It didn´t have to be this way, Greece

Yanis Varoufakis is everywhere since he resigned as Greece´s finance minister, explaining in length his side of the recent Greek drama.

His record as finance minister is abysmal, having taken over a stalled economy in January with weak signs of recovery and six months later leaving an economy in total chaos.
He tends not to talk much about that, however.

Yet, he wasn´t wrong in what he wanted for Greece, on what Greece sorely needed – and deserved.
He was just so terribly wrong on how to go about obtaining it.

Varoufakis didn´t get the European Union.
At all.

In the interviews he has given and articles he has written, he tells us how he over and over demanded debt restructuring from his creditors, how he painstakingly explained the economic logic behind his demand and how he got absolutely nowhere.

His interlocuteurs were, according to Varoufakis,  too stupid – or plain evil. Why, the silly buggers kept answering with talk about the law, like they were all lawyers or something!

Here´s what Yanis Varoufakis didn´t understand about the European Union:
It´s a common project.
It can exist only as long as everybody brings something to it, along with their taking something out of it.
And it´s very much based on law.

Yanis Varoufakis is Greek, therefore a cynic.
He would say that everybody in the EU ands the eurozone is only in it for what they can take from it.
He would be right.
The EU countries are not in it because they are very unselfish, generous or simply good. They are indeed in it because they perceive that they get something out of it.

But never without having to give, also.
Most national politicians realize – after having participated in the work of the EU for a while – is that there is no free lunch, if you want to win on one issue, the others will make you compromise elsewhere.

There´s a balance in there somewhere.
Funny  really, everybody involved knows more or less where the balance lies.
People can tell when a country has overstepped the mark.

And here´s the thing.
When Syriza came into power in December last year, the balance was tipping over in favour of stopping austerity.
There was a general feeling that Germany had been taking out too much of the common project.
Their sizzling hot economy had partly – not entirely – come about thanks to the misfortunes of other eurocountries.
The argument for stopping the downsizing and starting investing was winning.

Syrizas and Varoufakis´ electoral victory gave hope to many within the European institutions, to many in the European parliament, to the government of France and Italy, to the opposition in Spain and Portugal and Ireland.
(And within the IMF, too.)

Here was an opening at last, a chance to oppose the German thinking.
The Greek case, from an economic point of view, was by this time clear cut. The country had been subjected to harsh austerity for five years.
No creditors had lost any money over Greece – instead the Greek taxpayers had been asked to bear the burden of the oversized debt.

Structural reforms had been undertaken but in a stalled economy any effects of such reforms would always be slow to appear and in a stalled economy, would never had been able to prooduce much impetus anyway.

So Greece  was – it is – a textbook case of how too much austerity can kill an economy. An extremely convincing example to use in the debate on austerity.

So why did Varoufakis and Syriza – with the potential back up they were always going to have – not manage to win the argument in the eurozone?

Because they demanded something and offered nothing in return.
That´s just not how it´s done in the EU.

Syriza would promise no reforms and even rolled back some that had already been introduced – in your face, creditors! – even though many of the proposed reforms make good sense and would no doubt be beneficial for Greece.

Yanis Varoufakis tells us how he bragged in eurozone meetings of how  he and Syriza were non-corrupt and would not defend any of those privileged by the clientilism system in place that has been so detrimental for Greece.

So why not take on board some of the reforms?
Ah, well. Yanis Varoufakis felt Greece was owed debt relief.
He felt Greece owed no one else any engagement to undertake any measures, any promises or even explanations.
Greece was proud.
Greece would not be humiliated.

The Greek finance minister showed how not only was he completely blind to the underlying logic the EU and of the eurozone – the part about give and take (even when it´s only about saving face for the politicians sitting opposite you at the table, never mistake that for unimportant).

He also missed the vital part about the law governing EU and eurozone relations.
The thing is, there is nothing in the treaty on the eurozone that says that other euro countries must save you, when your economy is falling apart.

Quite the opposite, there´s actually a bit mentioning that other countries can  not ”take over” other countries debts (also known as Article 125.1).

So bottom line.
What does that leave you with?
Well, one sovereign state asking 18 other sovereign states for money to pay its debts.

They don´t have to help.
There are no rules that say they should.
They can help if they want to, but this would necessitate a certain amount of creativity with  the rulebook.

In a situation like that, is it clever to demand stuff, offer nothing and then insult your creditors on twitter during coffee break?
I´m hardly going out on a limb here if I suggest that, no. It´s probably not.

There really was an opening for putting the breaks on austerity when Syriza arrived at the negotiating table in Brussels in the beginning of this year.
Strong forces in Europe wanted to.
It was in no way an open and shut case for Greek debt relief but the odds were good.

Varoufakis blew it.
All it would have taken was to treat his interlocuteurs at the table as partners, not as enemies.
The EU really is about all for one, one for all.
It couldn´t work if it wasn´t.

Prime Minister Tsipras had to pay dearly for the economist Varoufakis´lack of political understanding (but then again Tsipras did pick him and chose to listen to him).

The Greeks most of all will keep paying the cost for his mistakes.

And the rest of Europe wanting a stop to austerity, has been pushed back to the starting point.

 

 

 

 

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