Committee for the Abolition of Illegitimate Debt

 The book’s starting point; Yanis Varoufakis’ Adults in the Room

In 2017 Yanis Varoufakis, then Minister of Finance in the Syriza government and the main negotiator with the Troika Troika Troika: IMF, European Commission and European Central Bank, which together impose austerity measures through the conditions tied to loans to countries in difficulty.

IMF : https://www.ecb.europa.eu/home/html/index.en.html (ECB ECB
European Central Bank The European Central Bank is a European institution based in Frankfurt, founded in 1998, to which the countries of the Eurozone have transferred their monetary powers. Its official role is to ensure price stability by combating inflation within that Zone. Its three decision-making organs (the Executive Board, the Governing Council and the General Council) are composed of governors of the central banks of the member states and/or recognized specialists. According to its statutes, it is politically ‘independent’ but it is directly influenced by the world of finance.

https://www.ecb.europa.eu/ecb/html/index.en.html , IMF IMF
International Monetary Fund Along with the World Bank, the IMF was founded on the day the Bretton Woods Agreements were signed. Its first mission was to support the new system of standard exchange rates.

When the Bretton Wood fixed rates system came to an end in 1971, the main function of the IMF became that of being both policeman and fireman for global capital: it acts as policeman when it enforces its Structural Adjustment Policies and as fireman when it steps in to help out governments in risk of defaulting on debt repayments.

As for the World Bank, a weighted voting system operates: depending on the amount paid as contribution by each member state. 85% of the votes is required to modify the IMF Charter (which means that the USA with 17,68% % of the votes has a de facto veto on any change).

The institution is dominated by five countries: the United States (16,74%), Japan (6,23%), Germany (5,81%), France (4,29%) and the UK (4,29%).
The other 183 member countries are divided into groups led by one country. The most important one (6,57% of the votes) is led by Belgium. The least important group of countries (1,55% of the votes) is led by Gabon and brings together African countries.

http://imf.org , European Commission), published a book entitled, Adults in the Room: My Battle with Europe’s Deep Establishment (Vintage Digital, 2017). He gives his version of what happened, of what he did, and of what the Tsipras government’s strategy was.

Having read Varoufakis’ book attentively, Eric Toussaint first takes the trouble to hail this work, “Adults in the Room can be read as a thriller, it has suspense, U-turns, treason […] Varoufakis has made the effort of communicating his version of the facts. He took risks in doing so. If he hadn’t written this book, many important facts would have remained unknown.”

Anyone reading it will learn, sometimes with great surprise, a number of astonishing choices that were made by Tsipras’ inner circle.

However, this version of the facts does not sit well with Eric Toussaint. He has both the legitimacy and the arguments to explain why. He has followed very closely what has been happening in Greece since 2003. He met Alexis Tsipras many times, as well as other prominent Greek politicians, to discuss the policies and strategies that could be put in place should Syriza come to power. Between March 2015 and July 2015, he was the Coordinator of the Audit Committee on Greek Debt set up by the President of the Greek Parliament. He lived in Athens for several months. He was thus at the heart of these events.

Eric Toussaint also takes a stance in his book, as he does not limit himself to giving readers additional keys for understanding the facts presented in Yanis Varoufakis’s work. Although Toussaint’s final chapter is entirely dedicated to the alternatives that could have been put in place, he does not hesitate to give his opinion on what it would have been positive and feasible to do.

Anyone reading it will learn, sometimes with great surprise, a number of astonishing choices that were made by Tsipras’ inner circle. In my opinion, one of the key moments in this book is the following: the origins of Syriza’s capitulation started in the Summer of 2012, when Tsipras’ team, without really discussing it with the Party or its electoral base, decided not to respect one section of its programme, namely, the section which concerns debt and banks; and instead they adopted a strategy solely based on amicable negotiations with their so-called European partners. Even though Toussaint insists that a “distinction must be made between Alexis Tsipras and Yanis Varoufakis,” Yanis Varoufakis has a degree of responsibility for this shift. As Eric Toussaint writes in his introduction, and I entirely share Share A unit of ownership interest in a corporation or financial asset, representing one part of the total capital stock. Its owner (a shareholder) is entitled to receive an equal distribution of any profits distributed (a dividend) and to attend shareholder meetings. this observation: “If a popular government really wants to break away from current policies of austerity and privatisation in Europe, it will necessarily and immediately come into conflict with the all-powerful conservative forces, both nationally and at the EU level.”

 The book’s objective is to learn from past mistakes to prevent another fiasco

Eric Toussaint does not criticise the choices made by Yanis Varoufakis and Tsipras out of pleasure. In his introduction, he clearly spells out the book’s purpose: “It is essential to analyse the policies put in place by Alexis Tsipras because, for the first time in the 21^st century, a radical left wing party was elected to govern in Europe. Less than six months after having formed a government, it bent over and complied with financiers’ demands, and thus austerity measures were not lifted. It is of the utmost importance that we understand the failures and learn the lessons of this government’s responses to the problems it faced.”

Despite their apparent radicalism and will to resist the Troika [...] Varoufakis and Tsipras made multiple concessions.

The Syriza government has been attempting to come out of austerity for 5 years now. Yet the most prevalent impression amongst the population is the following: Tsipras and Varoufakis have tried everything, everything, to enact their electoral mandate, but they came up against a wall, the intransigent and all-powerful Troika (IMF, ECB, European Commission), which crushed them.

The second part of this sentence is correct: the main culprits of this failure are indeed the Troika and European governments. They did everything to “sink the Syriza project, in order to demonstrate to other countries’ populations that bringing to government forces bent on breaking away from austerity and the neoliberal model, will be in vain.”

However, the claim that Tsipras and Varoufakis did everything is erroneous. In this book, Eric Toussaint, uses specific facts to show that, not only did they not do everything, they also made several severe economic, political, democratic, and strategic errors. As Eric Toussaint demonstrates in his book, the strategy decided by Tsipras and Varoufakis’ inner circle was totally naive and couldn’t lead to anything other than capitulation.

Despite their apparent radicalism and will to resist the Troika, which can be explained by the fact that mainstream media, the Troika, and right-wing Greek parties incessantly attacked them as being irresponsible, Varoufakis and Tspiras made multiple concessions. They adopted a more than conciliatory attitude during negotiations, decided to keep a number of matters secret which, had they been revealed, would have strongly galvanised popular support, both nationally and internationally, and thus changed the balance Balance End of year statement of a company’s assets (what the company possesses) and liabilities (what it owes). In other words, the assets provide information about how the funds collected by the company have been used; and the liabilities, about the origins of those funds. of power.

Now, here are some concrete and important elements we learn when reading this book:

 Syriza’s 2012 programme which annoyed Varoufakis

In the May 2012 elections, Syriza reached 16.8% of the votes (it had got 4.6% in 2009). These election results did not allow Syriza to form a government, which resulted in new elections in June 2012. Betweenthe elections, Tsipras made 5 concrete proposals as part of the party’s programme:

1. Abolish all austerity measures;
2. Abolish all measures which had diminished workers’ rights;
3. Immediately abolish parliamentary immunity and electoral reform;
4. Nationalise all Greek banks;
5. Set up an international audit commission on debt combined with the suspension of debt payments until the end of the commission’s work.

With this programme, in the June 2012 elections Syriza obtained 26.5% of the votes (10% more than just a month before!). This orientation was clearly approved by the Greek population. Varoufakis was strongly opposed to the programme: “In 2012, when I came across the economic policies section in its electoral manifesto, I was so annoyed by it that I didn’t finish it.”

 From 2012 to 2014, Varoufakis and Tsipras pushed for a more moderate programme

Despite this profound disagreement, discussions between Tsipras’ team and Varoufakis continued. Step by step, the 5-point programme evolved towards more moderate policies. For example, the proposal of an audit and suspending debt payments was removed and replaced with the proposal to “convene a European conference on debt in order to reach an agreement between creditors, in the image of the 1953 London Agreement, when World War Two victors conceded to West Germany a significant debt reduction and very advantageous reimbursement conditions.”

In fact, most of Varoufakis’ priorities are in contradiction with Syriza’s programme.

In October 2013, Eric Toussaint had the opportunity to personally speak with Tspiras and tried to warn him against this choice. He summarises this exchange by saying, “I told him that there was no chance that this would happen. As leader of Syriza, he was in a perfectly legitimate position to push for plan A, but it was unthinkable that Draghi, Hollande, Merkel, Rajoy would agree to it. I told him that he needed a plan B, in which there must be the audit commission.”

Varoufakis put forward 6 priorities. Eric Toussaint analyses these in detail in Chapter 1, and it is worth reading these attentively. Overall, what comes out of them is that these priorities are in fact in contradiction with Syriza’s programme. For example, the pursuit of specific strategic privatisations, the transfer of ownership of Greek banks to the European Union, and the restructuring of debt without reducing the debt stock Debt stock The total amount of debt .

In June 2014, “Varoufakis confirmed Tsipras could count on him, with one condition: he wants the power to intervene in the construction of Syriza’s economic programme in the run up to the January 2015 elections. Tsipras accepted.”

 The September 2014 Thessaloniki Programme

The Thessaloniki Programme was presented in September 2014. Eric Toussaint wrote this summary of the programme: “to put an end to the second memorandum and to replace it with a national reconstruction plan; to obtain cancellation of most of the public debt; to break with austerity; to return the enjoyment of a range of social rights to the Greek people; to restore salaries and pensions at least to pre-2010 memorandum levels; to end privatisations; to take control of the banks; to create a public development bank; to reduce low-income households’ public and private debt; to create 300,000 jobs; and to revive democracy.”

Tsipras and Varoufakis decided to turn their backs on a political orientation that had been decided collectively within Syriza and had been democratically approved by the Greek population.

Here is Yanis Varoufakis’ reaction : “I got hold of the text and read it. A wave of nausea and indignation permeated my gut. Straight away I went to work. The article that emerged less than half an hour later was used[...] by Prime Minister Samaras to lambast Syriza in Parliament.”

After this attack, Varoufakis expected his collaboration with Tsipras to end. But no, Pappas (one of Tsipras’ close collaborators) organised a meeting and here is what was said:

• Varoufakis : “As you know, I have serious reservations about the Thessaloniki Programme. I even have very little respect for this programme.’ [...] Pappas seized the opportunity to tell me over and over again that I shouldn’t see this programme as a constraint.”
• Pappas : “Stop, it doesn’t change anything. The Thessaloniki Programme was a rallying call for our troops. Nothing more. We count on you to shape Syriza’s real economic programme.”

This extract, surreal but true, clearly shows the strategy that was chosen, even before January 2015: a green light for Varoufakis to negotiate proposals which were in contradiction with the mandate that they had been given. Tsipras and Varoufakis decided “to turn their backs on a political orientation that had been decided collectively within Syriza and had been democratically approved by the Greek population.”

Varoufakis himself admits this in his book: “Syriza’s position was very clear: the party demanded neither more nor less than an unconditional writing off of the debt. Half of the members always wanted a unilateral write-off of a major share of the debt; most did not even believe in a debt swap, yet only a fragile verbal pact tied me to the ruling trio.”

 Despite the Troika’s aggressiveness and total intransigence, 5 months of secret diplomacy ensued with ever more compromises.

It is really instructive to read chapters 5 to 9, as they shed light on the facts which must be known if we want to have a correct picture of the way in which the negotiations took place. What is astonishing is that even before the negotiations started, it was very clear that the European institutions would not make any concessions. Instead, they put everything in place to choke the Greek government, despite its having been democratically elected:

• Ending Greek banks’ access to ECB liquidities Liquidities The capital an economy or company has available at a given point in time. A lack of liquidities can force a company into liquidation and an economy into recession. from the 4^th February 2015 onwards, although the government had only been in place one week and had not yet taken any decisions to defy European budgetary discipline.
• Categorical refusal to amend the memorandum in any way. Even though it had been agreed that Varoufakis would send a new set of measures (which he presented as being a success, although these were very moderate and in contradiction with the Thessaloniki Programme), the Troika responded saying that the list “cannot replace the memorandum, which is the legal foundation of the Plan.”
• Categorical refusal from the ECB to pay out the 1.9 billion euros it had made in scandalous benefits after buying up Greek bonds between 2010 and 2012.
• Threatening to close down banks.

… and more in the same vein. Despite these repeated attacks, which Varoufakis saw as “explicit and perfectly calculated acts of aggression”, each time, Tsipras and Varoufakis decided that they would not react and they would show their good will. For example, following the ECB’s decision to cut all liquidities to Greek banks, Varoufakis replied to the ECB with: “You have done impressive work to preserve the cohesion of the Eurozone and the Greek’s place in this zone, even in the summer of 2012. If I am here today, it is to ask you to continue on the same trajectory.”

Eric Toussaint makes one aggravating factor perfectly clear: the majority of the negotiations were done in a small, restricted committee. Most of the time, the Greek people, international opinion, Syriza parliamentarians, and even Syriza’s central committee were not consulted.

Varoufakis even signed the 20 February agreement, which completely turned its back on the priorities set out in the Syriza Programme. This agreement includes the following passages: “The Greek authorities repeat their unequivocal commitment to honour, fully and on time, their financial obligations to all creditors. (…) The Greek authorities commit to abstain from any overhaul of the measures and any unilateral change in the policies and structural reforms which would have a negative impact on budgetary objectives, the economic recovery and financial stability, as assessed by the institutions.”

As Eric Toussaint demonstrates in his book, on multiple occasions Varoufakis and Tsipras hesitated to end discussions and answer back. When they threatened to close the door of the negotiations, they immediately retracted, using the excuse that it wasn’t the right time. Unfortunately, it was never the right time before the total capitulation of July 2015.

For example, when the refusal to modify any measures figuring in the previous memorandum came, Varoufakis claims that, at that moment, he should have ended negotiations and suggested to Tsipras he apply unilateral measures, beginning with a haircut of Greek bonds held by the ECB and the introduction of a new parallel payment system. But he does not do this. He writes: “Unfortunately, I opted for the soft method.” And he says by phone to the Eurogroup: “We insist that [...] this list continue to be examined, knowing that this list of reforms is the starting point.”

Another example: Varoufakis recalls a surreal meeting between Tsipras and his main ministers which took place on Friday 3^rd April 2015. He explains that before the meeting, he tried to convince Tsipras not to make the next planned IMF payment on 9^th April 2015, amounting to 462.5 million euros. Tsipras answers: “ ‘Varoufakis is right. Too much is too much. We have scrupulously respected their rules. We have followed their procedures. We have retreated to show them that we are ready to accept compromises. What do they do? They delay, the better to accuse us of delaying. Greek is a sovereign country, and today, it is up to us, the whole Cabinet, to declare “Enough!”’ He got up from his seat and in a louder and louder voice he pointed towards me, screaming: ‘Not only are we going to default, but you will take the plane, fly to Washington and announce it yourself to the great IMF woman!’ ” Eric Toussaint then explains how and why this declaration was to come to nothing.

However, on the rare occasions when they did resist a little, they saw they had massive support from the people. For example, when having refused to sign a draft joint press release with the Eurogroup, Varoufakis called Tsipras to announce the “bad news.” He says Tsipras replied: “ ‘Be happy!’ he exclaimed. ‘People are partying in the streets, they are with us. It’s amazing!’”.

For Eric Toussaint: “This perfectly demonstrates the power of the mobilisations which there would have been had Tsipras and Varoufakis adopted a coherent line of refusing ultimatums, had they put into practice the suspension of debt payments and the audit on the debt, the unilateral haircut on the bonds held by the ECB, had they put in place a parallel payment system, had they asserted their voting rights in Greek banks, had they declared a control of capital movements.”

Eric Toussaint makes one aggravating fact perfectly clear: the majority of the negotiations were carried out in a small, restricted committee. Most of the time, the Greek people, international opinion, Syriza parliamentarians, and even Syriza’s central committee were not consulted. Eric Toussaint has rightly and repeatedly criticised this fact. He writes, for example, “What is astonishing is the amount of time spent by Varoufakis and Tsipras in endless meetings abroad for negotiations during which they make concessions, whilst, at the same time, the Troika continue to methodically destroy the hopes of the Greek people. It never crosses their minds to take time to meet the Greek people, to take the floor in meetings where the Greek people were invited to attend. (…) Varoufakis and Tsipras did not seek to communicate with international public opinion nor to mobilize international solidarity. Never did they take advantage of their journeys to Brussels or other capitals to publicly explain what was really happening.” Varoufakis superbly recognises this in the title he chose for his book: “Adults in the Room: My Battle with Europe’s Deep Establishment” (translated into French as Conversations entre adultes : dans les coulisses secrètes de l’Europe).

 Between February 2015 and May 2015, the coffers are emptied

What did they expect exactly? Did they expect European institutions to eventually reciprocate if they showed good faith? That was totally naive. It is certain that, during the crucial months, the choking continued and public coffers were emptied as the debt repayments continued. Indeed, given the 20^th February agreement, the government decided to meet all its dues to both the IMF and the ECB. “In total, more than 1,500 million euros were paid in March 2015, using all the available liquidities even though the Varoufakis’s hopes of finding more money from China had vanished, the ECB had confirmed it would not pay interest Interest An amount paid in remuneration of an investment or received by a lender. Interest is calculated on the amount of the capital invested or borrowed, the duration of the operation and the rate that has been set. due to Greece on bonds bought in 2010 and 2012, and it would not reestablish Greek banks’ access to normal liquidities.”

 May 2015: an internal attempt by Syriza to change strategy

Eric Toussaint reveals a little known, yet very interesting, fact: as the months went past, it became ever more clear that Tsipras and Varoufakis’ strategy was a dead end. “On 24^th May 2015, during a Syriza central committee meeting, a motion was proposed by the Left Platform which had been criticising the direction of negotiations and the government’s strategy, calling instead for unilateral measures in order to implement the Thessaloniki Programme. This motion obtained 44% of the votes.”

 Tsipras, trapped, hesitates to publicly capitulate

In early June, the Troika decided to put maximum pressure on the government to force it to capitulate completely. (…) “On 3^rd June 2019, Tsipras went to Brussels for a meeting with Juncker and Dijsselbloem who were in direct contact with Merkel, Hollande and Lagarde. (…) Tsipras decided to return to Athens on 4^th June. On the following day, he criticised the Troika’s intransigent attitude in front of Parliament without explaining the concessions he had already made. (…) Benoît Cœuré, ECB Vice-President, announced that Greek banks might have to close their doors on 22^nd June.”

If we follow through Varoufakis’ reasoning and the recommendations he made to Tsipras and his government, it is only after having capitualted that they did made a grand effort to ask peoples to mobilise. Moibilise for what? In solidarity with a government that capitualted?

On 20^th June, according to Varoufakis, Tsipras was very downtrodden and he gives him a speech proposal to give to the nation, and to explain the necessity of capitulating to the Troika’s demands. Varoufakis claims to have said: “ ‘If you want to capitulate, capitulate, but do it correctly’ – and I handed him a letter where I had written the outlines of a speech, a speech to the nation, which he should read on TV: ‘Fellow Greeks, We have fought valiantly against an ironclad troika of creditors. We gave it our all. Alas, it is hard to argue with creditors who do not want their money back. We faced down the world’s strongest institutions, the local oligarchy, powers much greater than ours. We have received no help from anyone. Some, like President Obama, had kind words for us. Others, like China, looked sympathetically towards us. But no one came forward to offer any tangible assistance against those who are determined to crush us. We are not giving up. Today I am signalling to you that we shall live to to fight another day. Tomorrow morning, I shall accede to the Troika’s demands. But only because this war has many battles ahead. As of tomorrow, and after I yield Yield The income return on an investment. This refers to the interest or dividends received from a security and is usually expressed annually as a percentage based on the investment’s cost, its current market value or its face value. to the Troika’s terms, my Ministers and I will embark upon a pan-European tour to inform the peoples of Europe about what happened, to energize them and to invite them into a common struggle to end the rot and to reclaim Europe’s democratic principles and traditions. .’ Alexis read it, and said with his usual downtrodden look, ‘I cannot admit to our people that I am going to surrender.’ It could not be clearer: he had indeed decided to give up, but he could not bring himself to announce it.”

Eric Toussaint asks a question and offers an answer: “If we follow through Varoufakis’ reasoning and the recommendations he made to Tsipras and his government, it is only after having capitulated that they made a grand effort to ask the people to mobilise. Mobilise for what? In solidarity with a government that had capitulated? From February, there should have been a systematic campaign to mobilise national and international support for the government’s actions which it should have implemented instead of capitulating for the first time on 20^th February.”

 A referendum to give legitimacy to the capitulation?

Instead of publicly capitulating, on 26^th June, Tsipras announced a referendum on 5 July 2015, asking if, YES or NO, they should capitulate to the Troika’s demands. Why this U-turn? Varoufakis affirms that the objective of Tsipras’ inner circle (placing himself outside of it on this point), in organising a referendum, was to seek the legitimacy to capitulate.

This book is full of information key to understanding what really played out out in Greece between January and June 2015, as well as between 2010 and 2014. This must serve as a lesson to not commit the same errors again when a progressive and popular government takes power in Europe.

On the Troika’s side, the reaction was violent: the ECB forced the government to close banks in the week preceding the referendum.

However, despite this aggressiveness, despite the “fatigue” due to the intense social struggles waged since 2010, and despite the exploding job insecurity linked to violent austerity measures since then, and even though there had been no real campaign in favour of voting NO, the Greeks’ answer was very clear: 61.5% voted NO. More than 70% of Greek youth voted in favour of the saying NO to the creditors. This again showed “to what extent a large proportion of people were ready to resist creditors.”

Despite this NO result, on 6^th July Tsipras met with parties that had called for a YES vote. 24 hours later, he had elaborated a common position with them which complied with the Troika’s demands. “On 13^th July, following a meeting of the heads of State and governments of the Eurozone, the Greek government agreed to enter a process leading to a third memorandum, with harsher conditions than those rejected in the 5 July referendum… It was a betrayal of the popular will, even more so after he had publicly sworn to respect the referendum result, whatever it might be.”

 By way of conclusion

It is of course impossible to summarise such an intense book in a few pages. I invite readers to get this book, because numerous other passages are very instructive, for example: the real origins of the Greek crisis; the (neoliberal) team that Varoufakis brought together around him; the work of the Truth Committee on Public Debt which revealed that most of the debt demanded from Greece was illegal, odious and/or illegitimate, and that there were thus a number of solid legal arguments to contest its repayment; Varoufakis’ famous “Plan X”; the issue of exiting the Eurozone. And of course, the last chapter: What could have been done?

As you can tell, this book is full of information key to understanding what really played out in Greece between January and June 2015, as well as between 2010 and 2014. This must serve as a lesson to not commit the same errors again when a progressive and popular government takes power in Europe. We never know when and where this might happen, but it will happen, sooner or later. As the great Chilean poet reminds us, “They can cut all the flowers, but they cannot stop Spring”

Must reads:

• - Michael Roberts, Capitulating to adults
• - Philippe Poutou, A book that reads almost like a thriller

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