And The Weak Suffer What They Must? Europe, Austerity, and the Threat to Global Stability
by Yanis Varoufakis (Bodley Head, £16.99hb)
Peter Hegarty
In a memorable passage in this apologia, former Greek Minster of Finance Yanis Varoufakis describes walking down a long cold corridor in the finance ministry in Berlin.
At the other end German finance minister Wolfgang Schäuble is waiting for him in his wheelchair. Refusing to shake the Greek’s extended hand, he brusquely waves him towards a meeting room.
So began Varoufakis’ five-month long membership of the Eurogroup – Europe’s finance ministers as a collective – and his crash course in the workings of the EU.
What struck him most was its opacity and unaccountability. The Eurogroup ministers, for example, keep no notes of their meetings, and are under no obligation to explain their decisions to anyone. The Eurogroup does not even exist in law.
Groupthink prevails: those who lead and administer the EU remain wedded to economic and financial nostrums that have repeatedly proved ineffective.
They are unmoved by the poverty and distress their policies produce. In fact they may even regard distress as beneficial: a bureaucratic ‘high priest’ once told Vardoulakis that further impoverishing Greece could have the useful effect of discouraging Italian resistance to austerity.
The great strength of the book is the evidence Varoufakis marshals in support of his arguments for democratic reform of the EU.
He reproduces an exchange between journalist Vincent Browne and Klaus Masuch, an ECB official, during which Browne eloquently and repeatedly asks Masuch why the Irish taxpayer should have to shoulder the debts of a failed bank. He doesn’t get a straight answer, in fact barely gets an answer at all. As Browne presses him, Masuch gathers his papers and walks out of the room.
Varoufakis recalls a long revealing conversation he had with a German banker, ‘Franz’, who describes his professional decline during the age of predatory lending. In the past he had relied on research and his own good judgement when it came to approving or rejecting loan applications. Now he was simply handing out money to fulfil loan quotas, and dealing with people, such as ‘cocky’ Irish property developers, his bank would once have avoided.
The German government emerges badly from these pages. In 2013 US Treasury Secretary Jack Lew accused it of exporting depression to the rest of the eurozone, a charge Berlin unconvincingly refuted.
Varoufakis accuses Chancellor Merkel of engineering the removal of Silvio Berlusconi, a disreputable, but democratically-elected politician; the humiliating terms visited on the government Varoufakis served amounted to a ‘coup d’etat’ organised by Merkel and ‘official Europe’.
Against this background the Irish reader may well conclude that it was prudent for our government to behave as a ‘model prisoner’, avoid antagonising its creditors, and quietly go about negotiating concessions.
Warning of the rise of the far-right Varoufakis draws on his bitter experience of sitting in the Greek parliament enduring the sneers and snarls of the brutish deputies of the Golden Dawn party, a rising force in a dejected country.
If France’s drift continues, he predicts that the fortunes of the anti-Semitic National Front will only improve.
Stability
The world is looking on anxiously. On its own the United States can no longer guarantee world financial stability. It needs Europe to return to growth, which might result from the creative use of existing funds for the massive programme of investment Varoufakis advocates.
But the leaders and administrators with whom he quarrelled over five long months, and whom he repeatedly derides, are clearly not given to imaginative thinking. His disturbing, well-sourced book foresees the EU going the way of the Soviet Union.