You must be prepared to say no.” Upon his election, Varoufakis used the less than ideal influence available to a rock climber who, roped to his companions, announces a willingness to let go. On behalf of Tsipras’s government, Varoufakis told Greece’s creditors, and the world’s media, that his country objected to the terms of its agreements. This position encouraged widespread commentary about Greece following a heedless path from “no” to default, and from default to a “Grexit” from the euro currency, which might lead to economic catastrophe in Europe and the world.

It was as if Christopher Hitchens had woken up one day as Secretary of State. Varoufakis was no longer writing elegantly prosecutorial blog posts about Christine Lagarde, the managing director of the I.M.F.; he was meeting with Lagarde. Within days of Greece’s election, an academic with Marxist roots, a shaved head, and a strong jaw had become one of the world’s most recognizable politicians. He showed a level of intellectual and rhetorical confidence—or, perhaps, unearned swagger—that lifted Greek hearts and infuriated Northern European politicians. His reluctance to wear a tie seemed to convey the impossibility of containing his manliness.

I first met Varoufakis at the end of April, when his political career had barely begun. He hadn’t yet taken down Instagram photographs of birthday cakes and swimming pools, and when he recalled meeting high-level officials he indulged in the kind of candid, if self-flattering, storytelling that most politicians save for their journals. He teasingly referred to George Osborne, the British Chancellor of the Exchequer, as “Georgie.”

Varoufakis was more willing than most elected officials to allow that his career might soon end. It wasn’t clear how long a smiling, steely “no”—even when underwritten by sane economic theory, a popular mandate, and a level of charisma that inspired a member of the Portuguese parliament to proclaim, online, “Damn, the Greek finance minister is sexy”—could serve as the primary international posture of a bankrupt nation hoping to stay in a currency union. Varoufakis was still negotiating for the right to negotiate, while relations between him and Greece’s creditors were publicly souring. It was as if he’d landed in a brisk parable about the illusory power of the Great Man in history. “I don’t care,” he said of his political future. He simply wanted a less punishing deal with creditors, at which point he and Tsipras, by private agreement, would—for one day—wear ties. “But when they say to me, ‘You can keep your job if you sign on this dotted line of a program that is deflationary,’ well, I might as well let the other guys come and do it.”

We were on a Lufthansa flight from Washington to Munich. As we stood in the aisle, Varoufakis told me that he’d had “a very pleasant and quite surprising” ten-minute conversation with President Barack Obama, at a Greek Independence Day celebration in the East Room of the White House. “The setting was appalling,” he said. “All these people were pushing in to talk to him and hug him.” John Stamos, the actor, was at Varoufakis’s right shoulder. “But we probably had a more serious conversation than I would have had in the Oval Office.”

Obama, Varoufakis said, had told him that he didn’t envy him. (In fact, many politicians surely do envy circumstances where there’s so little to lose, professionally, by acting on long-held beliefs in exactly the way demanded of them by a clear-voiced electorate.) Varoufakis told Obama that things were tough: “You inherited a mess when you came to office, but at least you had your central bank behind you. We inherited a mess and we have a central bank”—the European Central Bank—“trying to choke us.”

According to Varoufakis, Obama replied, “Don’t underestimate how tough it was for me,” adding that bailing out Wall Street was “contrary to my politics” and “political poison.” He urged Varoufakis to “swallow bitter stuff.” (The White House declined to comment about the conversation.)

Varoufakis had gone to Washington for three days of back-to-back meetings at a spring gathering of the world’s senior financial officials. Shortly before his White House appointment, he and Wolfgang Schäuble, Germany’s powerful finance minister, had both spoken at the Brookings Institution, with a half-hour pause between their appearances. This was not quite long enough to suppress jokey talk, in the audience, about the risks of an accidental summit in the foyer. (At a joint press conference in Berlin, in February, Schäuble said of their first meeting, “We agreed to disagree”—a statement with which Varoufakis immediately disagreed.)

Since 2010, Greece’s economic fate has been determined largely by representatives of Germany, Europe’s largest economy, in particular by Merkel and Schäuble. The ill feeling between the two nations draws on memories of the Second World War, and is shaded by German perceptions of Greeks as “insufferable spendthrift overreachers,” as Varoufakis once put it. The distrust was not eased when, during a televised interview on a German current-affairs program, Varoufakis was shown a 2013 clip of himself speaking at the Subversive Festival, in Zagreb—an event that also featured Oliver Stone. In the clip, Varoufakis described having made the case, three years earlier, that Greece should default and “stick the finger to Germany”—he raised a finger—“and say, ‘Well, you can now solve this problem by yourself.’ ” The clip’s editing dishonestly disguised the fact that Varoufakis had been referring to 2010—when he did argue for defaulting on the private bank loans—but his unusually flustered on-air response was to insist that the clip had been faked, and that he had never made the gesture in his life.

The two Brookings appearances displayed contrasting forms of certainty, or arrogance. Varoufakis charmed with rhetoric: European leaders, he suggested, seemed intent on solving a continental crisis “by exporting it to the rest of the globe.” Schäuble spoke as though he were briefing colleagues, his combative thoughts smoothed by an avuncular delivery. “In Europe, we have good reason not to provide financial assistance without demanding something in return,” he said, amiably. A little later: “Even Yanis Varoufakis, who is a famous economist, is not the first economist in world history—no!”

At the White House, Varoufakis repeated a line that he had used at Brookings: “Mr. President, my government is planning, and I am planning, to compromise, compromise, and compromise, but we’re not going to be compromised.” (“He liked that,” Varoufakis recalled.) Varoufakis told him, “Mr. President, of course one has to suffer costs in order to get the benefits, but the question is the balance. There has to be a positive balance.” He went on, “We are being asphyxiated for trying to simulate what you did, right?”

Obama showed more solidarity than Varoufakis was expecting. “I know—austerity sucks,” Obama said. (“He used those words. Very un-Presidential.”) According to Varoufakis, the President was referring less to austerity’s unpleasantness than to its ineffectiveness. Obama meant that austerity “doesn’t work—it creates misery, and it’s self-perpetuating, and it’s self-defeating.”

Varoufakis told Obama that he hadn’t felt quite the same comradeship when speaking with the U.S. Treasury Secretary. “Jack Lew is not toeing the Obama line,” he said.

“You know how finance ministers are,” Obama replied. “They’re more conservative.”

Varoufakis changed planes in Munich, and flew on to Athens. On the jet bridge, a Greek woman urged him, “Be strong. Keep saying no.” And, on a day when the lead story in the Frankfurter Allgemeine Zeitung quoted an unnamed source, from among Greece’s creditors, describing Greek negotiators as “incompetent and inexperienced,” a man with a German accent introduced himself, saying, “People tell me I look like you.” He also had a shaved head and, like Varoufakis—who wore Doc Martens shoes to the White House—had carried some youthful fashion thoughts into middle age. Varoufakis posed for a joint photograph.

On the tarmac, a frugal ministerial Hyundai awaited. We drove out of the airport and into a car advertisement—a stretch of empty, velvety highway built shortly before the 2004 Summer Olympics. I later spoke to Elina Psykou, a Greek filmmaker, whose next movie will be set in the Athens of this era. She described her script as a study of denial.

It was a Sunday, which gave Varoufakis a break from a weekday habit of checking his phone every minute or two for real-time data about the finances of the Greek state. “I don’t care about stock markets,” he said. “They can fall as much as they want.” Rather, the figure that commanded his attention was an unpublished one: “The balance, the bottom line.” After the election, Varoufakis had refused to sign an agreement keeping Greece on the previously agreed path, which impeded a final, €7.2 billion payment of bailout money. This action helped return Greece to recession, and did nothing to forestall its debt repayments. The Greek crisis had already become one of contraction, poverty, and unemployment, but this spring Greece’s debtor status took on a banana-republic dimension. Pensioners withdrew their life savings from banks, and Greeks anticipated their government running out of cash. In the car, Varoufakis acknowledged his job’s discomforts, then brightened: “At least it makes more sense than people looking at their Bloomberg terminals just to make a margin call, right?” He was not downcast, and could still muster the thought that Merkel, in time, would help to engineer a deal.

In Washington, however, there had been little to encourage him. He said that he had told troika representatives, “If they think that, with this Chinese water-drop torture, we’re going to succumb, they’ll be disappointed. So the blood will be on their hands.”

As we drove, Varoufakis talked of his father, George, whose example of stubbornness had helped shape him. In 1946, during Greece’s civil war against Communist insurgents, George Varoufakis was arrested as a student leftist, and refused to sign a denunciation of Communism. He was imprisoned for four years, and repeatedly tortured. His signature would have freed him. I later met the senior Varoufakis—the courtly chairman of a steel company who, at ninety, still goes to the office every day. He told me that for years after he was freed he couldn’t listen to Johann Strauss: his torturers had “put on waltzes, very high, in order not to hear our voices, our screaming.”

After George Varoufakis returned to college, a female student kept an eye on him for a paramilitary right-wing group—“Stasi stuff,” as Yanis put it. But she fell in love with George, and they married. Yanis was born in 1961. During the military dictatorship of 1967 to 1974, Varoufakis’s uncle, a libertarian, was imprisoned for participating in small-scale terrorism. Varoufakis recalled his excitement when charged with smuggling notes to him on prison visits.

In the Hyundai, Varoufakis’s phone rang, and he talked for a minute in Greek. Afterward, he smiled; it had been a cabinet colleague who was “blessed with natural optimism.” He went on, “Without knowing anything, he says, ‘Welcome back, I’m sure you did a fantastic job, everything will go fantastically well!’ ” Varoufakis laughed. “How the fuck does he know?”

The day after Varoufakis returned from Washington, he rode his motorcycle to the ministry. He met with three German bankers who, in an attempt at solidarity, arrived without ties, then he chaired a discussion about the creation of a more autonomous Greek tax authority—a long-standing ambition of the troika. Much Greek income goes unreported. According to a 2012 analysis, the average declared monthly income of self-employed Greek medical workers was sixteen hundred and twenty-eight euros; those workers spent an average of sixteen hundred and sixty euros on monthly debt repayments.

That evening, Varoufakis rode to Maximos Mansion, a few minutes away, to see Tsipras. Varoufakis described his Washington meetings, and made the case for the new tax body. They were together for three and a half hours. “He bought it, so that was good,” Varoufakis later recalled.

After ten, he e-mailed me, and I went to his home, on the top floor of an apartment building in northern Athens. Varoufakis and Stratou had just moved in. Their previous apartment, in a building belonging to Stratou’s parents, was featured in Paris Match earlier this year, in photographs that showed Varoufakis at the piano, and larking around on a roof with Stratou, the Acropolis behind them. The photographs became a small scandal. Although that apartment did not look opulent, Stratou and her family are known to be well off, and to many observers the couple appeared rather comfortable at a time of national privation. The more cutting charge might be vanity: they seemed overly confident in their lean, well-tailored, Mediterranean allure, and had failed to anticipate the posed garishness of the Paris Match style. “Aesthetically, it was horrible,” Varoufakis told me. “It was my fault.” Given that fuss, it seems unkind to report that their new home is lovely: thousands of square feet of high-bourgeois modernism involving art, parquet flooring, and low, pale sofas.

Varoufakis and Stratou attended the same private secondary school, in Athens, although they don’t recall meeting. In 1978, Varoufakis enrolled at the University of Essex, a radical college northeast of London, where he joined the Communist Party of Great Britain. He recalled that, as the face of the Black Students’ Alliance—a role he was persuaded to take by black students—he would “get up and say, ‘We blacks believe . . .’ And then everybody would laugh.” He continued, “Then I would look at them and say, ‘Black is a state of mind, and we Greeks are the blacks of Europe, together with the Irish.’ ”

Varoufakis and Stratou’s relationship accommodates the kind of recurring, and mostly amiable, friction suggested by the phrase “O.K., you tell the story.” Varoufakis said that, as a foreigner in Britain during the Thatcher era, he always felt the threat of street violence. Stratou, who studied at St. Martin’s College, a few years later, disputed this memory. Varoufakis cried out, “You were in paradise, in London!” This spring, a Greek Web site speculated that Jarvis Cocker, the former lead singer of Pulp, was referring to Stratou in “Common People,” the band’s much-loved 1995 single. The autobiographical song starts, “She came from Greece, she had a thirst for knowledge / She studied sculpture at St. Martin’s College.” It goes on to quote her: “I want to live like common people / I want to do whatever common people do.” Varoufakis later told me that Stratou was the only Greek sculpture student at St. Martin’s at the time.

Varoufakis studied economics, but came to think of it as “computerized astrology” in its mainstream academic form. (He has written of his hope, as a professor, to present economics as “a contested terrain on which armies of ideas clash mercilessly.”) He turned largely to mathematics before returning to economics with a Ph.D. thesis about the dynamics of workers’ strikes. He also briefly competed in professional car races. “I was very good at qualifying”—when other drivers weren’t on the track—but “crap at the races.” He added, “I was either insufficiently aggressive or, when I would try to overcompensate, too aggressive. I crashed a number of times.”

Varoufakis, who has compared his place in economics to that of “an atheist theologian ensconced in a Middle Ages monastery,” held various junior posts at British universities before joining the faculty at the University of Sydney, where he met his first wife, a Greek-Australian historian. In 2000, Varoufakis returned to Greece, to take a professorship at the University of Athens. He published on game theory, and occasionally advised George Papandreou, then in opposition. Varoufakis recently described him to me as having the economic mind of a five-year-old. Varoufakis never voted for Papandreou; nor did he immediately align with Syriza when it was founded, in 2004, as a grouping of small leftist parties. “I was in tune with them, but they were all over the place—ecologists, Communists.”

In 2005, he separated from his wife, not long after the birth of their daughter; she and her mother live in Australia. He later met Stratou, who asked for his advice about an art project involving fraught or disputed borderlines. Soon after, they embarked on a yearlong series of trips to photograph such borders in Cyprus, Kashmir, and elsewhere. He wrote an accompanying text, “The Globalizing Wall,” and began publishing personal and cultural essays. He was emerging as an all-purpose public intellectual in the mold of Slavoj Žižek.

Being “of a Marxist disposition,” as Varoufakis told me, he had tended to see calm as a prelude to turmoil: “Most of my colleagues in economics think of crises as preventable accidents—a mistake of some policy—whereas, if you look at the world from my perspective, capitalism generates them.” Before 2007, he said, he had begun to feel “very jittery” about the instability of a system in which the flow of global capital had come to rely on what he saw as America’s deliberate policy of causing its deficits to rise. Later, in a spirited book, “The Global Minotaur,” which some reviewers described as conspiratorially inclined, he recycled a metaphor that he’d once used to critique U.S. foreign policy. America was an economic beast held in check only by the constant movement of overseas money through Wall Street. “By 2007, I realized that we were facing the prospect of a new Great Depression,” he said. Then, after the Lehman Brothers collapse, “the statements from Europe were mind-bogglingly stupid,” he said. “Like, ‘This is an Anglo-American problem. We are safe because we have safe practices in the banking sectors of Europe.’ Yeah, right.”

When the crisis hit Greece, Varoufakis began his blog, and, with Stuart Holland, a British academic and former politician, published an essay, “A Modest Proposal.” It suggested ways in which the E.C.B. and the E.U. could press the banks holding bonds of struggling eurozone countries to forgive much of this debt, and envisaged a Europe that could issue its own bonds and fund stimulus investments—effectively putting German savings to work in Ireland and Greece. Varoufakis, who had argued against Greece’s decision, in 2001, to adopt the euro, wrote that if there was going to be a currency union then it should not be half-baked, and should function more like the one that joins California and Alabama.

Varoufakis recognized the many frailties in Greece’s economy, but he preferred to talk of a banking crisis rather than a debt crisis, and of a European crisis rather than a Greek one. If Greece had over-borrowed, the real villains were the lenders standing in line for bailout funds. The euro had created a delusion: banks had lent to Greece as if it were a student backed by wealthy parental guarantors. But there were no such guarantees, and when the lending stopped Greece was trapped by the currency that had indulged it. The country couldn’t painfully devalue its currency, like, say, Argentina at the start of the century. (A devaluation makes your people poor but your goods enticingly cheap.) And the euro lacked a body like the Federal Reserve, or the Bank of England, that could feed newly minted cash into the Greek economy; to Varoufakis’s frustration, the E.C.B. wasn’t that kind of bank.

In part because Varoufakis had once advised Papandreou, his views were widely noticed. “I acquired the two things I hate—fans and enemies,” he told me. One night in 2011, he was in bed when the phone rang. A man threatened Varoufakis’s family with violence if he didn’t stop criticizing a particular Greek bank.

At the time, Golden Dawn, Greece’s neo-Nazi party, was gaining support. Stratou said to Varoufakis, “Either you don’t get involved, or you get into politics to protect us, or we get out of the country.” In 2012, Varoufakis was offered a visiting professorship at the University of Texas, and they moved to Austin. Varoufakis taught a graduate class on the crisis and, with Galbraith, revised “A Modest Proposal.” “They were knights trying to save the world!” Stratou told me, laughing at her choice of words but sincere in her admiration.

Tsipras, a former civil engineer, was elected to parliament in 2009, and became Syriza’s leader. In 2014, he urged Varoufakis to represent the party in elections for the European Parliament, which meets in Brussels. Varoufakis declined. In that election, Syriza won more seats than any other party. Greece’s right-of-center government was weakened, and it was further weakened that November, when the troika announced that Greece had fallen short of its promised reforms and demanded additional action—including spending cuts—before releasing a payment of €7.2 billion. By now, a Greek election was likely, with Syriza’s victory almost inevitable. Tsipras had admired Varoufakis’s writing and felt that he would be an effective minister of finance, despite his inexperience and his limited links to Syriza. Varoufakis agreed to come home. According to Stratou, he “felt that, when he’s eighty years old, looking back, if he hadn’t taken that opportunity it would feel like a betrayal of his own country.” She recalled how often he said, “If I were in conversation with Merkel, this is what I would do . . .”

Two days after Varoufakis was sworn in as minister, he slipped into Syntagma Square, alone. Yorgos Avgeropoulos, the documentary filmmaker, was waiting there to introduce him to Emmi Christoulas, the daughter of the pharmacist who had committed suicide. Varoufakis laid a flower by the cypress where Christoulas had died. (Varoufakis didn’t alert the press, or mention it to me, but he allowed Avgeropoulos to film it.) Tsipras’s first act as Prime Minister was to lay flowers at the memorial in an Athens suburb where two hundred Greek resistance fighters were executed by Nazi forces, in 1944. German newspapers took note of the symbolism.

At the ministry, Varoufakis answered a call from Jeroen Dijsselbloem, the Dutch minister of finance. Dijsselbloem is the current president of the Eurogroup, the constitutionally ambiguous but all-powerful committee comprising the finance ministers of countries using the euro. (There are nineteen such countries; nine others, including the U.K., are in the E.U. but not in the eurozone.) Nobody in the Eurogroup has more power than Schäuble, but Dijsselbloem has taken on the role of enforcer—or, to quote one unfriendly observer, water carrier. If Greece wanted to modify the economic “program” mandated by the troika’s loans, the Eurogroup’s blessing was required. In Varoufakis’s description, the nineteen governments could be divided into three groups: “There is a very small minority that believes in austerity, and in this program.” Germany leads this minority. A second group—Ireland, Spain, Portugal, the Baltic states—has pursued austerity programs, and now fears that Syriza, if successful, would leave those countries exposed to radical domestic opposition. “Then there’s another group, of substantial countries like Italy and France—especially France—who don’t believe in austerity. But they fear that if they side with us they will be punished.” Their punishment would be austerity.

Greece’s arrangement with the troika was set to expire on February 28th. If Syriza did not commit to the existing terms, and the program lapsed, the E.C.B. would no longer be obliged to supply emergency lines of credit to Greek banks, which would consequently run out of cash. The country would have to print its own money, taking it out of the euro. Varoufakis’s declared hope was that, before February 28th, the Eurogroup would agree to a “bridge”—a short-term renewal of loans, which would provide time to negotiate modifications to the program. Syriza could, for example, delay privatizations at a time when prices for state assets were unusually low, and uphold an election promise to raise state pensions and the minimum wage. Varoufakis also wanted some debt relief.

On the phone, Varoufakis recalled, Dijsselbloem “was perfectly pleasant,” asking, “What do you want to do?” Promising to negotiate in good faith, Varoufakis requested the bridge. According to Varoufakis, Dijsselbloem said, “Sounds reasonable. I’ll fly in in a couple of days.”

“It was downhill from that moment,” Varoufakis said.

Arriving in Athens, Dijsselbloem asked the same question, and Varoufakis gave the same answer. This time, Dijsselbloem replied, “That will not do.” (“I have no doubt that he was pulled into line between the telephone conversation and the visit,” Varoufakis told me. He declined to name Germany explicitly, but added, “You can imagine.”) Varoufakis asked Dijsselbloem, “Are you threatening me, on Day One, with Grexit?” Dijsselbloem said that a crashed program wouldn’t necessitate Greece’s exit from the euro.

“But the banks will shut down,” Varoufakis said.

“Yes, sure,” Dijsselbloem replied. (Last week, a spokesperson for the Dutch finance ministry said, “We never comment on reports of discussions held behind closed doors. Mr. Dijsselbloem is trying to enjoy a government summer recess. I would advise Mr. Varoufakis to do the same.”)

At a subsequent joint press conference, Varoufakis declared that Greece would continue negotiating with the E.U., the E.C.B., and the I.M.F. individually, but not as a bloc that had the power—deeply resented—to embed its officers in Greek ministries. He was unilaterally attempting to detach debt from day-to-day interference in Greece’s governance (or, as he put it to me, “a pattern of humiliation”). Varoufakis made his point in Greek. There was a pause while Dijsselbloem caught up through headset translation. Varoufakis now claims that, privately, Dijsselbloem had acknowledged that troika reform was inevitable. But that’s not how it looked. Dijsselbloem took off his headset and stood up to leave; Varoufakis’s face displayed the smiling, embarrassed faux-innocence of someone who has said more than he planned to say in a domestic argument. Dijsselbloem “was livid,” Varoufakis told me. “He whispered in my ear, ‘You just killed the troika.’ ”

Varoufakis’s fame grew the next week, after he left his suitcase in an Athens taxi. Arriving in Paris, late in the evening, at the start of a tour of European capitals, he had only the clothes he was wearing. That night, at Zara, he bought two shirts and a pair of pants. But he relied on Theodore Passas, Greece’s Ambassador to France, for a coat. “He’s a snazzy Ambassador,” Varoufakis told me. Passas lent Varoufakis a gangsterish hybrid of motorcycle jacket and hunting coat, and after Varoufakis wore it to meet George Osborne in London—over an electric-blue shirt—the European press wrote many delighted columns about a minister of state who looked as if he might be armed. Varoufakis told me, “It worked out fabulously. They called me a Russian mafioso, right?” On this visit, Lord Lamont, the British Conservative politician, who had sent Varoufakis many supportive messages (to the point where Varoufakis regarded him as “my best mate”), took him to a club on Pall Mall for breakfast. As Lamont explained to the Financial Times, “they wouldn’t accept that his national dress was not a tie.”

Varoufakis told me in April that Osborne agreed with him on “everything.” Varoufakis’s habit was to believe—or claim to believe—that what a politician said kindly over lunch was more sincere than what he broadcast in public. (A spokesman for the British Treasury declined to comment on Osborne’s conversations.) Varoufakis told me that he and Michel Sapin, the French finance minister, talked “like brothers when we’re alone.” He added, “He’s saying, ‘We’ll change Europe together!’ Then we go out—press conference, microphones, and cameras—and he says, ‘Greece must try harder, must accept the conditions.’ ” Varoufakis said that, when he challenged Sapin about this, the mournful reply was “Yanis, France is not what it used to be”—that is, its power had diminished. A spokesperson for Sapin denied this account, adding that Varoufakis “is an intelligent and flamboyant man, but lacks political sense.”

Ten days after the election, Varoufakis attended his first Eurogroup meeting. “People think it’s like a courtroom drama,” Varoufakis said. “It is not. It is just grindingly boring.”

The Eurogroup meets in private, each of the nineteen ministers sitting with a single colleague. At the meetings that Varoufakis attended, the creditor institutions were also represented. After a few opening remarks, the ministers spoke in turn. Schäuble dominated the room. “All eyes are on him, and what he’s going to say, and the tone in which he’s going to say it,” Varoufakis recalled. Then the attendees attempted to agree on a communiqué. At this point, “all hell would break loose,” Varoufakis said. When he found a draft unacceptable, he raised his hand: “Jeroen, this sentence I can’t live with. I need to add this adjective here and remove that verb there.” Schäuble often objected to Varoufakis’s suggestions. “This can go on for six hours,” Varoufakis said.

Breaking with tradition, Varoufakis’s ministry later made public his opening remarks at his first Eurogroup session. Varoufakis said, “We must earn your trust without losing the trust of our people—of the voters amongst which we enjoy, for now, sizable approval ratings. For such approval is an important capital good in Europe’s struggle to sort Greece out and to render it stable.” He went on, “It will simply not be possible for our country to grow if we remain on the growth-sapping austerity path.”

Varoufakis recalled that Schäuble seemed “very cross,” and said, “When there’s a program that everybody has agreed to, that’s it. Elections cannot change anything, because, then, every time there’s an election everything will change.” (A spokesperson for the German finance ministry said, “Meetings of Eurogroup finance ministers are confidential.”) As Varoufakis put it to me, the idea that elections could change nothing was the “greatest gift one could give to the Chinese Communist Party.” That’s overheated, of course, and democratic governments tend to respect the binding agreements signed by their predecessors. But it was interesting, at Brookings, to hear Schäuble say that “France would be happy if someone could force” its parliament to pass unpopular labor-market reforms. It wasn’t quite clear what Schäuble meant by “France,” if it was neither its people nor its parliament.

During that first meeting, Varoufakis said, he was asked to approve a communiqué that pretended “nothing had changed.” He asked to edit “the program” to “the amended program.” Recalling this request, Varoufakis described it as “very conciliatory,” although it might be more accurate to say that it was not.

Schäuble vetoed the edit. Varoufakis said, “I veto that veto.” During a break in the subsequent discussion, Dijsselbloem told Varoufakis that the opportunity to meet the deadline of February 28th—more than two weeks away—would expire the next morning, because of the time required by some countries to secure parliamentary approval of a renewal. If Varoufakis didn’t sign? Dijsselbloem said, “Then you’ve missed the train”—in other words, the loan agreement would be cancelled.

Varoufakis called Tsipras in Athens. “He said, ‘Don’t sign it. Fuck him.’ No, he didn’t say that, but that’s more or less what he meant. And so I said, ‘No deal.’ ”

The next morning, Dijsselbloem came to Varoufakis’s hotel to talk. Given that the deadline had passed, Varoufakis decided that Dijsselbloem had been “bullshitting” him, and asked, facetiously, if the train had reversed into the station. Varoufakis told me, “He had lied to a minister, when he was serving as president, on that minister’s first rookie appearance! His duty is to keep members of the Eurogroup informed about the legal process, and he lied to me about that. That’s just unacceptable.”

On February 20th, the Eurogroup reached a temporary agreement. Greece gained an extension until June 30th, before which it could propose revisions to the program. For the moment, Syriza agreed not to pursue its key spending plans. Though Varoufakis chose to see the agreement as an opportunity “to write our own program and to be judged on that,” others saw it as Syriza in retreat. The government had shelved its campaign commitments while gaining no guarantee of revisions, and had failed to collect €7.2 billion. “The Greek government will certainly have difficulty explaining this to its voters,” Schäuble said to reporters.

Varoufakis told me that, immediately after he signed the communiqué, “the troika was knocking on our door,” as if nothing had changed. “We had to say, ‘No, this is not what we signed up for.’ ” He later regretted not making his frustration more public. “I should have impressed upon the Prime Minister that we had to blast this one out of the water—condemn them for backtracking.”

In April, as Varoufakis flew back from Washington, Greece was being assailed for not having yet submitted a comprehensive revised program. “We could have moved faster,” Varoufakis acknowledged. “Then again, the other side was really not moving at all.” The other side may not have recognized any obligation to move. To them, Varoufakis was a student late with an assignment unlikely to impress.

He quoted a line sometimes attributed to Henry Kissinger: “Who do I call if I want to speak to Europe?” He was struggling to deal with governments and institutions that were “fragmented, both horizontally and vertically.” He explained, “Horizontally, Merkel and Schäuble don’t see eye to eye. They have different ideas of what they want from us. He wants us out of the eurozone. Merkel doesn’t.” (The spokesperson for the German finance ministry said, “Mr. Schäuble and Chancellor Angela Merkel always act in a coördinated manner.”) Mariano Rajoy, the Spanish Prime Minister, wanted Syriza out of power; François Hollande, the French President, didn’t. Varoufakis offered me an example of “vertical fragmentation”: he believed that Lagarde, the I.M.F. managing director, “doesn’t want us out, and would like to bridge an accommodation, but the little people that she sends in the troika—these people have an agenda of their own.” He went on, “I spend all my life these days on the phone, trying to avert these fragmentation problems, coördination failures, little agendas. We don’t even get to talk about important things. I’ve been saying to all these people, ‘Can we agree on four major reform bills and rush them through parliament?’ ” He had argued that interim reforms—however incomplete in the eyes of the troika—would release “a wave of optimism” among potential investors in Greece.

But, Varoufakis said, he’d found no market in Europe for such thoughts. At the level of the Eurogroup, Varoufakis told me, the conversation was “all about the rules.” It was not a forum in which to discuss debt unsustainability, or the rarity of economic growth under austerity conditions. Varoufakis told me that he was “accused of talking about economics.” Once, Varoufakis was asked what Greece’s target surplus should be, if not 4.5 per cent of G.D.P. He “had to give a lecture” about the variables that made the question unanswerable in that form. “They’re not economists,” Varoufakis said. “Most of them are lawyers.”

Varoufakis, in his negotiations, adopted a refrain: “You may not like us, but we have a few things going for us. First, we’re not corrupt yet. Second, we’re pro-European. Third, we are democrats. We want this country to be reformed. Help us do it. Don’t crash us. If you crash us, we will end up with very nasty people taking over.”

According to a Eurogroup official, Varoufakis “didn’t seem to understand that the other people in the room were constrained by their national parliaments. They are bound by certain treaties. Those constraints fly in the face of pure economics. The eurozone is complicated, and he had no understanding or sympathy for that.”

Meanwhile, at lower-level “technical” meetings, representatives of Greece’s creditors pressed Varoufakis’s colleagues about “the granular stuff”: about modernizing the milk market, for example, or allowing notaries to compete on price. Greece’s program was built out of such policy details; Varoufakis felt that the ideas were often “anti-growth rubbish,” and that the process was pointless if it ignored economic fundamentals in a way that could only prolong a five-year dynamic of “extend and pretend.” He recalled trying to introduce a document that contained the words “debt restructuring.” He was told, “If it has those words, we can’t have it. Take it back.”

According to troika officials, Greek negotiators barely engaged at the technical level. Initially, this appeared to reflect only incompetence, but later there seemed to be some strategy in it—an effort to force the conversation into the political realm. In the end, Greece’s milk market was discussed, in the middle of the night, by Europe’s heads of state.

In the opinion of one troika official, Varoufakis’s disregard for the granular—like the ease with which he requested other European taxpayers to settle Greece’s account—had an undemocratic air. “One may dismiss this as technocrats looking at numbers,” the official said. “But, if something doesn’t add up and there is a gap, the gap has to be financed by somebody.” He went on, “Adding up is the essence of democracy.”

When Greece did engage, I was told by another representative of a troika institution, “the stuff they sent us was extraordinarily naïve.” He recalled a measure, submitted by Varoufakis in March, designed to boost sales-tax compliance by hiring amateur spies: people, including tourists, would be trained to wear hidden cameras. The troika representative said, “It was stunning to see something like this in a document of a minister of an E.U. country.”

A few days before the referendum, Gikas Hardouvelis, a senior Greek economist who was Varoufakis’s predecessor as minister of finance, sat at a café in a northern suburb of Athens, speaking with the tight-mouthed fury of someone who can no longer maintain his public discretion. That week, on successive nights, large crowds had gathered at Syntagma Square, in support of “no” (the working class) and “yes” (the middle and upper-middle classes). Across Athens, posters showed Schäuble in scowling closeup, with the text “For five years he has drunk your blood. Tell him, ‘No!’ ” When I asked an Athens bar owner how he might vote, he asked me to describe the difference between a Winchester and a Magnum. Hardouvelis, a “yes” voter, said, “Only Third World dictatorships have referendums like this, fooling the people and pretending to be a democracy.”

On the day after the January election, before Varoufakis had been sworn in, Hardouvelis represented Greece at a Eurogroup meeting in Brussels. He told the attendees, “Remember one thing. Eighty per cent of the Greek people say they want to be members of the euro area.” In his view, “The Europeans were willing to be flexible, because they knew they had to deal with a leftist government. They were willing to give them something—on the primary surplus for 2016, perhaps.”

Hardouvelis said that Varoufakis had squandered this opportunity: “He managed to have eighteen enemies. That’s all he did!” He described Tsipras as “a guy who has never been outside Greece, has never had to deal with foreigners, so he couldn’t automatically enter the logic of the other side.” Tsipras, whose command of English is tentative, depended on Varoufakis. By the time Tsipras had reduced that dependency, Greece was nearing disaster. “I blame Varoufakis,” Hardouvelis said. “He did a huge disservice to Tsipras, because he knew very well what was going on, and he acted only to promote himself, sacrificing the country and his Prime Minister in the meantime.” This was a common theme in Athens, although it was possible to imagine the argument turned on its head: that is, an adept politician had taken advantage of an unwary but overconfident intellectual. Hasta la victoria siempre!

Some of Hardouvelis’s colleagues had recently told him that University of Sydney academics had expressed relief about Varoufakis leaving Australia, calling him “the most narcissistic man they’d ever met in their lives.” Hardouvelis noted that, in the government office that was once his own, Varoufakis was “too proud” to use the ministerial desk or the office phones. (Varoufakis worked, with a MacBook and a cell phone, at one end of a long conference table.)

Two days before the Sunday referendum, Varoufakis arrived at the ministry at midday. A hundred reporters were outside in the street. We sat at his conference table, and he described the events of the previous week—and his disagreements with Tsipras—in a way that suggested he didn’t plan to remain in office beyond the weekend. He began by saying that, in April, senior U.S. officials had warned him that Greece’s creditors “want to throw you onto the rocks.” On hearing this, Varoufakis had sought to change Greece’s negotiating stance. He began making the case to colleagues for publishing a Greek Plan, on Greece’s terms. With Jeffrey Sachs and others, he wrote a draft in three parts: a fiscal plan, proposals for debt relief, and suggestions for structural reforms.

Varoufakis recalled, “I took it to the P.M., to the negotiating team, and said, ‘I think we should go this way. If you don’t like it, we can make amendments.’ ” A public plan would have been perceived, accurately, as a scornful rejection of the existing negotiations. Tsipras turned down the idea as too risky. (As someone close to the negotiations pointed out to me, one risk was that the plan’s primary author would have been evident—that is, it would be the Varoufakis Plan.)

The consensus on the Greek team was that an agreement could be reached only through the established process. Varoufakis objected: “If we don’t manage to change the structure of the negotiation, then we will never get the agreement.” If his confidence in this strategy now seems foolhardy, it rested on what he regarded as a bedrock of logic. “An unpayable debt will not be paid,” he told me. “It’s like the law of gravity.” His goal was to persuade Greece’s creditors to concede this truth now—not years from now.

At a meeting in Riga, Latvia, in late April, the Eurogroup’s tone toward Greece was sharply critical. One unnamed source told a reporter that Varoufakis was considered a time-waster, a gambler, and an amateur. In a tweet, Varoufakis quoted F.D.R.: “They are unanimous in their hate for me; and I welcome their hatred.”

Tsipras, unsettled by the animosity in Riga, and recognizing Varoufakis’s low opinion of the day-to-day negotiations, reshuffled his team. Varoufakis lost direct oversight of the technical talks.

One evening in May, Varoufakis learned that, two days earlier, Tsipras had made a concession about the primary surplus that Varoufakis regarded as economically and tactically disastrous. “And the Prime Minister, being such a convivial guy, said, ‘Of course I didn’t tell you, because I knew you would disagree!’ ” Varoufakis recalled. “Which, you know, for a finance minister is a bit of a problem.”

The creditors had been pressing for an eventual primary-surplus target of 4.5 per cent of G.D.P. Tsipras, guided by other colleagues, proposed surplus targets that, starting at one per cent, would rise to 3.5 per cent in 2018. Such a figure was still “absurd,” Varoufakis told me. “No economy in Greece’s situation sustainably produces a primary surplus of 3.5 per cent.” Varoufakis asked me to picture someone considering investing, next year, in a new enterprise in Greece. He or she might hope for profits two years later. But “if the Greek state’s debt is unsustainable in 2018, and the government has committed to a 3.5-per-cent primary surplus, what you are telling the investor is ‘You’re going to be taxed through the nose, because the state needs to have this primary surplus.’ No financially minded investor will invest in a country that makes this announcement.”

He went on, “Tsipras gave them austerity hoping that he would secure debt relief.” In Varoufakis’s view, Tsipras “just didn’t understand,” adding, “For non-economists, it’s easy to say, ‘I had two targets, austerity and debt. It would be good to hit both of them, but if I can hit one of them—’ ” He paused. “The politician must compromise.” Varoufakis remained adamant that austerity and debt needed to be addressed simultaneously. Tsipras, meanwhile, had made a concession on the surplus that only weakened the case for debt relief. It’s hard to protest loan repayments while one is officially predicting a budget in the black. “Then they know they can take you to the cleaners,” Varoufakis said. “And then they will demand everything on everything. Which is what happened.” As he put it, sharks are not placated by a little blood.

He considered resigning. “But I happened to be quite popular,” he said. “And if I went I’d damage Alexis badly, in the middle of negotiations.” (Tsipras had privately used the precarious metaphor of two standing dominoes.) For a month, as the June 30th deadline approached, and as Greece made further concessions, Varoufakis maintained hope that the I.M.F. might strengthen Greece’s hand by describing the country’s debt as unsustainable. The I.M.F. has a constitutional obligation to avoid making loans in which wishful thinking informs the repayment schedule. (Such an objection was made, belatedly, on July 14th.)

Varoufakis felt unsupported. Although Tsipras seemed to share his urgency about debt relief, Varoufakis said, there were “comrades who were saying, ‘Look, even that doesn’t matter. Let’s just have an agreement.’ Fatigue sets in after a while.”

At a Eurogroup meeting in Brussels, on June 25th, Varoufakis was invited to sign a deal that offered five months of limited further funding. The provisions included all of Greece’s concessions and no debt relief. Varoufakis regarded it as “the kind of offer you make when you don’t want an agreement.”

Tsipras was furious. “He’d had to tread on every red line this government had drawn,” Varoufakis said. According to Varoufakis, Dijsselbloem said, “Yanis, you can consider this a take-it-or-leave-it offer.” (Dijsselbloem has disputed this.)

Varoufakis believes that the Eurogroup, having decided that Syriza “is a government we don’t want,” deliberately prolonged negotiations, in order to weaken Greece’s economy. In June, Varoufakis told Pierre Moscovici, the economic-policy commissioner for the E.U., that “Schäuble wants us out of the euro.” (Schäuble had told Varoufakis this himself.) “But he doesn’t care whether our government falls or not. And I feel that Merkel wants us in the euro, but she wants our government to fall.” According to Varoufakis, Moscovici concurred with this analysis. Schäuble’s domestic popularity, and his seniority, had given him the freedom to adopt a position toward Greece that is at odds with Merkel’s. Der Spiegel recently described Germany’s resulting approach as “a curious mix of indecision and brutality.”

At the June 25th meeting, Varoufakis said, Schäuble announced that the deal was too soft on the Greeks for it to pass through the Bundestag. “Of course, when Schäuble speaks, the Lithuanians, the Slovaks, the Finns go along with him. They say, ‘We can’t push it through our parliaments!’ ” According to Varoufakis, “Dijsselbloem seemed quite perturbed. He wanted to pressure me to accept it. I said, ‘Wolfgang cannot push it through his parliament—why can I?’ ”

The next morning, Tsipras brought the members of the Greek team together at a Brussels hotel, asking them to leave their cell phones outside the room. He said that he was calling a referendum of “yes” or “no” to the terms offered by the Eurogroup. The Eurogroup met once more, the next day. “That was very unpleasant, because I had to defend the principles of democracy to a group that doesn’t care very much about democracy,” Varoufakis said. “Actually, they are positively against it. I was told, in no uncertain terms, ‘How dare you put such complex issues in front of an electorate ?’ ” He requested a four-week program extension, arguing that “the Greek people should be able to deliberate on this in some peace and quiet.” The Eurogroup refused him.

I asked Varoufakis about the sight of elderly Greeks struggling to collect social-security payments, and of lines at A.T.M.s. “We didn’t close down the banks,” he said. “The Eurogroup did. I can’t take moral responsibility for something that they did.” He went on, “There are times when you say, ‘To hell with it, I’m not going to sign something I disagree with. And stuff the consequences!’ I’m not a consequentialist.”

I saw him at the end of the day, at the ministry. Outside, there had been a skirmish between riot police and anarchists; there was a slight sting of tear gas in Syntagma Square. The ministry had lowered a metal shutter over its glass front door. Varoufakis was standing in the lobby, quite still, shoulders set back, his motorcycle helmet looped over one arm. “The economic arguments have disappeared from the scene,” he said. Schäuble had by then spoken publicly about a Grexit. If the moment was alarming, it was also clarifying. “Now it’s ‘We’ll crash them, even if it means crashing ourselves.’ Like at the beginning of the First World War.” The metal shutter rattled upward and, on the other side of the glass, a bank of television cameras was revealed.

Varoufakis was at home as the referendum results came in, two evenings later. On the TV news, maps of Greece were entirely colored in the orange of “no.”

By the day of the referendum, the question on the ballots referred to a negotiation that had concluded. The bailout program had lapsed, and the offered terms were no longer on offer. The referendum had become an obscure gauge of national mood and self-image. Sixty-one per cent voted “no,” in support of Syriza’s line. But Greece’s banks were closed, and a Grexit now seemed imminent.

On the night of the referendum result, Varoufakis met with Tsipras and said, “Reactivate me fully or replace me.” Tsipras offered him the Ministry of Economy, Infrastructure, Shipping and Tourism. Varoufakis declined. He resigned the next morning.

On July 8th, after consultations with other Greek leaders, Tsipras proposed a new, three-year bailout, with fresh austerity measures. The Eurogroup responded with a proposal more severe and humiliating than anything discussed in previous months. On July 12th, Tsipras, having met with European leaders for seventeen hours, agreed to recommend the terms to his parliament. He had secured only minor modifications, and only a hint of future debt relief. Greece agreed to place fifty billion euros’ worth of state assets in a privatization trust fund; troika officials would be embedded, again, in ministries in Athens. “Read and weep,” Varoufakis wrote on his blog.

Before the deal could be signed, Greece was obliged to introduce reform legislation. On July 15th, the parliament met to discuss a first batch of measures, including pension cuts and sales-tax increases, which would immediately raise the price of hundreds of goods and services, from fertilizer to funerals.

That night, Molotov cocktails were thrown in Syntagma Square; in a television interview, Tsipras made a baldly consequentialist case. He accepted responsibility for “signing a text that I do not believe in but that I am obliged to implement.” He continued, “The worst thing a captain could do while he is steering a ship during a storm, as difficult as it is, is to abandon the helm.” Referring to Varoufakis, he said, “Being an excellent academic doesn’t necessarily make one a good politician.”

Varoufakis remained a member of parliament, and he was one of thirty-two Syriza members, out of a hundred and forty-nine, who voted “no” that night. He was regularly updating his blog and addressing his six hundred thousand Twitter followers. (Tsipras has half as many.) “I’m here to stay,” Varoufakis told an Italian reporter. In a radio interview, he said that Tsipras “didn’t have what it took sentimentally, emotionally, at that moment, to carry that ‘no’ vote to Europe—and use it as a weapon.”

A few days later, comments that Tsipras had made to advisers were leaked to the press. He said that he had “read heroic statements,” but had “heard no alternatives to the blackmailing ultimatum of July 12th.” He asked if his leftist opponents had a plan that would look any different from Wolfgang Schäuble’s.

When a second batch of legislation reached parliament, on July 22nd, Varoufakis voted “yes.” If he had been edging toward a sustained public challenge to Tsipras, this was a change of course. When I spoke to him on the phone the next day, he said that in the hours before the debate he’d vacillated between “yes” and an abstention. The bailout was not viable, he said: “It was a coup d’état.” Had he still been minister, he would have taken the mandate of the referendum and dared the Eurogroup: “Do it, just do it!” But he had decided to be led, he said, by a sense of solidarity with Tsipras and Syriza. He then listed various details of the legislation—omissions and inclusions—that had given him just enough permission to vote “yes.” As he described his path to compromise, I seemed to be hearing a politician becoming comfortable with the discomfort of politics.

I had last seen Varoufakis at his ministry office, on the morning of his resignation. There was the sound of a shredder humming. In a conference room, he thanked his staff, and discussed the fact that his friend Euclid Tsakalotos had been invited to replace him. Varoufakis returned to his office, in high spirits, and started boxing up books. He observed that his resignation had pushed up the value of the euro. “I am a paragon of stability,” he said. He looked at his phone. “Now I can delete Wolfgang Schäuble’s cell number.” A colleague suggested that he save it, for prank calls.

Varoufakis then said that he would miss his prime opponent. He liked Schäuble, “on a personal level.” Varoufakis went on, “He has a vision. It’s a wrong vision, but he’s very lucid about it. He’s a man of principle. And I like conviction politicians.” ♦

Yanis Varoufakis and Joseph Stiglitz – New Economic thinking

Greece’s Parliament Cannot Override the NO Vote. The Agreement with the Creditors is Illegal

Global Research, July 21, 2015


greece-troika-400x224FIRA, GREECE. On Sunday  July 5, the Greek people voted in a historic referendum to refuse the Troika’s draft agreement. 

The Referendum was an outright  ”ritual of democracy”.  The Greek people were betrayed. On Monday morning, July 6, on the day following the referendum, Prime minister Tsipras put forth a 13 page draft proposal which included most of the demands of the creditors.  This proposal, which was drafted before the referendum in close consultation with the creditors was essentially intended to lead towards the acceptance of the creditors’ demands, namely to support the YES vote which was defeated in the July 5 Referendum.  

This about-turn had been carefully engineered. The Greek people were misled and deceived. PM Tsipras was “in bed with the creditors” while leading the No Campaign. He had made a deal with the creditors, he was in favor of accepting the demands of the creditors all along. The NO mandate of  the Greek people was meant to be ignored. And the decision to stall the implementation of the NO Vote was taken BEFORE the referendum. 

The July 6 post referendum document put forth by PM Tsipras on Monday 6 July was accepted in substance by the Troika. It was then endorsed by the Greek Parliament. 

The important question for the Greek people.

Does the vote of acceptance by the Greek parliament provide a legally binding green-light to the government to finalize debt negotiations AGAINST the Greek people, overriding the NO Vote in the Referendum. 

What is the role of a referendum under Greece’s constitution?

While the result of a referendum is not always legally binding, it nonetheless provides  an explicit political mandate to the government which has to be followed. A referendum  cannot be based on an a priori deception. The results cannot be ignored in a democracy. 

The referendum was held while the Tsipras government had already decided to cave in to the creditors.

Neither the Parliament nor the government can rescind the VOTE of the Greek people on the July 5 2015.

Under a democracy, the government has a responsibility to implement the NO vote in the Referendum, which was sponsored by the Syriza government in the first place.

If it is not willing to respond to the demands of the Greek people it must resign.

It is important at this stage that the Greek people question the legality of the parliamentary decision. It is worth noting that the Supreme Special Court (Ανώτατο Ειδικό Δικαστήριο) endorsed the holding of the Referendum.

What must now be established is the constitutionality of the parliament’s denial of the Referendum procedure and its de facto endorsement of the YES Vote.  That decision has to be challenged.  And this must be done before a final binding agreement with the creditors is reached. 

Disclaimer: The contents of this article are of sole responsibility of the author(s). The Centre for Research on Globalization will not be responsible for any inaccurate or incorrect statement in this article.

German Company is Top Tax Evader in Greece



El-Venizelos1-400x285A German company was found to be the biggest tax evader in Greece. A court in Athens found that Hochtief, the German company that was running the “Eleftherios Venizelos” Athens International airport was not paying VAT for 20 years. It is estimated that Hochtief, will have to pay more than 500 million Euros for VAT arrears. Together with other outstanding payments, like those to social security funds, it might have to py more than 1 billion Euros.

It must be noted that under the “Troika” austerity programme Greek employees lost around 400 million Euros from cuts to their salaries.

Hochtief, which is the biggest German Construction company, specializing in airports, was also running the Athens International airport through a subsidiary until 2013, when it sold it’s share to a Canadian company.
(source: neurope)



Disclaimer: The contents of this article are of sole responsibility of the author(s). Unruly Hearts will not be responsible for any inaccurate or incorrect statement in this article.

Greece debt crisis: Tsipras facing eurozone deal revolt

July 15, 2015 – 30 minutes ago

Greek MPs are debating tough economic measures they must approve by the end of the day in order for an €86bn eurozone bailout deal to go ahead.

The new legislation includes tax rises and an increase in the retirement age.

As debate continued, protesters threw petrol bombs at police during an anti-austerity protest close to parliament, and police responded with tear gas.

PM Alexis Tsipras has said he does not believe in the deal, but has urged MPs to agree to the measures.

The vote is expected to pass with opposition help, despite a revolt from some hardliners in the ruling left-wing Syriza party.

Pro-European opposition parties have pledged to vote for the measures.

Hardliners in the ruling left-wing Syriza party are likely to vote against, and the junior coalition party has offered only limited support.

“If I don’t have your support it will be hard for me to remain as prime minister,” Mr Tsipras has told his MPs, as government estimates suggest between 30 and 40 will oppose the measures.

Opponents of the deal took to the streets of Athens ahead of the vote, and unions and trade associations representing civil servants, municipal workers and pharmacy owners held strike action.

More than half of the members of Syriza’s central committee have signed a statement condemning the bailout agreement, describing it as a coup against their nation by European leaders.

The possible bailout was agreed in Brussels on Monday by eurozone members, though one of Greece’s creditors, the International Monetary Fund (IMF), has suggested in a report that it does not go far enough – and that Greece will need some of its debts to be written off.

Greece’s economy has shrunk by 25% in the last five years amid austerity measures designed to curtail its ballooning public sector debt.

In order to begin negotiations over a third bailout worth €86bn (£61bn; $95bn) over three years, Greek MPs need to approve measures including:

  • The ratification of the eurozone summit statement
  • VAT changes including a top rate of 23% to take in processed food and restaurants and; a 13% rate to cover fresh food, energy bills, water and hotel stays; and a 6% rate for medicines and books
  • The abolition of the VAT discount of 30% for Greek islands
  • A corporation tax rise from 26% to 29% for small companies
  • A luxury tax rise on big cars, boats and swimming pools
  • And end to early retirement by 2022 and a retirement age increase to 67

Monday’s announcement of a possible deal was met with anger among many in Greece, who called it a “humiliation”.

The Greek constitution states that a government must have a majority – 151 seats out of 300.

But if it loses a vote, the government can still function in a minority capacity as long as the opposition does not call a vote of confidence and as long as the numbers don’t fall below 121.

The number of anti-bailout MPs is known to be at least 30 within Syriza’s 162-seat coalition.

The question is whether there will be more than 41.

If the numbers go below 121, Prime Minister Alexis Tsipras’s government will be severely damaged and will likely look to opposition parties to join a national unity government.

Mr Tsipras has said he does not believe in the deal, though he agreed to it.

In a television address on Tuesday, he called the proposals “irrational” but said he was willing to implement them to “avoid disaster for the country” and the collapse of the banks.

As parliamentary committees considered the details of the laws, Deputy Finance Minister and Syriza member Nadia Valavani announced her resignation, saying: “I’m not going to vote for this amendment, and this means I cannot stay in the government.”

And tempers flared when former Finance Minister Yanis Varoufakis was heckled with shouts of “You got us here” while addressing one committee.

The jeers came when he said he doubted the deal could work, and compared it to the conditions imposed on Germany in the Treaty of Versailles after World War One.

Meanwhile, French MPs have overwhelmingly backed the Greek bailout deal. Because of their constitutions, several eurozone members, including Germany, must ratify the deal in their parliaments before it can proceed.

Banks stay shut

Greece faces an immediate cash crisis. Banks have been shut since 29 June.

Mr Tsipras has warned banks are unlikely to reopen until the bailout deal is ratified, and this could take another month.

The European Commission has formally proposed a short-term €7bn loan for Greece through the EU-wide European Financial Stability Mechanism (EFSM).

Use of the EFSM for eurozone rescues has been opposed by Britain and other countries which are not part of the euro but are European Union members.

One British official in Brussels told the BBC the UK government had no objection in principle to the use of the EFSM – as long as British taxpayers’ money was ring-fenced from any liability.

Valdis Dombrovskis, a senior European Commission official, said it was working to protect non-euro states from any negative financial consequences should the loan not be repaid.

‘Need for debt help’

The IMF report was written before the eurozone reached a deal with Greece in the early hours of Monday. It was shared with eurozone leaders in advance, but made public only on Tuesday.

It predicts that, in two years’ time, Greek debt will reach close to 200% of GDP (national income) which could “only be made sustainable through debt relief measures that go far beyond what Europe has been willing to consider so far”.


It recommends a “very dramatic extension” on the maturity of Greece’s debts, “with grace periods of, say, 30 years on the entire stock of European debt”.

“Other options,” it says, “include explicit annual transfers to the Greek budget or deep upfront haircuts (debt write-offs)”.

Germany, the largest contributor to Greek rescue funds, and a number of other eurozone countries have long resisted any talk of haircuts and debt relief.

The European Commission published its own assessment on Wednesday, taking a more optimistic view of Greece’s debt sustainability than the IMF but also suggesting debt relief.

The Commission’s report says rescheduling the debt is possible, but only if Greece implements the reforms being demanded by its creditors. It rules out debt write-offs.

Analysis – by Chris Morris, BBC News, Brussels

The IMF report highlights a massive flaw in the deal hammered out so painfully between Greece and the rest of the eurozone: the numbers don’t add up.

It believes that without a restructuring of the Greek debt, it will keep on rising.

But the point about this deal is – once again in the eurozone, it was a case of politics trumping economics.

The desire to keep the eurozone together was stronger (for now) than the economic forces threatening to pull it apart.

There was plenty of talk about debt restructuring during the negotiating process, but not on the scale that the IMF is suggesting.

Officially, there will be a discussion of restructuring only after a first review of the new bailout is successfully concluded.

That is several months down the line.

But, while the IMF report doesn’t comment directly on Monday’s deal (because the report had already been written by then), it certainly implies that the IMF may feel it is unable to take part in the new bailout programme for Greece.

And that would leave a large hole – both in terms of numbers and political credibility.

Greek crisis will shake IMF


Varoufakis: pourquoi l’Allemagne refuse d’alléger la dette de la Grèce


12 juillet 2015


Behind Germany’s refusal to grant Greece debt relief – Op-Ed in The Guardian

Tomorrow’s EU Summit will seal Greece’s fate in the Eurozone. As these lines are being written, Euclid Tsakalotos, my great friend, comrade and successor as Greece’s Finance Ministry is heading for a Eurogroup meeting that will determine whether a last ditch agreement between Greece and our creditors is reached and whether this agreement contains the degree of debt relief that could render the Greek economy viable within the Euro Area. Euclid is taking with him a moderate, well-thought out debt restructuring plan that is undoubtedly in the interests both of Greece and its creditors. (Details of it I intend to publish here on Monday, once the dust has settled.) If these modest debt restructuring proposals are turned down, as the German finance minister has foreshadowed, Sunday’s EU Summit will be deciding between kicking Greece out of the Eurozone now or keeping it in for a little while longer, in a state of deepening destitution, until it leaves some time in the future. The question is: Why is the German finance Minister, Dr Wolfgang Schäuble, resisting a sensible, mild, mutually beneficial debt restructure? The following op-ed just published in today’s The Guardian offers my answer. [Please note that the Guardian’s title was not of my choosing. Mine read, as above: Behind Germany’s refusal to grant Greece debt relief ). Click here for the op-ed or…

Greece’s financial drama has dominated the headlines for five years for one reason: the stubborn refusal of our creditors to offer essential debt relief. Why, against common sense, against the IMF’s verdict and against the everyday practices of bankers facing stressed debtors, do they resist a debt restructure? The answer cannot be found in economics because it resides deep in Europe’s labyrinthine politics.

In 2010, the Greek state became insolvent. Two options consistent with continuing membership of the eurozone presented themselves: the sensible one, that any decent banker would recommend – restructuring the debt and reforming the economy; and the toxic option – extending new loans to a bankrupt entity while pretending that it remains solvent.

Official Europe chose the second option, putting the bailing out of French and German banks exposed to Greek public debt above Greece’s socioeconomic viability. A debt restructure would have implied losses for the bankers on their Greek debt holdings.Keen to avoid confessing to parliaments that taxpayers would have to pay again for the banks by means of unsustainable new loans, EU officials presented the Greek state’s insolvency as a problem of illiquidity, and justified the “bailout” as a case of “solidarity” with the Greeks.

To frame the cynical transfer of irretrievable private losses on to the shoulders of taxpayers as an exercise in “tough love”, record austerity was imposed on Greece, whose national income, in turn – from which new and old debts had to be repaid – diminished by more than a quarter. It takes the mathematical expertise of a smart eight-year-old to know that this process could not end well.

Once the sordid operation was complete, Europe had automatically acquired another reason for refusing to discuss debt restructuring: it would now hit the pockets of European citizens! And so increasing doses of austerity were administered while the debt grew larger, forcing creditors to extend more loans in exchange for even more austerity.

Our government was elected on a mandate to end this doom loop; to demand debt restructuring and an end to crippling austerity. Negotiations have reached their much publicised impasse for a simple reason: our creditors continue to rule out any tangible debt restructuring while insisting that our unpayable debt be repaid “parametrically” by the weakest of Greeks, their children and their grandchildren.

In my first week as minister for finance I was visited by Jeroen Dijsselbloem, president of the Eurogroup (the eurozone finance ministers), who put a stark choice to me: accept the bailout’s “logic” and drop any demands for debt restructuring or your loan agreement will “crash” – the unsaid repercussion being that Greece’s banks would be boarded up.

Five months of negotiations ensued under conditions of monetary asphyxiation and an induced bank-run supervised and administered by the European Central Bank. The writing was on the wall: unless we capitulated, we would soon be facing capital controls, quasi-functioning cash machines, a prolonged bank holiday and, ultimately, Grexit.

The threat of Grexit has had a brief rollercoaster of a history. In 2010 it put the fear of God in financiers’ hearts and minds as their banks were replete with Greek debt. Even in 2012, when Germany’s finance minister, Wolfgang Schäuble, decided that Grexit’s costs were a worthwhile “investment” as a way of disciplining France et al, the prospect continued to scare the living daylights out of almost everyone else

By the time Syriza won power last January, and as if to confirm our claim that the “bailouts” had nothing to do with rescuing Greece (and everything to do with ringfencing northern Europe), a large majority within the Eurogroup – under the tutelage of Schäuble – had adopted Grexit either as their preferred outcome or weapon of choice against our government.

Greeks, rightly, shiver at the thought of amputation from monetary union. Exiting a common currency is nothing like severing a peg, as Britain did in 1992, when Norman Lamont famously sang in the shower the morning sterling quit the European exchange rate mechanism (ERM). Alas, Greece does not have a currency whose peg with the euro can be cut. It has the euro – a foreign currency fully administered by a creditor inimical to restructuring our nation’s unsustainable debt.

To exit, we would have to create a new currency from scratch. In occupied Iraq, the introduction of new paper money took almost a year, 20 or so Boeing 747s, the mobilisation of the US military’s might, three printing firms and hundreds of trucks. In the absence of such support, Grexit would be the equivalent of announcing a large devaluation more than 18 months in advance: a recipe for liquidating all Greek capital stock and transferring it abroad by any means available.

With Grexit reinforcing the ECB-induced bank run, our attempts to put debt restructuring back on the negotiating table fell on deaf ears. Time and again we were told that this was a matter for an unspecified future that would follow the “programme’s successful completion” – a stupendous Catch-22 since the “programme” could never succeed without a debt restructure.

This weekend brings the climax of the talks as Euclid Tsakalotos, my successor, strives, again, to put the horse before the cart – to convince a hostile Eurogroup that debt restructuring is a prerequisite of success for reforming Greece, not an ex-post reward for it. Why is this so hard to get across? I see three reasons.

One is that institutional inertia is hard to beat. A second, that unsustainable debt gives creditors immense power over debtors – and power, as we know, corrupts even the finest. But it is the third which seems to me more pertinent and, indeed, more interesting.

The euro is a hybrid of a fixed exchange-rate regime, like the 1980s ERM, or the 1930s gold standard, and a state currency. The former relies on the fear of expulsion to hold together, while state money involves mechanisms for recycling surpluses between member states (for instance, a federal budget, common bonds). The eurozone falls between these stools – it is more than an exchange-rate regime and less than a state.

And there’s the rub. After the crisis of 2008/9, Europe didn’t know how to respond. Should it prepare the ground for at least one expulsion (that is, Grexit) to strengthen discipline? Or move to a federation? So far it has done neither, its existentialist angst forever rising. Schäuble is convinced that as things stand, he needs a Grexit to clear the air, one way or another. Suddenly, a permanently unsustainable Greek public debt, without which the risk of Grexit would fade, has acquired a new usefulness for Schauble.

What do I mean by that? Based on months of negotiation, my conviction is that the German finance minister wants Greece to be pushed out of the single currency to put the fear of God into the French and have them accept his model of a disciplinarian eurozone.

Greece Might Have To Sell Ancient Ruins, Islands Under Bailout Deal





It’s a horrifying prospect:  Greece may have to sell it’s ancient ruins and sights in Athens and elsewhere, as well as nature preserves, and islands as part of it’s deal under the new bailout agreement.  People are very rattled at the part of the seven-page agreement where the Greek government has agreed to sell off 50 Billion Euro’s worth of “valuable Greek assets”.

According to Time.com [1]:

“It’s an affront,” says Georgios Daremas, a strategist and adviser to the Greek Ministry of Labor, Social Security and Social Solidarity. “It’s basically saying sell the memory of your ancestors, sell your history just so we can get something commercial for it,” he tells TIME on Monday. “This is an idea to humiliate Greeks.”

The idea of locking up Greek assets in a special fund emerged on Saturday from Germany, the biggest and one of the least forgiving of the creditor-nations involved in the talks. In order to guarantee repayment on loans to Greece, the German Finance Ministry even suggested moving the titles to Greek assets to an “external fund” [2] in Luxembourg so that Athens could not renege on their sale. On this point, Greek Prime Minister Alexis Tsipras managed to fight off the Germans on Sunday, though it was one of the very few concessions he managed to get during the marathon talks.


“The deal is difficult, but we averted the pursuit to move state assets abroad,” [3] Tsipras said in trying to put a positive spin on the bailout, which would see Greece take more than 80 billion euros in additional loans in order to stave off bankruptcy over the next three years.

Greek payments on its two previous bailouts were also meant come in part from the sale of state assets. Under the terms of its first bailout in 2010, Greece agreed to privatize around 50 billion euros in property and infrastructure as a way of raising money for its creditors. But only 3.2 billion euros have come from these sales to date. So Germany and other creditors have good reason to doubt the Greek commitment to privatization.

Going forward, Greece will have to stash its assets in a specially created fund and prepare them for sale “under the supervision of the relevant European Institutions,” according to the text of the bailout agreement published on Monday [4]. Asked what kinds of assets the fund would include, Dutch Finance Minister Jeroen Dijsselbloem, one of the key European negotiators in the bailout talks, said “experts” would be brought in to settle this question. “I won’t give you any examples, because it’s not my specialty,” he told reporters in Brussels on Monday [5].

Most of the examples would have to come from the government’s land and real estate holdings, says Daremas, the government official in Athens. “That may include buildings, possible areas of land, and even islands,” he says. To protect the natural, historical and archaeological value of such real estate, Greece would need to pass laws and empower oversight bodies to make sure that “the new owner does not abuse or damage the property,” says Daremas.

Since Greek islands and plots of land often house ruins from ancient civilizations, some of these may also have to be sold, he added. “Maybe some archeological sites that are not developed,” Daremas says. “But if you have this as a private investment you also have to assume responsibility for developing the site, of course being monitored by [Greek] authorities.”

There are, of course, limits to the privatization of ancient artifacts. The treasures of Greek antiquity, such as the Acropolis in Athens, would never be sold, Daremas says. “That’s impossible. Their value is immeasurable.”

The idea of selling the Acropolis came up early in Greece’s debt crisis. In 2010, two conservative German lawmakers caused a furor [6] in Greece by suggesting that ancient ruins should not be off limits to privatization. “Those in insolvency have to sell everything they have to pay their creditors,” Josef Schlarmann, a member of Chancellor Angela Merkel’s political party, said at the time. Since publishing those remarks, the Bildnewspaper, Germany’s most popular tabloid, has continued to irritate Greeks by asking why the Acropolis cannot be sold to repay debts to Germany [7].

This is black humor,” says Natalia Kosmidou, a tour guide at the Acropolis in Athens. “The Germans must have had too much beer.” Although the last five years of economic turmoil have forced Greece to rely on private donors and foreign foundations to help pay for the maintenance and restoration of the Acropolis, Kosmidou says, “the Greek state will always own these monuments, even as the poorest pauper, even penniless.

Greece has at least been willing to discuss the sale of its islands, however, as many of them are uninhabited and underdeveloped. Joseph Stiglitz, the Nobel-prize winning economist who has spoken out in favor of debt relief for Greece [8], says the sale of islands could be an important part of the broader privatization campaign. “You could sell them,” he says. “But not a fire sale, because that would be like giving away your patrimony for nothing.”

That would mean waiting until the property market in Greece recovers. “Of course real estate prices are depressed right now,” says Daremas. “It’s very important to have time, and to wait for change in the economic climate to be able to sell them at a fair price.” The Greek promise to sell state assets came with no time limit in the text of the agreement published Monday. But in their hunger for guarantees on this latest package of loans to Greece, creditors in Germany will not be happy to wait much longer.


Disclaimer: The contents of this article are the sole responsibility of the author(s).  Unruly Hearts will not be responsible for any inaccurate or incorrect statement in this article.

The German Siege Of Greece Begins (No, This Is Not A Repeat From 1941)


Global Research, July 07, 2015

By Michael Snyder

Siege-Public-Domain-460x306-400x266Did you notice that Greece’s creditors are not rushing to offer the Greeks a new deal in the wake of the stunning referendum result on Sunday?  In fact, it is being reported that the initial reaction to the “no” vote from top European politicians was “a thunderous silence“.  Needless to say, the European elite were not pleased by how the Greek people voted, but they still have all of the leverage.  In particular, it is the Germans that are holding all of the cards.  If the Germans want to cave in and give the Greeks the kind of deal that they desire, everyone else would follow suit.  And if the Germans want to maintain a hard line with Greece, they can block any deal from happening all by themselves.  So in the final analysis, this is really an economic test of wills between Germany and Greece, and time is on Germany’s side.  Germany doesn’t have to offer anything new.  The Germans can just sit back and wait for the Greek government to default on their debts, for Greek banks to totally run out of cash and for civil unrest to erupt in Greek cities as the economy grinds to a standstill.

In ancient times, if a conquering army came up against a walled city that was quite formidable, often a decision would be made to conduct a siege.  Instead of attacking a heavily defended city directly and taking heavy casualties, it was often much more cost effective to simply surround the city from a safe distance and starve the inhabitants into submission.

In a sense, that is exactly what the Germans appear to want to do to the Greeks.  Without more cash, the Greek government cannot pay their bills.  Without more cash, Greek banks are going to start collapsing left and right.  Without more cash, the Greek economy is going to completely and utterly collapse.

So yes, the Greeks voted for change, but the Germans still hold the purse strings.

And right now the Germans do not sound like they are in any mood to compromise.  The following comes from a Reuters report that was published on Monday…

German Chancellor Angela Merkel’s deputy said Athens had wrecked any hope of compromise with its euro zone partners by overwhelmingly rejecting further austerity.

Merkel and French President Francois Hollande conferred by telephone and will meet in Paris on Monday afternoon to seek a joint response. Responding to their call, European Council President Donald Tusk announced that euro zone leaders would meet in Brussels on Tuesday evening (1600 GMT).

German Vice-Chancellor Sigmar Gabriel, leader of Merkel’s centre-left Social Democratic junior coalition partner, said it was hard to conceive of fresh negotiations on lending more billions to Athens after Greeks voted against more austerity.

Leftist Prime Minister Alexis Tsipras had “torn down the last bridges on which Greece and Europe could have moved towards a compromise,” Gabriel told the Tagesspiegel daily.

In addition, Angela Merkel’s office released a statement on Monday that placed the onus on making a new proposal to end this crisis on the Greek government

“It is up to Greece to make something of this. We are waiting to see which proposals the Greek government makes to its European partners,” the office of German Chancellor Angela Merkel, Europe’s leading austerity advocate, said in a statement.

Just because the Greek people want the Germans to give them a very favorable deal does not mean that the Germans will be inclined to do so.  The Germans know that whatever they do with the Greeks will set a precedent for the rest of the financially-troubled nations all across Europe.  If Greece gets a free lunch, then Italy, Spain, Portugal, Ireland and France will expect the same kind of treatment

Angelos Chryssogelos, an expert on Greek politics at the London-based think tank Chatham House, said the strength of Sunday’s mandate handed to Tsipras means it will be almost impossible for the prime minister’s leftist Syriza party to make a deal with European creditors.

“The Europeans made it pretty clear where they stand, and they have been consistent,” Chryssogelos said, adding that the creditors also are unlikely to back down. “Right now, voters across the eurozone largely support the tough stance taken by the eurozone.”

Chryssogelos said Greek voters may have underestimated the resolve of the creditors to reach an accord on their terms. “If someone is seen getting preferential treatment, then someone else will want that treatment,” he said, referring to other eurozone debtors such as Ireland and Portugal.

And remember, there is a very important Spanish election coming up in December.

If Syriza comes out as the big winner in this crisis, it will empower similar movements in Spain and all over the rest of the continent.

So look for Greece’s creditors to tighten the screws over the coming days.  In fact, we already saw a bit of screw tightening on Monday when the ECB announced that Greek banks would not be receiving additional emergency assistance

In a move sure to increase pressure on Greece’s flailing banks, the European Central Bank on Monday decided not to expand an emergency assistance program, raising fears that Greece could soon go completely bankrupt.

The move put a swift crimp on Greek leaders’ jubilation after winning a landslide endorsement from their citizens to reject Europe’s austerity demands and seek a new bailout bargain. Now they must seek a bargain before the money runs out within days, which would likely force them off the euro.

Basically we are watching a very high stakes game of chicken play out.  And as the cash dwindles, economic activity in Greece is slowly grinding to a halt.  The following comes from the Washington Post

The dwindling cash is sucking the life out of everything from coffee shops to taxis, as anxious Greeks economize amid fears for the future. Greek leaders also banned transfers of money abroad, meaning that very little can now be imported into the country.

Printing plants are warning that they may run out of paper to print newspapers by the end of the week. Butchers say that stocks of imported meat are dwindling.

Some are even projecting that we could see civil unrest erupt in Greece in about “48 hours” once the ATM machines  run out of cash

Greek Prime Minister Alexis Tsipras probably has 48 hours to resolve a standoff with creditors before civil unrest breaks out and ATMs run out of cash, hedge fund Balyasny Asset Management said.

Yes, the Greek people exhibited great resolve in voting against the demands of the creditors on Sunday.

But how long can they endure this economic siege?

It is inevitable that a breaking point will come.  Either the Greek government will give in, or the Greeks will leave the euro and start to transition back to the drachma.

If we do see a “Grexit”, and many analysts believe that one is coming, it could set off a chain of events that could cause immense financial pain all over the planet.  There are tens of trillions of dollars of derivatives that are tied to European bond yields, European interest rates, etc.  The following is an excerpt from a piece authored by Phoenix Capital Research that explains what kind of jeopardy we could potentially be facing…

The global derivatives market is roughly $700 trillion in size. That’s over TEN TIMES the world’s GDP. And sovereign bonds… including even bonds from bankrupt countries such as Greece… are one of, if not the primary collateral underlying all of these trades.

Greece is not the real issue for Europe. The entire Greek debt market is about €345 billion in size. So we’re not talking about a massive amount of collateral… though the turmoil this country has caused in the last three years gives a sense of the importance of the issue.

Spain, by comparison has over €1.0 trillion in debt outstanding… and Italy has €2.6 trillion. These bonds are backstopping tens of trillions of Euros’ worth of derivatives trades. A haircut on them would trigger systemic failure in Europe.

If Greece gets a “haircut” on their debt, other European nations would want the same and that would cause massive chaos in the derivatives markets.

But if Greece does not get a deal and ends up leaving the eurozone, that will cause bond yields to go crazy all over Europe and that would also cause tremendous chaos in the derivatives markets.

So much depends on keeping this system of legalized gambling that we call “derivatives trading” stable.  We have allowed the global derivatives bubble to become many times larger than the GDP of the entire planet, and in the end we will pay a great price for this foolishness.

Every pyramid scheme eventually collapses, and this one will too.

But the difference with this pyramid scheme is that it is going to take the entire global financial system down with it.

Posted by Ainhoa Aristizabal