Yanis Varoufakis, The Bodley Head, 2017
Written by the ‘rock star’ Economist, Yanis Varoufakis, ‘Adults in the Room’, tells of his time as Finance Minister for Greece at the height of the Grexit débacle. It makes fascinating and sobering reading. It is especially apposite for the UK as it negotiates its own ‘rupture’ from the EU – Brexit.
Perhaps more shocking than the Machiavellian machinations of Eurocrats in Brussels and within his own government in Athens, are the appalling revelations of negotiations held in bad faith by the really powerful in Europe. Negotiations that purport to strive for a ‘win-win’, but in reality are designed to crush the weaker side, ‘…pour l’encouragement des autres’ 1
The paraphrased strategy below, as described by Jeff Sachs, goes as follows:
‘The stronger demands x from the weaker as a starting point, promising talks about y and z later. But they lie! Once you give them x they will deny they ever promised you anything. Don’t fall for it! 2
We can see this playing out again with Brexit. The EU demands that there be no negotiation of trade deals until the ‘divorce settlement’ is concluded: no phase 2 until phase 1 is complete. This ‘ratchet effect’ is a well-known tactic designed to prevent compromise under the guise of a cautious, careful step-by-step approach. Of course, phase 2 never comes!
There are other striking similarities, too. For example, the media war that the Eurogroup waged against Varoufakis and the way Brexit is being reported. Varoufakis was portrayed as a bumbling, Left-wing incompetent, ego-driven, childish and not living in the real world. Whereas Wolfgang Schäuble, the German Finance Minister, was the exasperated father-figure, long-suffering and reasonable. In the same way, the Brits are being described as clueless dogmatists leading their hapless citizens over a self-defeating precipice. Unlike the benign German pragmatists, who simply want the best for ‘alle’.
The reality is the opposite. Varoufakis was trying to put forward moderate, sensible policies that would benefit both Greece and the EU. He had support from neoliberal economists (not his natural bedfellows, such as Norman Lamont), and arch-pragmatists, like Christine Lagarde (whose comment gave the title of this book). However, the supremacy of Germany had to prevail at all costs.
Once again, with Brexit, for purely dogmatic reasons, we see that Germany must punish the UK to preserve the so-called, ‘four freedoms’, and maintain the integrity of the EU by making a terrifying example of Britain. Further hypocrisy was added for Greece in that rules were readily broken to favour the strong, but insisted upon to chastise the weak. Capital controls (supposedly forbidden under ‘free movement of capital’) were considered essential in Greece, and are still largely in place since 2015. But, the UK is told that ‘freedom of movement of people’ is non-negotiable!
‘Adults in the Room’ gives an outsider’s view from the inside. It shows how easily democracy can be subverted by unelected, career bureaucrats. How even the loudest protesting voices can be intimidated and/or have their mouths ‘stuffed with gold’. 3 It is ‘Yes, Minister’ without the humour. 4
Yanis Varoufakis makes it clear that economic common-sense was never really important in Grexit; it was all politics.
- Varoufakis, Y. (2017) Adults in the Room: My Battle with Europe’s Deep Establishment. The Bodley Head, London. p.425