Adults in the Room: My Battle with Europe's Deep Establishment

Yanis Varoufakis

Book cover

With Q1 almost over, this is my first contender for best book I read in 2018.

Yanis Varoufakis was the finance minister, briefly, of the left-insurgent Syriza government in Greece that took power in 2015. He is not a career politician, but rather an academic economist who agreed to serve as finance minister because of his strong beliefs about the injustice of the current political and economic situation of Greece. (Actually, I met Varoufakis once at a finance conference in New York, probably in 2010 or so, and spoke with him briefly there, well before he was world-famous.) By 2015, Greece had already been exposed as having severe economic problems that had been swept under the rug for years, had defaulted on its debt, and had accepted an austerity-heavy bailout package from the so-called “troika” of multilateral institutions (the European Central Bank, the European Commission, and the International Monetary Fund). Syriza was voted into office on a wave of popular discontent, as the Greek people realized that the bailout package was doing nothing to revive the economy. Syriza in general, and Varoufakis in particular, promised to renegotiate the bailout agreement on terms that would be more favorable to the Greek people, on the strength of their willingness to trigger “Grexit” and leave the euro if the troika refused to renegotiate.

While Syriza remains in power in Greece today, they were spectacularly unsuccessful in fulfilling their popular mandate. Prime minister Alex Tsipras ultimately signed an extension of the original bailout agreement, with as much or even more austerity measures, and Varoufakis resigned immediately before this happened due to his unwillingness to countenance such an action. Even worse, this capitulation immediately followed a referendum on the extension of the bailout, called by Tsipras himself, in which the Greek people voted overwhelmingly to reject it!

So finally, with that background set, I can come to Varoufakis’s book. It is his memoir of his time as finance minister, as well as the lead-up in which he is convinced to run for parliament and accept the role of finance minister. He frames the book as a “Greek tragedy” of sorts–a dramatic story in which the well-meaning protagonists are brought low by their own flaws. Much like, say, “Oedipus Rex,” our knowledge of how events turn out does nothing to lessen the drama of the story; indeed, I would say it largely heightens it–Syriza’s capitulation was so complete that I was dying to know how it could possibly have happened. (“How could someone possibly accidentally kill his father and marry his mother??”)

Varoufakis does not disappoint and absolutely brings the drama. There are betrayals, a vote that the government hopes to lose, an attack with a broken bottle, even a dramatic point centering on the “author” metadata of a Microsoft Word document! The key attraction of the book is Varoufakis’s detailed recounting of many, many conversations that went on behind closed doors between himself and other political and economic leaders–primarily Wolfgang Schauble, the German finance minister; Jeroen Dijsselbloem, the Dutch finance minister and leader of the Eurogroup roundtable of finance ministers; Mario Draghi, the president of the European Central Bank; Christine Lagarde, managing director of the IMF; and of course, the key domestic players such as Alex Tsipras and Yannis Stournaras, the governor of the Bank of Greece (effectively a branch of the ECB). (The very biggest players, Angela Merkel and Barack Obama, largely float above the drama like greater gods.) Although Varoufakis has plenty to be angry about, this doesn’t come across as a score-settling tell-all, nor (mostly) as an attempt at self-exculpation; rather, it comes across as a real desire to communicate to “civilians” the pathologies of the current European political and economic governance structures.

This is the heart of what makes this book great–it is a fascinating view into how policy is made, behind the scenes, in a formally multilateral environment where there is in fact a heavy imbalance of power (with German and global forces basically holding all the cards). It is also a very interesting portrait of how difficult it is for a radical movement to succeed within this context. Inertia, vested interests, and concern for appearances all militate heavily in favor of the status quo. I got the very strong impression from the book that Syriza, and Varoufakis in particular, planned its strategy extremely carefully and executed on it almost flawlessly–but only almost. Varoufakis himself very specifically identifies a particular meeting where, in hindsight, he believes the capitulation would have been averted if he had chosen differently–but that choice was made in a split second under immense pressure.

A corollary to this point is that the book shows how difficult it is to pull the trigger on a course of action that will upset the status quo and cause significant disruption, even when you have already decided rationally that this course of action is in fact preferable to the status quo (in this case, the disruptive course of action being Grexit). For someone who studies game theory academically, Varoufakis keeps his book admirably free of jargon, but his approach to the negotiations boils down to a strategy that is easy to outline. He believes that the best outcome for Greece is a renegotiation of the bailout that eases austerity. He believes that Grexit will be extremely disruptive and burdensome on the Greek people; however, for all this, he believes that it is nonetheless preferable to a continuation of the status quo austerity bailout. Therefore, he approaches the negotiations by making it clear that he is in no way gunning for Grexit, and wants to avoid it at almost all costs–with the only cost he is not willing to pay essentially being continuation of the status quo. Because Grexit will also be very bad for those on the other side of the table, his credible threat thereof should result in a successful renegotiation, which will be better for both sides than Grexit.

As I said, of course, this does not actually work. The primary weakness in the plan that Varoufakis identifies in the book is that it is not his call alone to make; that he needs the support of Tsipras, which erodes away over the course of the narrative. Varoufakis is overly willing to believe in Tsipras’s commitment, even after repeated “tells” that his resolve is weakening. I don’t think this is mostly naivete on Varoufakis’s part, but rather, a real commitment to try every other possible option before pulling the Grexit trigger. It’s hard to be an armchair finance minister and say what Varoufakis should have done differently in an extremely challenging situation. But if I had to say one thing, which I think is also externalizable to other contexts, it’s that it was a mistake to structure the deterrent as one “big bang” of a bunch of stuff that gets triggered all at once. This maximizes its unpalatability, meaning you want to put it off if at all possible, and also allows for extended “cheap talk,” in which your allies (Tsipras in this case) can pay lip service to the strategy without having to do anything concrete in support of it. I think it would have been preferable if Varoufakis’s Grexit plan, which did have several different components, had been structured as a series of ratcheting actions to be taken as negotiations continued to fail. It may be challenging to think of the exact right way to do this, but I think it would have been possible.

A final message that I took away from the book regards the incredible power of discretion by political decision-makers. Numerous times, when someone in power does not want to cooperate with Varoufakis, they “throw the book at him” or hide behind bureaucratic rules. In all of these cases, Varoufakis points out to them how the rules have been bent in the past, or more broadly how loopholes and creative solutions can be found where there is political will. (This is similar to, for example, discussions around bank bailouts during the financial crisis.) In Seeing Like a State, James Scott discusses at length the importance of local practices, and how this powers something like a “work-to-rule” strike. In this book, we see how “work to rule” can be used by the powerful against the weak, as well. Of course the powerful can always exercise power by enforcing rules, but by evincing the possibility of not enforcing rules, they can dissuade the weak from exercising what power they do have.

Anyway, enough of the nitty-gritty. Varoufakis is a very charismatic writer (as I remember him being in person), and mixes in plenty of humor and personal stories alongside the play-by-play. He comes across as a committed leftist and a committed Europeanist (which makes the outcome all the more tragic). He uses a charmingly large amount of allusions to Greek myth and literature, which could come across as clunky but in fact seemed natural to me. As I mentioned, he does not come across as self-exculpatory, but reflects on multiple occasions when he feels in hindsight he should have acted differently. If this book has a weakness, it is that it is difficult to know how reliable a narrator Varoufakis is. Although he comes across as genuine, he clearly has an interest in portraying things a certain way, particularly given his ongoing involvement in European politics as a leader of the pan-European leftist movement DiEM25. As far as I know, none of the other players have disputed his characterizations of what went on behind closed doors, so I think we don’t have any real cause to doubt his truthfulness there. But I would love to see a similarly open recounting from the perspective of one of the other major players! In particular, I ended the book still seeing Tsipras as something of a cipher. I think this is because it is the same for Varoufakis, who does his best to analyze the actions of his former comrade, but is ultimately also in the dark. The story seems to be that Tsipras was coopted by the establishment and converted into an insider. This seems credible given how things played out (Tsipras is still the PM in 2018). But I would be fascinated to know his view of the events narrated in Varoufakis’s book.

My Goodreads rating: 5 stars