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posted on 27 December 2015

THIS IS A COUP: My Comments On Paul Mason's Documentary

by Yanis Varoufakis

Paul Mason's recently released four-part documentary #THIS IS A COUP, on the crushing of the Athens Spring, offers much food for thought. Paul and I have had many opportunities to discuss the issues it covers, including on stage in London in front of a magnificent audience. When the time comes, I shall publish my full account. But for now, here are some comments for each one of the four episodes, culminating to a general comment at the very end - see below.


11'50" - "...four days to negotiate an extension of the bailout - something he [Tsipras] promised never to do."

This is quite untrue. Our mandate was all about negotiating a new agreement. To negotiate it was imperative that we secured an extension of the loan agreement (that was ending on 28th February) so as to gain enough time to conduct the negotiations. Remember: A 'bailout' comprises three parts - the loans, the loan agreement and the conditions (e.g. harsh austerity) that the money comes with are called Memorandum of Understanding or MoU. What we did was to negotiate an extension of the loan agreement without accepting the MoU or taking any fresh money. This was in concert with our election pledges. Indeed, the reason the first two Eurogroup meetings (11th and 16th February) led to impasse was because we insisted that the words 'Memorandum of Understanding' and 'Program' stay off the communiqué.

12'44" - To stop the bank run "Varoufakis is forced to accept whatever is on the table."

Again, this is wrong. Having brought the first two Eurogroup meetings (11th and 16th February) to an impasse, in my third Eurogroup meeting, on 20th February, an agreement was reached that did not mention the words 'Memorandum of Understanding' or 'Program'. Instead it stated that the Greek government would propose a new list of reforms that the institutions would then approve. This phrase constituted a significant victory for the Greek side. It was quite the opposite of having accepted "whatever" was "on the table".

12'51" and 13'01" - Two captions appear

"Austerity measures continue" - Recall, once more, that our mandate was to negotiate a New Deal for Greece. The 20th February agreement succeeded in putting on hold the new austerity measures that the Troika was demanding (even from the previous government) until the negotiations' end. An apt caption would be: "New austerity measures averted - for now!"

"Europe gets a veto over all Greek laws" - Not so. The MoU our government inherited, from the previous governments, had already committed all Greek governments to a state of servility to the Troika. The 20th February agreement was in fact a major improvement in that it specified that we would have to consult the creditors only regarding legislation that had a negative fiscal impact or a negative effect on the stability of the financial sector or growth. This left us with many degrees of freedom (since these negative effects were a matter of interpretation) that the previous Greek governments lacked. For example, soon after we legislated to grant free food, electricity and shelter to 300 hundred thousand people without consulting with the Troika. (That they kicked and screamed anyway over this piece of legislation is another matter.) In this sense, the said caption is unfair and misleading.

13'27" - "This deal is so terrible..," narrates Paul

The 20th February Eurogroup agreement was quite the opposite of "terrible": it was an excellent deal, all things considered. A game changer. Possibly the first time ever that a Eurozone government had forced a major concession on the Eurogroup/Troika (namely to get an opportunity to re-write, from scratch, the conditions of its loan agreement). The fact that a few days later (on 24th February) the Troika tried to rescind that agreement (in a teleconference of the Eurogroup members) is another matter and does not justify calling the 20th February Eurogroup agreement "terrible".


1'59" - What Syriza wants is to "cancel Greece's debt"

That was not our policy or aim. Cancelling Greece's debt was never something I put to the Eurogroup. Our negotiating policy (that I had been working on for at least two years, in agreement with Alexis Tsipras and his team) was based on a moderate proposal of smart debt swaps that were politically fathomable in places like Germany while, at the same, time offering Greece substantial debt relief - so much so that investors would be attracted again to Greece, recognising that the Greek state had recovered its solvency.

1'55" - "Euclid Tsakalotos now replaces Varoufakis as lead negotiator."

The main change at the end of April was that the Prime Minister (under pressure from the President of the Eurogroup) assumed direct control over the behind-the-scenes negotiations and the concessions made to the Troika, with George Chouliarakis (my Deputy at the Eurogroup) as his effective adviser and orchestrator of the day-to-day talks with the Troika's officials. Euclid Tsakalotos was given a coordinating role but very little authority over our side's concessions. For my part, I continued to negotiate with finance ministers and the Eurogroup, from a position of greater weakness (given the above).


40" - "There is now only 9 days of bailout money left"

Paul gives the impression that we had a stock of bailout loans, from which to pay our way, and that this stock was running low - leaving us with only 9 days before its depletion. This is false. Our government did not need bailout money to run our state; e.g. to pay pensions, salaries, suppliers, for schools etc. Indeed, we were running a (small) primary surplus and could continue to pay our way ad infinitum. (New bailout funds were only necessary to meet repayments of our debt to the Troika. (This is what made our negotiation on debt restructuring so pivotal.) So, the "9 days left" that Paul mentions was the time left before the ECB could decide (as it did) to pull the plug from the commercial banks upon the expiration of the extension of the loan agreement that we secured in the 20th February Eurogroup meeting. Nothing to do with the state running out of (bailout) money.

5'08' - Caption: "Bank run begins"

No, at that point a bank run that had begun in December ended tragically - with the banks' closure. It is important to recall that the bank run initially was started well before we were elected, courtesy of a scare campaign by the Greek Central Bank (a part of the ECB) whose explicit purpose was to scare Greeks off voting for Syriza. Then, after our election, the ECB made a sequence of aggressive moves to engineer an accelerating bank run in order to put pressure on our government to capitulate. By end of June, the ECB closed the banks by announcing it would no longer offer the banks' liquidity. [There is nothing easier than a central bank starting a bank run and closing down the banks, when while its purpose is precisely the opposite: to prevent a bank run and keep them open.]


37" - "Greeks voted by 61% to deft Europe and reject austerity"

It is a mistake to conflate the Eurogroup/Troika with Europe. Greeks did not vote to defy Europe. They voted to say no to a catastrophic economic program imposed upon Greece, before transplanted into other European countries to the detriment of Europe.

9'18" Caption: "Europe lends Greece €86 billion"

Perhaps it is useful to note that none of this money will go to the Greek state. Not one cent! A small part will go to the Greek banks and the rest will be used to refinance existing (unsustainable) Troika loans. A typical case of extending-and-pretending; of a bankrupt debtor being given new loans from which to pretend to be meeting her debt repayments while the debt mountain grows taller and debtor more and more bankrupt.


There is a presumption running through Paul's and Theopi's documentary that is never properly stated or interrogated. It is the view that, in the final analysis, we (and other Eurozone member-states) face only two options: Capitulation to the troika or exit from the Eurozone.

While this was always the Troika (and Dr Schäuble) line, with which to scare governments into submission, it should not be taken for granted. It has always been my view that, had we remained steadfast, Mrs Merkel and Mr Draghi would step in and avert Grexit at all cost. An honourable agreement would have transpired, instead of the document of surrender also known as the 3rd Greek bailout.

Did we have the right to take this risk? We had, I believe, a duty to do so. Indeed, my interpretation of the 62% NO referendum vote is that the majority of Greeks instructed us as follows:

  • We do not want a clash with Europe.

  • We do not wish to leave the Eurozone.

  • But, if Brussels-Frankfurt-Berlin demand our surrender and acceptance of a deepening Great Depression under the threat of Grexit, tell them: Do your worst. We are not budging!

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