In his recent remarks, Konstantinos Poulis expressed the most substantive and essential critique of the strategy I pursued with regard to the creditors both prior to and during my brief term in the Ministry of Finance. In short, his critique was that:
I did not prepare Greece’s citizens for the possibility of a Grexit, despite the fact that I had boldly forewarned them that there was no sense in winning the elections and standing up to the creditors unless we were prepared to choose Grexit over a third memorandum and further austerity measures. Because of my insistence that Grexit would spell disaster and, simultaneously, that the creditors would only cave if we were in fact prepared for a Grexit, “the very thing that led Varoufakis to his role in the public discourse wound up strengthening the creditors’ position.”
Poulis’ critique is extremely useful in that it sheds light on the main question of 2015: how could we, both the leadership and the citizens, convince ourselves we could avoid a terrible Grexit only if we truly believed that there was something even worse: the establishment of permanent debt-bondage by means of a third memorandum?
Poulis’ critique is twofold: that for years I had overstressed, first, the cost of a Grexit and, second, the likelihood that the creditors would cave if we were ready to accept a Grexit (with the result that Grexit would thus be avoided). Thus, on the one hand I intensified fear of Grexit in the minds of the citizens and, on the other, I told them that there was no reason to prepare for it. Poulis therefore concludes,
[I]t turned out that we entered into a battle in which the soldiers never thought they would actually have to fight…When the moment of rupture came, nobody prevented Tsipras from reversing the result of the referendum.
As I was carefully reading this critique, two thoughts/comments occurred to me:
An alternative strategy?
The logical consequence of the above critique would be that I should have (1) spoken of Grexit in words that made it seem less catastrophic and (2) not spoken with such certainty of the likelihood that the creditors would cave if we were in fact ready for a Grexit. I understand the argument here, but I have difficulty agreeing with it for one simple reason: it implies that I should have said things I did not believe, and which I still do not believe to this day!
I understand the argument here, but I have difficulty agreeing with it for one simple reason: it implies that I should have said things I did not believe, and which I still do not believe to this day!
(1) A Grexit would have come at an immense cost. Whoever denies that is lying, either to themselves or to others. In my book’s introduction, I calculate that the cost of a Grexit in the summer of 2015 would have amounted to a decrease in GDP of between 6 and 13%. I had no right to conceal that from the citizens in general, and from the voters in particular. The duty that I had—and which I fulfilled—was to continue repeating, loudly and clearly, that a Grexit would prove (in the medium term, over an 18-month period) less painful than a third memorandum.
(2) A Grexit would have cost the rest of Europe approximately one trillion euros, with precisely the result that I predicted: if we were ready for Grexit, there would be no Grexit, because the creditors would have caved at least on the matter of restructuring the debt. And you don’t have to take my word for it: Vice President of the European Central Bank Vítor Constâncio fully confirmed this, when in September of 2015 he boldly stated that the cost to Europe would have been so great that there was no chance of the ECB pushing Greece out of the Eurozone. In other words, he confirmed that it had all been an “empty” threat. The same thing I had believed since 2010 I still believe today. Should I have said anything different to the public?
Beyond the fact that telling the truth is itself a revolutionary act, I disagree that being more “economical” about what I believed to be true (by understating my estimate of a Grexit’s cost and overstating its likelihood) would have improved the unity of the OXI-bloc and so increased our negotiating power.
Soldiers who hadn’t realized they would have to fight?
Poulis writes: “If the point of OXI was that the people desired to leave, then there would have been someone to fight for it instead of Syriza being re-elected under the Thatcherite banner of ‘TINA’.” Allow me to disagree.
Under no circumstances did the people desire rupture. The Greek people were extraordinarily at the ready throughout the “Spring” of 2015, especially on the fifth of July. The significance of the OXI, as I interpreted it and continue to interpret it, was simple: we don’t want rupture. We don’t want to leave the euro. And yet, if the terms of our remaining are the permanent establishment of debt-bondage, continued indignity, propagation of humiliation, and the selling off and desertification of the country, then let’s leave the Eurozone. If official Europe presents us with a Schäublean ultimatum “Austerity or Grexit”, then…Grexit.
That was the will of those who filled Syntagma Square on the evening of July 3. It was the message sent by the 62% two days later. The people did their duty; the soldiers were ready for battle. Consciously, with full awareness of the enormous cost of a Grexit, they were prepared to accept that there was no other choice, knowing, at the same time, that if the leadership honored their expressed will then the likelihood of Grexit was small.
In other words, the soldiers were well informed and were ready to fight, even if we were a David standing before the creditors’ Goliath. What they were not prepared for, however, was the capitulation of those who had readied them to fight the good fight. In fact, when, even before the battle had truly begun, their generals laid down their arms and informed the people that concession was the only path, it was no surprise that they returned home in despair, resolved never to believe anyone again. This was why, in September of 2015, a mutated Syriza and “TINA” won out: More than 1,500,000 “soldiers” (i.e., eligible voters) did not vote in the referendum, while those who did vote chose, half-heartedly, to keep those who had promised to implement the terms of capitulation with wild enthusiasm far from Maximos Mansion.
Epilogue
2015 is a part of our history. Now the matter at hand is 2018, and especially 2019. There is no such thing as ultimate defeat, just as there is no such thing as ultimate triumph. Independent of disagreements about the precise probability that the creditors would have caved back then, today we face a simple choice: between the narrative of austerity-driven recovery that has been realized (or at any rate is on its way) and the alternative of constructive disobedience. The hour of the next battle draws near.
*With the publication of my book on the 2015 Greek Spring (Adults in the Room/Ανικητοί Ηττημένοι), I have now finished issuing responses and explaining my positions regarding those events. The present text was written for one reason: it constitutes a response to the comments offered by my friend Konstantinos Poulis during my book presentation, which he moderated. Thus, with this response, that presentation is concluded.
These pieces were translated by Konstantinos Poulis and Johanna Hanink. Published here with thanks to The Press Project.
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