11 May 2017
Adults in the Room
A book by Yanis Varoufakis
Reviewed by Peter Hanratty, Madagascar British Chamber of Commerce
The book written by Yanis Varoufakis and subtitled “My Battle With Europe’s Deep Establishment” describes his time as Minister of Finance for Greece, when he was charged with leading debt negotiations with the EU Commission, the European Central Bank and the IMF during the first five months of 2015.
It is an important book. Whether you agree or disagree with his views, Varoufakis has written a “must read” for anyone involved in Brexit trade negotiations and, indeed, anyone who wishes to understand where the imminent Brexit discussions may lead. The title of the book is a quote from Christine Lagarde (Head of the IMF) apparently asking after a lengthy negotiation session whether there were any “Adults in the room”?
On the negative side – as I perceive it – the book perhaps has two weaknesses. First its length. At 550 pages dealing with approximately 160 days, it is truly a blow by blow account, something which inevitably leads to repetition of the same points, valid as they are. Secondly the book – given its length – glosses over how Greece found itself technically bankrupt, something which gives colour to the hard line reaction against Varoufakis. Indeed Varoufakis himself rather enjoyed cultivating a rebellious image of leather jacket, motor bike and communist credentials which, together with his outspoken approach, clearly did not endear him to European decision makers.
The negatives however are far outweighed by the extraordinary quality. Firstly – especially in the opening chapters – it is beautifully written. The reader is left in little doubt about the exceptional intellect of Varoufakis who manages to explain complex economic issues clearly.
His ongoing thesis is repeated throughout the book – namely that The European Commission, European Central Bank and IMF (Troika) continually enforce on Greece repeated bail outs – with each bail out exerting more stringent conditions and making it impossible for the economy to grow or to attract private investment. This results inevitably in greater social hardship. New money coming in is merely used to repay interest and debt from the Troika themselves, who dare not see any debt being forgiven lest other EU countries demand the same treatment.
Valoufakis makes the point that Greece wishes to remain in the EU and is merely asking for common sense with repayments linked to economic growth. This is refused by the “Eurogroup” of Financial Ministers.
Negotiating with the Troika is almost impossible. They make it clear they are accountable to individual countries but, when Varoufakis seeks to deal with these countries, they refer him to the Troika. It reminds me of my own time working for a European Bank which had experienced several mergers but where the decision making was left unresolved, resulting in three head offices and two credit committees. Each credit committee deferred to the other although the same people sat on each, conveniently avoiding difficult decisions. Varoufakis describes the same culture.
He sees Brussels as a “democracy free zone”. Indeed when Varoufakis explained that he had just been elected by Greek voters, the powerful German Finance Minister ominously replied that “elections cannot be allowed to change the economic programme of member states.”
The worry for Brexit negotiators is typically characterized by Varoufakis in the Eagles song “Hotel California” – “You can check out any time you like – but you can never leave”.
Since in his view Brexit negotiations with the EU are impossible – he suggests the UK adopt the “Norway Solution”, becoming part of the European Economic Area. While this is not perfect it could provide an interim solution allowing unimpeded trade with the EU while allowing time to set up trading agreements elsewhere.
A remarkable book.
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