Tag Archives: Syriza

Yanis Varoufakis in conversation, as Syriza splinters and Greek election beckons

By Yanis Varoufakis, et al
September, 2015

Yanis-Varoufakis Photo by Jörg Rüger, Creative Commons

Yanis-Varoufakis Photo by Jörg Rüger, Creative Commons

When Yanis Varoufakis was elected to parliament and then named as Greek finance minister in January, he embarked on an extraordinary seven months of negotiations with the country’s creditors and its European partners.

On July 6, Greek voters backed his hardline stance in a referendum, with a resounding 62% voting No to the European Union’s ultimatum. On that night, he resigned, after prime minister Alexis Tsipras, fearful of an ugly exit from the eurozone, decided to go against the popular verdict. Since then, the governing party, Syriza, has splintered and a snap election has been called. Varoufakis remains a member of parliament and a prominent voice in Greek and European politics.

When asked about Tsipras’s decision to trigger a snap election, inviting the Greek public to issue their judgement on his time in office, Varoufakis said:

If only that were so! Voters are being asked to endorse Alexis Tsipras’ decision, on the night of their majestic referendum verdict, to overturn it; to turn their courageous No into a capitulation, on the grounds that honouring that verdict would trigger a Grexit. This is not the same as calling on the people to pass judgement on a record of steadfast opposition to a failed economic programme doing untold damage to Greece’s social economy. It is rather a plea to voters to endorse him, and his choice to surrender, as a lesser evil.

The Conversation asked nine leading academics what their questions were for a man who describes himself as an “accidental economist”. His answers reveal regrets about his own approach during a dramatic 2015, a withering assessment of France’s power in Europe, fears for the future of Syriza, a view that Syriza is now finished, and doubts over how effective Jeremy Corbyn could be as leader of Britain’s Labour party.


Anton Muscatelli, University of GlasgowWhy was Greek prime minister Alexis Tsipras persuaded to accept the EU’s pre-conditions around the third bailout discussions despite a decisive referendum victory for the No campaign; and is this the end of the road for the anti-austerity wing of Syriza in Greece?

Varoufakis: Tsipras’ answer is that he was taken aback by official Europe’s determination to punish Greek voters by putting into action German finance minister Wolfgang Schäuble’s plan to push Greece out of the eurozone, redenominate Greek bank deposits in a currency that was not even ready, and even ban the use of euros in Greece. These threats, independently of whether they were credible or not, did untold damage to the European Union’s image as a community of nations and drove a wedge through the axiom of the eurozone’s indivisibility.

As you probably have heard, on the night of the referendum, I disagreed with Tsipras on his assessment of the credibility of these threats and resigned as finance minister. But even if I was wrong on the issue of the credibility of the troika’s threats, my great fear was, and remains, that our party, Syriza, would be torn apart by the decision to implement another self-defeating austerity program of the type that we were elected to challenge. It is now clear that my fears were justified.


Roy Bailey, University of EssexWas the surprise referendum of July 5 conceived as a threat point for the ongoing bargaining between Greece and its creditors and has the last year caused you to adjust how you think about Game Theory?

Varoufakis: I shall have to disappoint you Roy {Editor’s note: Roy Bailey taught Varoufakis at Essex and advised on his PhD}. As I wrote in a New York Times op-ed, Game Theory was never relevant. It applies to interactions where motives are exogenous and the point is to work out the optimal bluffing strategies and credible threats, given available information. Our task was different: it was to persuade the “other” side to change their motivation vis-à-vis Greece.

I represented a small, suffering nation in its sixth straight year of deep recession. Bluffing with our people’s fate would be irresponsible. So I did not. Instead, we outlined that which we thought was a reasonable position, consistent with our creditors’ own interests. And then we stood our ground. When the troika pushed us into a corner, presenting me with an ultimatum on June 25 just before closing Greece’s banking system down, we looked at it carefully and concluded that we had neither a mandate to accept it (given that it was economically non-viable) nor to decline it (and clash with official Europe). Instead we decided to do something terribly radical: to put it to the Greek people to decide.

Lastly, on a theoretical point, the “threat point” in your question refers to John Nash’s bargaining solution which is based on the axiom of non-conflict between the parties. Tragically, we did not have the luxury to make that assumption.


Cristina Flesher Fominaya, University of AberdeenThe dealings between Greece and the EU seemed more like a contest between democracy and the banks, than a negotiation between the EU and a member state. Given the outcome, are there any lessons that you would take from this for other European parties resisting the imperatives of austerity politics?

Varoufakis: Allow me to phrase this differently. It was a contest between the right of creditors to govern a debtor nation and the democratic right of the said nation’s citizens to be self-governed. You are quite right that there was never a negotiation between the EU and Greece as a member state of the EU. We were negotiating with the troika of lenders, the International Monetary Fund, the European Central Bank and a wholly weakened European Commission in the context of an informal grouping, the Eurogroup, lacking specific rules, without minutes of the proceedings, and completely under the thumb of one finance minister and the troika of lenders.

A protester holds a banner in Greek colors in front of the parliament building during an anti-austerity rally in Athens, Greece, June 29, 2015. REUTERS/Yannis Behrakis

A protester holds a banner in Greek colors in front of the parliament building during an anti-austerity rally in Athens, Greece, June 29, 2015. REUTERS/Yannis Behrakis

Moreover, the troika was terribly fragmented, with many contradictory agendas in play, the result being that the “terms of surrender” they imposed upon us were, to say the least, curious: a deal imposed by creditors determined to attach conditions which guarantee that we, the debtor, cannot repay them. So, the main lesson to be learned from the last few months is that European politics is not even about austerity. Or that, as Nicholas Kaldor wrote in The New Statesman in 1971, any attempt to construct a monetary union before a political union ends up with a terrible monetary system that makes political union much, much harder. Austerity and a hideous democratic deficit are mere symptoms.


Panicos Demetriades, University of LeicesterDid you ever think that your message was being diluted or becoming noisy, or even incoherent, by giving so many interviews?

Varoufakis: Yes. I have regretted several interviews, especially when the journalists involved took liberties that I had not anticipated. But let me also add that the “noise” would have prevailed even if I granted far fewer interviews. Indeed the media game was fixed against our government, and me personally, in the most unexpected and repulsive way. Wholly moderate and technically sophisticated proposals were ignored while the media concentrated on trivia and distortions. Giving interviews where I would, to some extent, control the content was my only outlet. Faced with an intentionally “noisy” media agenda that bordered on character assassination, I erred on the side of over-exposure.


Simon Wren-Lewis, University of OxfordMight it have been possible for a forceful France to have provided an effective counterweight to Germany in the Eurogroup, or did Germany always have a majority on its side?

Varoufakis: The French government feels that it has a weak hand. Its deficit is persistently within the territory of the so-called excessive deficit procedure of the European Commission, which puts Pierre Moscovici, the European commissioner for economic and financial affairs, and France’s previous finance minister, in the difficult position of having to act tough on Paris under the watchful eye of Wolfgang Schäuble, the German finance minister.

It is also true, as you say, that the Eurogroup is completely “stitched up” by Schäuble. Nevertheless, France had an opportunity to use the Greek crisis in order to change the rules of a game that France will never win. The French government has, thus, missed a major opportunity to render itself sustainable within the single currency. The result, I fear, is that Paris will soon be facing a harsher regime, possibly a situation where the president of the Eurogroup is vested with draconian veto powers over the French government’s national budget. How long, once this happens, can the European Union survive the resurgence of nasty nationalism in places like France?


Kamal Munir, University of CambridgeYou often implied that what went on in your meetings with the troika (the IMF, ECB and European Commission) was economics only on the surface. Deep down, it was a political game being played. Don’t you think we are doing a disservice to our students by teaching them a brand of economics that is so clearly detached from this reality?

Varoufakis: If only some economics were to surface in our meetings with the troika, I would be happy! None did.

Even when economic variables were discussed, there was never any economic analysis. The discussions were exhausted at the level of rules and agreed targets. I found myself talking at cross-purposes with my interlocutors. They would say things like: “The rules on the primary surplus specify that yours should be at least 3.5% of GDP in the medium term.” I would try to have an economic discussion suggesting that this rule ought to be amended because, for example, the 3.5% primary target for 2018 would depress growth today, boost the debt-to-GDP ratio immediately and make it impossible to achieve the said target by 2018.

Such basic economic arguments were treated like insults. Once I was accused of “lecturing” them on macroeconomics. On your pedagogical question: while it is true that we teach students a brand of economics that is designed to be blind to really-existing capitalism, the fact remains that no type of sophisticated economic thinking, not even neoclassical economics, can reach the parts of the Eurogroup which make momentous decisions behind closed doors.


Mariana Mazzucato, University of SussexHow has the crisis in Greece (its cause and its effects) revealed failings of neoclassical economic theory at both the micro and the macro level?

Varoufakis: The uninitiated may be startled to hear that the macroeconomic models taught at the best universities feature no accumulated debt, no involuntary unemployment and, indeed, no money (with relative prices reflecting a form of barter). Save perhaps for a few random shocks that demand and supply are assumed to quickly iron out, the snazziest models taught to the brightest of students assume that savings automatically turn into productive investment, leaving no room for crises.

It makes it hard when these graduates come face-to-face with reality. They are at a loss, for example, when they see German savings that permanently outweigh German investment while Greek investment outweighs savings during the “good times” (before 2008) but collapses to zero during the crisis.

Moving to the micro level, the observation that, in the case of Greece, real wages fell by 40% but employment dropped precipitously, while exports remained flat, illustrates in Technicolor how useless a microeconomics approach bereft of macro foundations truly is.


Tim Bale, Queen Mary University of LondonDo you see any similarities between yourself and Jeremy Corbyn, who looks like he might win the (UK) Labour leadership, and do you think a left-wing populist party is capable of winning an election under a first-past-the-post system?

Varoufakis: The similarity that I feel at liberty to mention is that Corbyn and I, probably, coincided at many demonstrations against the Tory government while I lived in Britain in the 1970s and 1980s, and share many views regarding the calamity that befell working Britons as power shifted from manufacturing to finance. However, all other comparisons must be kept in check.

Syriza was a radical party of the Left that scored a little more than 4% of the vote in 2009. Our incredible rise was due to the collapse of the political “centre” caused by popular discontent at a Great Depression due to a single currency that was never designed to sustain a global crisis, and by the denial of the powers-that-be that this was so.

The much greater flexibility that the Bank of England afforded to Gordon Brown’s and David Cameron’s British governments prevented the type of socio-economic implosion that led Syriza to power and, in this sense, a similarly buoyant radical left party is most unlikely in Britain. Indeed, the Labour Party’s own history, and internal dynamic, will, I am sure, constrain a victorious Jeremy Corbyn in a manner alien to Syriza.

Turning to the first-past-the-post system, had it applied here in Greece, it would have given our party a crushing majority in parliament. It is, therefore, untrue that Labour’s electoral failures are due to this system.

Lastly, allow me to urge caution with the word “populist”. Syriza did not put to Greek voters a populist agenda. “Populists” try to be all things to all people. Our promised benefits extended only to those earning less than £500 per month. If it wants to be popular, Labour cannot afford to be populist either.


Mark Taylor, University of WarwickWould you agree that Greece does not fulfil the criteria for successful membership of a currency union with the rest of Europe? Wouldn’t it be better if they left now rather than simply papering over the cracks and waiting for another Greek economic crisis to occur in a few years’ time?

Varoufakis: The eurozone’s design was such that even France and Italy could not thrive within it. Under the current institutional design only a currency union east of the Rhine and north of the Alps would be sustainable. Alas, it would constitute a union useless to Germany, as it would fail to protect it from constant revaluation in response to its trade surpluses.

Now, if by “criteria” you meant the Maastricht limits, it is of course clear that Greece did not fulfil them. But then again nor did Italy or Belgium. Conversely, Spain and Ireland did meet the criteria and, indeed, by 2007 the Madrid and Dublin governments were registering deficit, debt and inflation numbers that, according to the official criteria, were better than Germany’s. And yet when the crisis hit, Spain and Ireland sunk into the mire. In short, the eurozone was badly designed for everyone. Not just for Greece.

So should we cut our losses and get out? To answer properly we need to grasp the difference between saying that Greece, and other countries, should not have entered the eurozone, and saying now that we should now exit. Put technically, we have a case of hysteresis: once a nation has taken the path into the eurozone, that path disappeared after the euro’s creation and any attempt to reverse along that, now non-existent, path could lead to a great fall off a tall cliff.

The ConversationCreative Commons

Yanis Varoufakis is Professor of Economics at University of AthensThis article was originally published on The Conversation. Read the original article.

 Related reading on F&O:

The Greek tragedy: a drama with many villains and no heroes, by F&O International Affairs columnist Jonathan Manthorpe (*subscription)
EU makes last ditch effort to save Greek bailout, by Renee Maltezou and Lefteris Papadimas, Reuters (*unlocked)
Nine things to know about Greece’s IMF debt default , by  Andre Broome (*unlocked) 

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Today’s election could change Greece — and Europe

Some 100,000 anti-austerity protesters demonstrate in front of the Greek parliament in 2011. Photo by Kotsolis via Wikipedia, Creatiive Commons

Some 100,000 anti-austerity protesters demonstrate in front of the Greek parliament in 2011. Photo by Kotsolis via Wikipedia, Creatiive Commons

For years the world has watched Greece, the cradle of democracy, implode in protests and economic decline. Indebted Greece has long been ill-served by its political and business leaders, and lately beholden to creditors bent on austerity. And today when the Greek people go to the polls in a general election —  if most pundits are right — not only Greece will change, but the ripples will be felt throughout Europe and globally.

Excerpt of an analysis by academic Theo Papadopoulos:

Syriza is poised to win by a large margin and this victory will end four decades of two-party rule in Greece.

Since 2010 – and as a result of austerity measures – the country has seen its GDP shrink by nearly a quarter, its unemployment reach a third of the labour force and nearly half of its population fall below the poverty line.

With the slogan “hope is coming” Syriza, a party that prior to 2012 polled around 4.5% of the vote, seems to have achieved the impossible: creating a broad coalition that, at least rhetorically, rejects the TINA argument (There Is No Alternative) that previous Greek administrations have accepted. In its place, Syriza advocates a post-austerity vision, both for Greece and Europe, with re-structuring of sovereign debt at its centre.

How significant is this victory for Europe and the rest of the world? Comments range from grave concerns about the impact on the euro and the global economy to jubilant support for the renewal of the European left. For sure, Syriza is at the centre of political attention in Europe.  Click here to continue reading  Why the Greek election matters.

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Why the Greek election matters

The Hellenic Parliament. Photo by A. Savin via Wikipedia, Creative Commons

The Hellenic Parliament. Photo by A. Savin via Wikipedia, Creative Commons

By Theo Papadopoulos, University of Bath
January 24, 2015

The Greek election on January 25 will be the most important in recent memory. If the pollsters are proven correct, Syriza is poised to win by a large margin and this victory will end four decades of two-party rule in Greece.

Since 2010 – and as a result of austerity measures – the country has seen its GDP shrink by nearly a quarter, its unemployment reach a third of the labour force and nearly half of its population fall below the poverty line.

With the slogan “hope is coming” Syriza, a party that prior to 2012 polled around 4.5% of the vote, seems to have achieved the impossible: creating a broad coalition that, at least rhetorically, rejects the TINA argument (There Is No Alternative) that previous Greek administrations have accepted. In its place, Syriza advocates a post-austerity vision, both for Greece and Europe, with re-structuring of sovereign debt at its centre.

How significant is this victory for Europe and the rest of the world? Comments range from grave concerns about the impact on the euro and the global economy to jubilant support for the renewal of the European left. For sure, Syriza is at the centre of political attention in Europe.

The origins of the party are to be found in a series of splits and consolidations involving various left-wing political groupings that, in one form or another, were originally related to the Communist Party of Greece. Syriza in its current form is a strategic coalition comprising a variety of political platforms that include social democrats, radical socialists and communists, environmentalists, anti-globalisation campaigners and human rights advocates.

Its original base comprised small business owners, academics and teachers with very little appeal among traditional working class voters. But the party’s current appeal is far broader, extending to the middle classes that were hit so hard by austerity measures (especially those associated with the public sector), as well as self-employed people, ex-small business owners, unemployed and underemployed people (especially youth).

Unlike other EU countries, these parts of the Greek electorate are not attracted to ultra-nationalist Eurosceptic parties. As traditional left-of centre voters they find attractive Syriza’s political narrative, a combination of anti-establishment discourse, mild left-wing patriotism, a vision that another Europe is possible and a vague hope for improving their economic and social condition.

Not all are convinced by Syriza, however. The voters attracted to far-right party Golden Dawn are traditional anti-communists who used to belong to the conservative New Democracy party or LAOS, a smaller nationalist ultra-right party.

Their appeal is among the lower middle classes (and some ultra conservative working class) who have been also hit hard by austerity. These voters have bought into the rhetoric that culprits behind Greece’s demise are the corrupt political elite and the large number of illegal migrants.

Golden Dawn’s popularity has fallen slightly in recent months, but it is still strong and according to recent polls it is likely to gain 6% of the vote. But the party is politically isolated, with its leadership in prison and no access to mainstream media. It is unlikely that will play any role in the forming of any government in future.

How likely is that Alexis Tsipras, Syriza’s charismatic 41-year-old leader, will be “the Communist Harry Potter who could implode the eurozone”?

Despite the scaremongering that often surfaces in media reports, it is clear that the majority of Syriza representatives want to avoid having to take Greece out of the common currency. Despite some eurosceptic voices in the party, the leadership can hardly be characterised as anti-European. In internal discussions, various factions within Syriza have argued for introducing a national currency but these have remained, so far, a minority voice within the party.

Instead, the current leadership of Syriza has made numerous statements that it does not intend to destroy the euro or force Greece out of the eurozone. But they also mentioned that they are not willing to keep Greece into the eurozone at any cost. If Greece leaves the euro under Syriza, it will happen not because its leadership wants to but because it will be forced to.

This rather ambivalent message has served Syriza well both domestically and externally. Domestically, it alleviated the fears of many disaffected middle class voters who are very sceptical about a return to Drachma.

Externally, it indicates the spirit with which Syriza will approach any forthcoming negotiations with the troika (the International Monetary Fund, the European Central Bank and the European Commission). Namely, that Syriza does not share the same neoliberal economic policy agenda as Greece’s lenders – and certainly challenges Germany’s insistence on continuation of austerity – but it is willing to compromise over a mutually beneficial deal.

In terms of political rhetoric, Syriza has stated its political ambition is to change Europe as well as Greece. In what is admittedly a clever political move Syriza refused to accept the narrative of Greek exceptionalism when it comes to sovereign debt.

While attacking the incompetence and corruption of the two-party establishment that has run Greece since the 1970s, Syriza has framed the issue of Greek sovereign debt as part of the wider issue of European economic governance and, most recently, promoted the idea of a European summit on debt. In this way it opened a political space both for itself and other European political forces to change the dominant economic narrative in the EU.

Is the EU establishment going to respond? The announcement of new quantitative easing measures from the ECB marks a change in economic policy but according to chief Mario Draghi, Greece could be treated differently and any help will come with conditions. The months ahead will be tense and uncertain but one thing is for sure: nothing will be the same in Greek and European politics after Monday.

Creative Commons

Further reading:

The Conversation

This article was originally published on The Conversation. Read the original article.

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