Posted by Paul Samael on Saturday, November 24, 2018 Under: Book reviews
I recently read “Adults in the Room” by Yanis Varoufakis – the former Greek Finance Minister’s account of his experiences trying to negotiate with the EU over the Greek bailout after the financial crisis. Based on his media profile, I had tended to view Varoufakis as a bit, well, full of himself. And it’s certainly true that, as the computer-programmed match commentary on my son’s FIFA Xbox football game was almost guaranteed to say if you dribbled the ball around an awful lot without passing to any of your team-mates, “he doesn’t lack for confidence, does he?”
Despite all that, he makes for quite an entertaining narrator and manages to pull off the seemingly impossible trick of making endless late night negotiations on extremely dull technical issues feel quite dramatic. I was particularly struck by his numerous accounts of how difficult it was to get the EU, the European Central Bank and the IMF to engage with any material he presented in support of Greece’s negotiating position, however much work his team had done to demonstrate its credibility.
Why was the EU in particular so reluctant to engage? Well, according to Varoufakis, the EU took the view that Greece’s economic woes were the least of their concerns. They worried that if Greece were to default on its loans, the markets would take the view that this could happen in other EU countries whose finances were somewhat precarious and the euro would then be threatened. As a result, their key objective in the negotiations with Greece was to maintain the fiction that Greece could repay its debts – even though they were well aware that (a) this was about as likely as Donald Trump suddenly becoming a tree hugging, hippy environmentalist; and (b) it would put large numbers of ordinary Greek people through severe economic hardship.
All this made me wonder if there are some parallels here with Brexit, in that the EU’s chief concern in the negotiations with the UK has often seemed to be deterring other countries from thinking about leaving. I think the UK has handled the negotiations very badly, producing a poorly argued, unrealistic set of proposals that the EU was never likely to agree to – and producing them far too late in the day. But reading the Varoufakis book made we question whether, even if the UK had come up with a more realistic set of proposals sooner, the outcome might have been the same i.e. the EU would still have said, “no, it’s our way or the highway” – because its primary focus is always on keeping the EU as a whole together.
I’m not sure the parallels are quite so straightforward though, because in the Brexit negotiations the EU has been prepared to allow the UK meaningful choices. The UK government may not have liked the choices presented to it – which essentially boiled down to a fairly close relationship like Norway’s (inside the EU’s economic project of the Single Market, except for agriculture and fish, but outside its political project) or a much more distant one like Canada’s (based on a free trade agreement). But at least the UK has been given some meaningful choices, whereas the Greeks were given a choice between a further bailout on extremely painful terms – or crashing out of the euro, which would be just as painful. If you translated that to the Brexit negotiations, it would be like the EU saying “your choices are (a) staying in; or (b) leaving with no deal at all. We’re not interested in talking about anything else.”
So whereas the outcome of the Greek crisis had a sense of inevitability about it because of the EU’s well nigh immoveable negotiating position, Brexit strikes me as being more like a farce or a tragi-comedy– it’s an act of economic harm that we have elected to inflict on ourselves, even though we were given choices that would have mitigated much of the damage (and by the way, despite his negative experiences at the hands of Eurocrats, Varoufakis agrees that economically, the UK is much better off in the EU Single Market than outside it).
There is also more of a sense of tragedy to the Greek case because of the severity of their economic situation. To put it in perspective, it’s worth noting the comparison Varoufakis makes between the UK in the Great Depression and Greece’s position after the financial crisis:
“Between 1929 and 1932 Britain’s economy shrank by 4.9% and unemployment rose from 8 to 17%. […..]. By comparison, Greece has endured six consecutive years of recession, the loss of 28% of its national income, more than one in five workers losing their job, and an unemployment rate propelled from 7 to 27%, with youth unemployment at more than 65%.”
Now you could say, that’s all very well, but the Greeks borrowed too much, their state doesn’t collect enough tax and they basically brought all this upon themselves. But I don’t think any population needs or deserves the extent of economic hardship that has been inflicted upon Greece, when alternatives were available (but were never allowed to be put on the table). It’s not funny, it’s tragic.
You might also be interested in:
You might also be interested in:
- Review of "All Out War - How Brexit Sank Britain's Political Class" by Tim Shipman
- Inselaffen! Some thoughts on the referendum result
- Is the EU a giant squid?
- Brexit: a broader perspective (2)
- Ship of Fools
You might also like "The Hardest Word", a short story about kidnapping a banker in the wake of the financial crisis.
In : Book reviews
Tags: "adults in the room" "yanis varoufakis" greece bailout "financial crisis"
blog comments powered by Disqus