Adults in the Room: My Battle With Europe’s Deep Establishment, by Yanis Varoufakis
Reviewed by Carolyn Lochhead
Yanis Varoufakis’ Adults in the Room is essentially an account of 162 days spent having baffling conversations with the world’s most powerful institutions. Becoming Greek Finance Minister in 2015, after left-wing party Syriza was elected on an anti-austerity platform, it was Varoufakis’s job to negotiate a new deal with the European Commission, IMF and World Bank. Anyone would expect this to be a tough gig. What is less predictable is why it was so difficult.
It was not, argues Varoufakis, because he was trying to avoid paying Greek’s debts. It was because Greek’s creditors did not want their money back.
Here’s Varoufakis’s argument in as tiny a nutshell as I can squeeze it into. Greece did have big problems with tax evasion, corruption and mismanagement. But this alone did not cause its slide into bankruptcy. That was the product of catastrophic business decisions by French and German banks. When the 2008 crash hit, these banks faced insolvency. If Greece publicly admitted that it could not repay them, France would have faced destitution and Angela Merkel dire political consequences.
Therefore, the EU and IMF made massive loans to Greece, presenting them as a bailout of a lazy and profligate nation. And the money immediately made its way back to the French and German banks. Of course, this did not pay off Greece’s original debt, a matter which did not appear to concern its creditors, so further bailouts were required. Varoufakis calls these “extend and pretend” loans, and contends that even a child understands that you cannot make a bankrupt country pay off its debts by lending it more money. His chief aim as Finance Minister was to end this cycle, restructure the debt and tackle Greece’s endemic problems.
Now look. I’m moderately financially competent. I produce a mean Excel spreadsheet, I can muddle through a balance sheet and I always pay my mortgage. But global debt restructuring is way over my head, so I haven’t a clue if Varoufakis’s analysis of the Greek situation is right, though his prose is convincing. Instead, what I took from this book was threefold.
Public and private politics are massively different
I know, duh. It’s not exactly a newsflash that politicians may say different things in public than in private. But it’s rare to read a book that spells it out so clearly. After he is first elected, Varoufakis goes on tour, seeking to demonstrate to his global counterparts that he is not the irresponsible radical portrayed in the press.
Early in his tenure he meets Michel Sapin, then French Finance Minister. They agree on the ineffectiveness of austerity, the need for investment-led recovery and the importance of debt restructuring. It’s a pleasant, enthusiastic discussion.
In the ensuing press conference, Sapin performs a complete U-turn and orders Greece to pay its debts, with no flexibility at all.
This happens again and again. In private, people agree. In public, they denounce him. It’s a great lesson in big-league politics: it’s not enough to have a good argument. You must also manage the perceptions and the politics, understanding all the pressures to which your opponents and allies are subject. Varoufakis believes that the influence exerted by the IMF and other power players was simply too great: no-one could afford to anger them.
Which leads to lesson number two.
Democracy is in trouble
I work in public affairs, not because I want to hang out with politicians or because I adore parliamentary receptions (although who doesn’t love a canapé?) but because I fundamentally believe in the right of citizens to influence politics. Varoufakis argues that in the places that matter, this right is non-existent. He details how officials from the IMF, European Central Bank and European Commission would always speak first in the Eurogroup – the forum in which European finance ministers meet – before democratically elected politicians were allowed to voice an opinion. Indeed, he cites German Finance Minister Wolfgang Schauble saying frankly: “Elections cannot be allowed to change economic policy”.
It’s sobering. Varoufakis contends that Spain, France, Poland and other nations went along with the IMF line that Greece must privatise all its assets, slash pensions and generally punish the poorest for the sins of the bankers, because they feared if they did not, they would be next. He argues that this is an unintended consequence of the EU as it currently stands. Note, however, that he was not and is not an advocate for Grexit. It is odd to remember that just two years ago, the likelihood of Greece leaving the EU seemed high, while no-one seriously believed the UK would ever do such a thing. How things change. Although some things remain steadfastly the same: which brings me to my final lesson.
There are almost no women involved in global finance.
Angela Merkel. Christine Lagarde. That’s it. Varoufakis does not explicitly point this out but in chapter after chapter, he details exhausting and frustrating meetings with officials and politicians from around the globe, and these are the only two women who ever feature as serious players. It’s another depressing finding in a book that does not brim with hope and optimism for our shared global future.
We know how this story ends. Varoufakis resigns, devastated by Syriza’s decision to accept another bailout and submit to demands to further devastate the Greek economy. He is personally blamed for Greece’s bankruptcy, and indeed there are attempts to bring treason charges against him. It’s not a cheery tale. Yet Varoufakis remains optimistic, concluding:
“The idea of Europe has been wounded so deeply…that good people are turning away from it…But [our] policy of…being both in and against this illiberal and anti-democratic Europe is the only practical alternative to the dystopia unfolding as Europe disintegrates”.
The UK, of course, has chosen a different path. Given Varoufakis’s hellish experience of trying to negotiate with the EU and its allies, it might be wise for David Davis to read this book.
Carolyn Lochhead is Public Affairs Manager at mental health charity SAMH. You can follow her at @theshooglypeg.
Featured image credit: The Council of Gods, Raffaello
Portrait credit: Jörg Rüger