Share, , Google Plus, Pinterest,



The wrong/right man in the wrong/right place, probably

Michael Smith reviews ‘Adults in the Room: My Battle With Europe’s Deep Establishment’, by Yannis Varoufakis.

Yanis Varoufakis is (or was) “the most interesting man in the world” according to Business Insider; a “very, very clever person” according to Martin Wolf of the Financial Times. After all he landed Danae Stratou, allegedly the inspiration for Jarvis Cocker’s breathtaking song Common People, and challenged the deep global establishment. If he failed in the cut-throat bailout drama which he accepts as tragedy, in Greece, at least he came closer to undermining global capitalism, a system above all designed to be unassailable, than anyone else, both politically and intellectually.

Village readers, above all, will be familiar with the background: having held only university posts, mostly in Leftie bastions – Essex, Birmingham, East Anglia, Varoufakis was elected to the Greek parliament (Larry Summers calls this his big mistake!), collecting the largest number of votes (more than 142 thousand) of any Greek MP and became Syriza’s new government’s finance minister in early 2015 armed with ‘A Modest Proposal’, a plan to deal with Greece’s debt without vicious austerity, while staying in the EU. He’d been working on it for years with Stuart Holland, a former British Labour Party MP and the American economist, Jamie, son of JK, Galbraith.

In the end it was supported by numerous economists including Larry Summers, Thomas Piketty and Joseph Stiglitz.

Varoufakis considers the Greek state became insolvent in early 2010 and that the bailouts that followed were attempts to “extend and pretend” – to take on the largest loan in history (in order to keep making repayments on older loans) on condition of austerity measures that would shrink the incomes from which the old, un-serviceable loans, and the new bailout debts would be repaid. Taking on the “bailout” loans in 2010 and 2012 would lead to deeper bankruptcy and even harder default in the future, and therefore defies fundamental laws of economics and mathematics. This is still playing out.

Meanwhile, by the end of June 2015 having been deprived of funds, Greece was no longer able to make payments on its debts, and came close to declaring default. As queues formed at ATMs, ‘Marxist’ prime minister Tsipras called a referendum on the Troika’s demand for more austerity in exchange for additional funds to bail out Greek banks.

Over 61% of the 62.5% turnout recorded their solid NO to the Troika’s demands. Tsipras was appalled by the implications of the vote. That same night, having panickingly abandoned his back-up plan, Tsipras rejected the result, capitulated to the Troika, and Varoufakis was out, on his bike. The government had overthrown the people. Tsipras had been deMarxified and Varoufakis went back to rhetoric without power.



Paul Tyson says ‘Adults in the Room’ is “a reflection on the nature and meaning of power in our times”. In the Theological Review he writes that Varoufakis “chronicles what happens when an able theologian of modern political economics points out that our priests are heretics in the terms of their own doctrines. For if austerity is meant to heal the Greek economy then 1 + 1 = 17; but if austerity is not about healing the Greek economy, then what is really going on in the Eurozone? In response, our priest guild simply asserts that 1 + 1 obviously = 17, and they see no reason why they should tell anyone what is really going on. Who can know divine truth but the priest guild? Trust and obey, for there is no other way”. Less benign to Varoufakis, The system-defending Financial Times says the book is “a lesson in how not to negotiate with Europe’s power brokers”. Elected politicians have little power; stock markets and a network of hedge funds, billionaires and media owners have the real power, and the art of politics is to recognise this and achieve as much as possible without disrupting the system. That recognition was the universal norm. Varoufakis rejected it and, by describing it in frank detail, is now arming us against the stupidity of the electorates’ occasional fantasies, not least in an Ireland enjoying a smooth return to boom-and-bust, that the system built by Neoliberalism can somehow bend or compromise to our desire for social justice. That is what makes this book special, politically beautiful. The honesty of the outsider with the knowledge of the former quasi-insider.

The insider/outsider question is the key. Varoufakis opens the book with his arrival as Finance Minister in Washington for a meeting with Larry Summers, the former US treasury secretary and conduit to Obama. Summers asks him: “do you want to be on the inside or the outside? Outsiders prioritise their freedom to speak their version of the truth. The price is that they are ignored by the insiders, who make the important decisions”. Apparently Larry understood that Yanis would not sign surrender “at the price of becoming a bona fide insider…and he believed that this would be a pity, for me at least”. A lot, maybe the future of Europe, depends on how you read this conversation, according to The Theological Review. Some might consider that the pity was much more marked for his country and that his own was scarcely worth registering.

It’s all about power and its networks. The 2008 crisis, which continues. “is due to the terminal breakdown of the world’s super black boxes – of the networks of power”. Believing the solutions to the crisis will stem from the same networks is “touchingly naïve”. “The key to such power networks is exclusion and opacity”, Varoufakis asserts. As sensitive information is bartered, “two-person alliances forge links with other such alliances … involving conspirators who conspire de facto without being conscious conspirators”.

Before he went into government as he notes he believed we could open the black boxes: “each one of us may very well be a node in the network…if we can get inside the network…and disrupt the information flow, if we can put the fear of uncontrollable information leaking in the he mind of as many of its members as possible…then the networks will collapse under their own weight and irrelevance”.

That all seems fine except for Varoufakis it’s yesterday’s idea: “my priority was not to leak information to outsiders but to do whatever it took to get Greece out of debtors’ prison. If that meant pretending to be an insider, so be it…if it became acceptance of Greece’s permanent incarceration, I would leave”. However, it is not clear if he really believes in the Power of One. The obvious danger is that pretending to be an insider is the same as being one. Even for a Marxist.

‘Adults in the Room’ addresses the issue of our time head-on but also spices the attack with gratifyingly scathing anecdote.

The biggest precise psychological insight is that Angela Merkel and Nicolas Sarkozy knew that Greece was bankrupt in 2010 when the EU bailed it out, that there was a “bankruptcy cover-up”, and that the bailout was designed to save the French and German banks; and they knew it would be a disaster. “How do I know that they knew” Because they told me”.

This charge is not new – it was levelled at the financial elite at the time by leftwing activists and rightwing economists. But Varoufakis backs it – and others -with quotes.

Varoufakis’s academic achievements are in the application of game theory to economics. So his strategy was to make the enemy believe Syriza was prepared to default, or cut loose from the euro system – so they would roll over loans that were coming due, and hold off collapse of the Greek banking system.



This worked, though at the price of a suspicious rhetorical climbdown and retreat on Syriza’s domestic programme in February 2015. It failed in July because, after he had won an emotional referendum campaign, Tsipras chose compromise over war. Varoufakis needed better allies but it is not clear if he deserved them. The circularity does not disguise the truth that no country is self-determining and no individual can guarantee to buck the system.

Varoufakis expected to lose the referendum and that sealed his fate.

Why did Varoufakis’ arguments fail to convince?
He adduces evidence to show the European authorities feared that any concessions to the Radical Left would encourage similar movements, in Spain – Podemos – and in Portugal, Italy, France and Ireland, leading to a destabilisation of the global financial system.

But other forces were also at work.

An extraordinarily sinister event followed a telephone conversation with US economist Jeffrey Sachs, in which Varoufakis said the time had come to default on payments to the IMF. Five minutes later Sachs rang back after a shocked and shocking call from the US National Security Agency, whose informants had been monitoring the line.

Varoufakis spares nobody. Greece’s creditors sensed “their power mutate into insufferable powerlessness [and] felt compelled to do their worst”. He declares the tale can’t be told without naming the antiheroes. He finds Tsipras to be an enigmatic mix: optimistic, frivolous, melancholic, over-keen to prove himself, a vacillator and lazy thinker. Scorn is splashed at the Bank of Greece governor, Yanis Stournaras, an old friend. It is he who caused a bank run; not Varoufakis’ strategy. He regards most of his international foes as duplicitous: agreeing with him in private but unreliable in public. Key examplars are IMF chief Christine Lagarde, ECB president Mario Draghi and the EU finance ministers who might have rallied to Greece in its hour of desperation: Michel Sapin of France and Pier Carlo Padoan of Italy. A named exception is Emmanuel Macron, then economics minister in Paris, who makes several private attempts to help Athens but was thwarted. Varoufakis says Merkel overheard Macron refer to the treatment of Greece as like Versailles and ordered a compliant Hollande to keep him out of negotiations. The European Commission and its president, Jean-Claude Juncker, are simply weak. Particular spleen is reserved for a heretofore unknown Irishman with the unlikely name of Declan Costello, described to Varoufakis by an unnamed Irish ambassador as “an un-Irish Irishman”, who headed the European Commission’s team in Athens and is derided by Varoufakis as a master of the “runaround”, infiltrating the Greek administration and suborning Varoufakis’s own deputy.

Varoufakis sees Germany as the key player. Wolfgang Schäuble doesn’t even believe in democracy and is angling to get the IMF into France. He was “utterly powerless to do what he knows is right”: some indictment. The German finance minister confessed he wouldn’t sign a third bailout if he was in Varoufakis’s shoes, but he offered no alternative. Admittedly Varoufakis doesn’t acknowledge the central truth that Schäuble favoured “Grexit”. Merkel was the key. She is a “small c conservative who doesn’t like structural breaks”. She wouldn’t allow Grexit. Tsipras didn’t see this, and that was crucial. In the end her “outstanding work ethic” subdued him entirely.

Varoufakis both is and is not the best person to have led all this subversion. He’s so clever he can never treat anything anyone throws at him as gospel. He’s so unorthodox he doesn’t even see himself as an economist: “I am a Professor of Economics who has never really trained as an economist. While I may have a PhD in Economics, I do not believe I have ever attended more than a few lectures on economics!”. It is evident that his EU counterparts despair of him, just as Tsipras does in due course. He accepts that it was stupid to do the glamorous Paris Match feature he and his wife executed at the nadir of Greece’s depression, as well as turning up to see George Osborne in a leather jacket. But even here he’s equivocal: he’d left his suitcase behind in an Athens taxi. It’s not a big step to note the equivocation in his acceptance that his revolutionary insider self could not give voice if it risked, through instability, the welfare of his people.

Nor to say that, since his principal gripe with the insiders – with the deep establishment, was that they were willing to crush Greece in the interests of a similar conservative vision of the welfare of their own people and of the global system, there is an apparent equivalence between them and him. In the end this imputes to Varoufakis a moral vacancy and even a strategic circularity.

The deep establishment didn’t know what to do and so they kicked Greece to touch, hoping – not necessarily inaccurately – that things would be ok, especially in their own fiefs, in the end. He did not see this.

The game player got off the accelerating circle and has become an honorary resident guest at David McWilliams’ talks and on the BBC’s Question Time: not only the darling of the Corbynite Left but a mascot for Britain’s Eurosceptic Right, with the likes of former Chancellor Norman Lamont, “a pillar of strength” among his early admirers. Yanis Varoufakis lost his 2015 battle with the enemy he’s spent a lifetime defining. Greece isn’t getting the debt relief everyone knows it needs. But Yanis is doing ok and the book is excellent.
With ‘Adults in the Room’, according to Paul Mason in the Guardian, Varoufakis has written one of the greatest political memoirs of all time. It stands alongside Alan Clark’s for frankness, Denis Healey’s for attacks on former allies, and – as a manual for exploring the perils of statecraft – will probably gain the same stature as Robert Caro’s biography of Lyndon B Johnson. The Financial Times reviewer said it is a “tremendously indiscreet account by Varoufakis as he draws upon his own audio recordings and diaries of top-level meetings. It is deeply personal and very well written, with an impressive array of literary allusions”.

Varoufakis is doing better than his country. And being the most interesting man in the world while he does so. He’s working to build DiEM 25, a pan-European, cross-border movement of democrats. His aim is to repair the European Union. Would you trust him? Read the book.