Blog post

Yanis Varoufakis’s Account of the Greek Crisis: a Self-Condemnation — Part Three: How Tsipras and Varoufakis turned their backs on Syriza’s platform

In his book Adults in the Room, Yanis Varoufakis gives us his version of the events that led to the Tsipras government’s shameful capitulation in July 2015. In the third part of a series of articles analyzing the book, Eric Toussaint traces how Varoufakis influenced Tsipras to abandon the economic policies of the Syriza programme once in government. 

Eric Toussaint18 September 2017

Yanis Varoufakis’s Account of the Greek Crisis: a Self-Condemnation — Part Three:  How Tsipras and Varoufakis turned their backs on Syriza’s platform

See Parts One and Two of Eric Toussaint's analysis of the revelations contained in Yanis Varoufakis's recent memoir, Adults in the Room

First published by CADTM. Translated by Snake Arbusto in collaboration with Vicki Briault.

Yanis Varoufakis traces his collaboration with Alexis Tsipras and his alter ego, Nikos Pappas, back to 2011. That collaboration gradually broadened, starting with 2013, to include Yanis Dragasakis (who became vice-Prime Minister in 2015). There is a constant in the relations between Varoufakis and Tsipras: Yanis Varoufakis constantly argues for changes in the political programme that Syriza had adopted. Varoufakis tells us that Tsipras-Pappas-Dragasakis themselves clearly wanted to move toward an orientation that was different from, and significantly more moderate than, the one their party had adopted.

Varoufakis’s narrative is lively and piquant. Through it, we see how choices were made behind Syriza’s back at very important stages, without regard for basic democratic principles.

To hear Varoufakis tell it, he played a central role, and he did in fact exert influence on the line adopted by the Tsipras-Pappas-Dragasakis trio. It’s also certain that Tsipras and Pappas, outside of Syriza, sought to create fairly close relations with certain individuals and institutions in order to gradually move the policies put into practice farther and farther away from the positions Syriza had championed. Varoufakis is not the only person they contacted, but at a given point Tsipras and Pappas felt that he was the right man to negotiate with the European institutions and the IMF.

Early 2011: Varoufakis’s initial contacts with Tsipras and Pappas

Varoufakis describes his first meeting with Alexis Tsipras and Nikos Pappas in early 2011. Pappas had set up a meeting at a small hotel and restaurant near Syriza’s office.

When I walked into the hotel, he and Pappas were already at a table, ordering lunch. Alexis’s voice was warm, his smile unaffected, his handshake that of a potential friend. Pappas had wilder eyes, a high-pitched voice. (…) From the outset it was evident that Pappas had the young prince’s ear, guiding, restraining and spurring him on, and this initial impression survived throughout the turbulent times that followed: these two young men, of similar age but different temperaments, were acting and thinking as one. 1

Varoufakis explains that Tsipras was undecided about what attitude to adopt regarding a possible exit from the Eurozone.

Even in 2011 Syriza was torn by internal disagreements over whether the party should or shouldn’t make Grexit (Greece’s departure from the Eurozone, though not necessarily from the EU) its official policy. As we talked, Alexis’s attitude to the question struck me as cavalier and immature. His focus was more on keeping control of the feuding wings of his party than on clarifying in his own mind what the right policy should be. Judging by the meaningful looks coming from Pappas, it was clear that he thought so too and was hoping I would help shift his leader away from casual experimentation with the idea of Grexit.

I did my best to impress upon Alexis that turning Grexit into an objective would be as large a mistake as failing to prepare for it. I also criticized Syriza for making silly promises.

Tsipras asked Varoufakis what he thought of the idea of threatening the European policymakers with Greece leaving the Eurozone should they refuse to reconsider the policies of the Memoranda. Varoufakis answered that he would avoid exiting the Eurozone since it was possible to negotiate a favourable solution for Greece, in particular a new restructuring of its debt.

Tsipras replied that famous economists like Paul Krugman were saying that Greece would be better off without the euro.

Varoufakis continues his narrative:

I agreed that we would be better off if we had never entered the Eurozone but hastened to add that it was one thing to have stayed out of the euro and quite another to leave it. … To try to shake him out of his lazy thinking, I outlined what I expected to happen immediately if Grexit were announced. Unlike Argentina, a country that had severed its currency’s ties to the dollar, Greece did not have its own notes and coins in circulation.

To convince him, Varoufakis reminds Tsipras that "creating a currency takes months.”

In reality this argument, used many times by Varoufakis and other opponents of an exit from the euro, does not hold up. A new currency could have been adopted by using banknotes denominated in euros, but bearing a stamp. The banks’ automatic teller machines could have delivered euro bills that had been especially hallmarked beforehand. James Galbraith explained the idea in a letter to his friend Varoufakis in July 2015. 2

In reality, what Varoufakis wanted was to convince Tsipras that it was possible to stay in the Eurozone while at the same time breaking with the anti-social policies that had been conducted until then:

We shall demand a renegotiation that yields a new deal for Greece, rendering our social economy sustainable within the eurozone, but if the EU and the IMF refuse to negotiate meaningfully, then we shall not accept any more extend-and-pretend loans from Europe’s taxpayers. And if they want to retaliate by pushing us out of the euro, at immense cost to both themselves and us, then let them do their worst.

For Varoufakis, preparations should not be made for exiting the Eurozone, and if it were to happen one day, it would be the worst possible solution.

Varoufakis continues:

Pappas was nodding enthusiastically, but Alexis seemed elsewhere. When I pushed him to explain his silence, his reply confirmed that he was preoccupied with the goings-on within Syriza rather than engaging properly with the issue at hand. I was unimpressed. As the meeting drew to a close, and at the risk of sounding condescending, I offered him some well-meant but unsolicited advice on a separate matter, which he may have found offensive: "Alexis, if you want to be prime minister, you need to learn English. Get a tutor, it is imperative."

When Varoufakis returns home, his partner, Danae, asks him how the meeting went and he replies: “He is a very agreeable person but I do not think he has what it takes.”

Varoufakis, the debt audit, and suspension of payment

In his narrative of the events of 2011, Varoufakis never once mentions the citizen debt audit initiative, in which he refused to participate.

The CADTM’s views regarding the necessity of an audit of the debt began to be recognised in Greece starting from 2010. Several interviews were published in the Greek press. For example, the Greek magazine Epikaira published a long interview with myself, for the CADTM, and Leonidas Vatikiotis, a journalist and far-Left activist. There I explained the causes behind the explosion of public debt and how the Ecuadorian experience could be a source of inspiration for Greece in terms of an audit commission and the suspension of debt payments. To conclude, I was asked “What should Greece do?” and I answered:

An Audit Commission involving prestigious and experienced people should be formed immediately. My advice is clear: Open the books of account! … Proceed in the utmost transparency and in the presence of trade unions and citizens’ associations and discover which part of the debt is illegal and odious as per the international terminology. Denounce it! 4

Economist Costas Lapavitsas also wrote several articles actively defending the need to establish an audit committee. Those were widely circulated in Greece. In one of them he wrote:

The international audit commission could serve as a catalyst and contribute to the transparency that is needed. Such an international commission, made up of experts in auditing public finances, economists, labour organisers and representatives of social movements, will have to be totally independent of political parties. It will have to have support from many organisations, which will make it possible to mobilise very broad social strata. This is how the popular participation necessary to deal with the question of the debt will begin to become a reality. 6

On January 9, 2011, the Greek daily Ethnos tis Kyriakis, third in terms of circulation at that time, interviewed me and published it as: “It is not logical to repay debts that are illegitimate. The people of Europe also should audit their creditors.” 7 The daily explained: “The Committee’s work in Ecuador has recently been mentioned in the Greek Parliament by Sofia Sakorafa.”

Indeed, in December 2010, MP Sofia Sakorafa said in a speech in the Hellenic Parliament that a Debt Audit Commission, inspired by the Ecuadorian example, was necessary. The parliament was then dominated by PASOK and New Democracy, who had no interest in elucidating the debt, and her proposal was rejected. Nevertheless, people other than professional politicians kept on fighting the battle. The Greek debt audit committee (ELE) was launched in March 2011. This stemmed from major efforts to bring together people who had barely known each other just a few weeks earlier. The gravity of the Greek crisis catalysed the creative process. While preparing to launch the committee, Costas Lapavitsas issued an international appeal, supported by the CADTM. There was wide-ranging response.

Lapavitsas consulted me for the content of the international appeal to support the committee’s formation. I made some amendments. After that, we started seeking support from people likely to help us spread the word and also enhance the credibility of the initiative. I undertook to collect the maximum possible number of signatures from international personalities supporting the establishment of the audit committee. I had known many of them for years, such as Noam Chomsky (USA) with whom I had been in touch on the debt issue since 1998, Jean Ziegler (Switzerland) who was then a UN Special Rapporteur on the Right to Food, Tariq Ali (UK), and many economists.

In my quest for collecting signatures I was refused only once, by the North American economist James Galbraith. I had been conversing with him for several years during conferences on financial globalisation.

The second reason why Galbraith did not sign the appeal was Yanis Varoufakis’s advice to him. Varoufakis had publicly explained in 2011 why he refused to endorse the call for the Audit Committee’s formation. He says that Galbraith had contacted him, asking if he should sign this appeal and he advised Galbraith not to. Varoufakis’s refusal accounts for his indifference towards the Truth Commission on the Greek debt when he became finance minister in the first government of Alexis Tsipras in 2015. 8

In a long public letter published in spring 2011, Varoufakis justified his refusal to support the creation of the Citizen Debt Audit Committee (ELE in Greek). He wrote that if Greece defaulted, it would have to leave the Eurozone following which it would abruptly end up in the Neolithic age (sic!). Varoufakis also explained that the people who had taken this initiative were nice and well-meaning and that in principle he supported the audit but, in Greece’s current circumstances the audit was not appropriate. 9

The documentary Debtocracy, aired in April 2011, championed the proposal for a citizens’ debt audit and the need to cancel the illegitimate and odious part of the debt. 10 Aris Chatzistefanou and Katerina Kitidi, who directed this documentary in collaboration with Leonidas Vatikiotis, consulted me about the contents starting in February 2011. They took my suggestion to film a part of the documentary in Dakar on the occasion of the World Social Forum held there from February 6-11, 2011. The film was completed in record time and was circulated on the Internet. During spring 2011, more than 1.5 million people in Greece downloaded it in six weeks. It was a significant number for a population of 10 million, but no TV station broadcast it at that time.

Among the Greek personalities who signed the call for an audit in 2011 were Euclid Tsakalotos (who replaced Yanis Varoufakis as Finance Minister of the Tsipras government in early July 2015 and kept that ministerial post in the second Tsipras government, formed at the end of September 2015); Panagiotis Lafazanis (one of the main leaders of the Left Platform within Syriza, Minister of Energy in the Tsipras government between January and 16 July 2015, leader of Popular Unity, founded in August 2015 by the group who left Syriza in opposition to the Third Memorandum of Understanding); Nadia Valavani (also a Left Platform member, Alternate Minister of Finance from 27 January to 15 July, 2015, also a member of Popular Unity); Sofia Sakorafa (elected Syriza MEP in May 2014 and sitting as an independent since September because of her opposition to the capitulation); Georgios Katrougalos (Alternate Minister of Interior and Administrative Reconstruction between January 2015 and July 2015, then Minister of Labour and Social Solidarity beginning in August 2015 and again under the second government formed by Alexis Tsipras. From November 2016 he held the post of Alternate Minister for Foreign Affairs); and Notis Maria (elected MEP in May 2014 on the list of the sovereignist right-wing party ANEL and sitting as an independent since January 2015).

Neither does Varoufakis mention the international conference held in Athens in March 2011 by Synaspismos (the main component of Syriza, chaired by Alexis Tsipras) and the Party of the European Left, even though he himself participated in it.

A few words about the conference. It took place in Athens in early March 2011. Synaspismos and the Party of the European Left had invited me as speaker. Alexis Tsípras, Yanis Varoufakis, Oskar Lafontaine (one of the founders of the Left Party, Germany), Pierre Laurent (leader of the Communist Party and the Party of the European Left), Mariana Mortagua from the Left Bloc in Portugal, Euclid Tsakalotos, Yannis Dragazakis (deputy prime minister in the first and second Tsípras governments), myself, and several other guests delivered speeches during this conference.

My presentation focused on the causes of the crisis, and the vital importance of a drastic debt reduction through cancellation following a debt audit with citizens’ participation. 11 Yanis Varoufakis presented what he called a “modest proposal.”

There were 600 to 700 participants and the Nicos Poulantzas Institute published several speeches including those of Tsípras, Varoufakis, and myself in a book in English. It was called The Political Economy of Public Debt and Austerity in the EU. 12 If I mention this conference, it is to show that at the time it was quite an obvious choice to include a presentation on the need for an audit of the debt; yet Varoufakis totally excludes the subject both in the positions he has defended and in his narrative of the events of 2011.

The international conference supporting the citizens’ audit of Greece’s debt was held in Athens in May 2011 and it was a resounding success, with the attendance of nearly 3,000 people during three days. The CADTM was one of the organisations convening that conference. I coordinated the first panel discussion where the prominent participants were Nadia Valavani (who later became the Deputy Minister of Finance in the Tsipras Government) and Leonidas Vatikiotis. The CADTM helped the Greek organisers and the other non-Greek movements towards convincing a significant number of European organisations to support the conference and to collectively adopt a declaration upholding its essence.

Declaration from the Athens Conference on Debt and Austerity

We, representatives of movements and activists from across the world, met in Athens to discuss the lessons of previous international economic crises, to challenge illegitimate debt and mobilise for its cancellation, to offer our solidarity to the European people struggling against unjust austerity programs imposed by governments, the EU and the IMF, exemplified by the “Memoranda of Understanding,” as well as to formulate a plan of economic action which meets the needs of people instead of serving a tiny social elite.

Many countries in the developing world have lived in debt crisis since the 1970s. After bouts of reckless lending by international finance, some of the poorest people in the world faced cuts in income and social provision when the IMF imposed sharp austerity policies in return for bailing out banks and financiers. These policies were unjust and did not facilitate recovery. Instead, they increased the dependency of indebted countries on the power of financial markets, making governments less accountable to their people. Only when a handful of countries demanded their rights and stood up to the imposition of austerity, to the bailing out of financiers, and to the crushing burden of debt did it become possible to recover, at least for a short while. This is what happened in Argentina in 2001. Other countries can benefit from its experience, including Egypt, Tunisia and the entire Arab world now fighting for democracy and confronting odious debts of dictatorial regimes.

Today, in the wake of the international economic crisis, peripheral countries of the EU face a deep debt crisis. They have been pushed into it by the operations of the global financial system but also by the institutional framework and the economic policies of the EU which systematically favour the interests of capital. The Growth and Stability Pact has put pressure on labour across the eurozone, while the European Central Bank has supported the interests of large banks. The EU has been split into a powerful core and a weak periphery. The accumulated debts of the periphery are a result of the gap with the core but also of deepening inequality between the very rich and the rest of society. Workers and the unemployed, small farmers, and small and medium businesses are now forced to carry the burden of these debts even though they have not benefited from them.

Austerity and privatisation measures will squeeze the poorest in society most heavily, while those that created the crisis will be bailed out. The Pact for the Euro will exacerbate pressure on labour. The rich and big business will also continue to dodge taxes which could be used to build a fairer society. If these measures go unchallenged, they will have an immense impact on Europe, drastically changing the balance of power in favour of capital and against labour for many years.

The attempt to make working people and the poor bear the costs of the crisis, while the very rich escape, will be opposed by those in the firing line. The people of Greece, Ireland and Portugal, but also Poland, Hungary, Slovenia and elsewhere in Central and Eastern Europe, challenge the austerity policies of the EU and the IMF, oppose international financial power, and reject the slavery of debt. We call on people across the world to show solidarity with movements in these countries struggling against debt and the pernicious policies it brings in its wake.

Specifically, we call for support for:

The democratic auditing of debts as a concrete step towards debt justice. Debt audits which involve civil society and the labour movement, such as the Citizens debt audit in Brazil, allow people to establish which parts of public debt are illegal, illegitimate, odious, or simply unsustainable. They offer to working people the knowledge and authority necessary to refuse to pay illegitimate debt. They also encourage democratic accountability and transparency across the administration of the public sector. We express solidarity with debt audits in Greece and Ireland and stand ready to assist in practical terms.

Sovereign and democratic responses to the debt crisis. Governments must be bound primarily by their people, not by the unaccountable institutions of the EU, or by the IMF. The people of countries such as Greece must decide which policies will improve their chances of recovery and meet their social needs. Sovereign states retain the power to impose a moratorium of payments if debt is crushing the livelihood of working people. The experience of Ecuador in 2008-9 and of Iceland in 2010-11 shows that it is possible to have radical and sovereign responses to debt, even including cancellation of its illegitimate part. Even UN resolutions legalise the cessation of payments in a state of necessity.

Economic restructuring and redistribution, not debt. The domination of neoliberal policies and the power of international finance have led to low growth, rising inequality, and major crises as well as eroding democratic processes. It is imperative that economies are put on a different footing through transitional programs that include capital controls, severe regulation and even public ownership over banks, industrial policy that pivots on public investment, public control over strategic sectors of the economy, and respect for the environment. The first aim should be to protect and expand employment. It is also vital that countries should adopt far-reaching redistributive policies. The tax base should become broader and more progressive by taxing capital and the rich, thus allowing for the mobilisation of domestic resources as an alternative to debt. Redistribution should also include the restoration of public provision in health, education, transport and pensions as well as reversing the downward pressure on wages and salaries.

These are the first steps towards meeting the needs and aspirations of working people, while shifting the balance of power away from large capital and financial institutions. They would allow people across Europe, and more broadly across the world, to exercise better control over their livelihoods, their lives, and the political process. They would also offer hope to the young generation across Europe which currently faces a bleak future of scarce jobs, low wages and lack of prospects. For these reasons, supporting the fight against debt in Greece, Ireland, Portugal and other countries of Europe is in the interests of working people everywhere.

Athens, May, 8, 2011

Signed by the following:-

Initiative for the Greek Audit Commission

European Network on Debt and Development

The Committee for the Abolition of Third World Debt (CADTM)

The Bretton Woods Project, UK

Research on Money and Finance, UK

Debt and Development Coalition Ireland

Afri - Action from Ireland

WEED - World Economy Environment Development, Germany

Jubilee Debt Campaign, UK

Observatorio de la Deuda en la Globalización, Spain


During a discussion between Varoufakis and myself on 9 November 2016 in Athens, I asked him why he had not supported the citizen debt audit initiative beginning in 2011. 13 He answered that the initiative was not a good one since it called the legitimacy and legality of the debt into question. According to him, there was no reason to question the legality or legitimacy of Greece’s debt.

Varoufakis adopted the position of a short-sighted economist who can see debt only in terms of financial sustainability and access to sources of financing. He completely failed to understand the importance of the citizen audit. Whereas in the book he stresses the importance of the occupation movement that gathered in Greece’s public squares in June-July 2011, he did not notice the enthusiasm for a citizen debt audit initiative citizens expressed during that powerful movement.

So, in fact, I was an eyewitness to Varoufakis’s refusal to support the citizen audit in 2011 and I saw how he was able to convince James Galbraith not to sign the international call we had launched along with Costas Lapavitsas. After an attentive reading of Varoufakis’s book, I am convinced that he intervened actively to convince Tsipras, at least from May-June 2012, to abandon his support for the demands for a debt audit and for suspension of repayment of the debt while the audit was conducted.

Within the leadership of Syriza and among Alexis Tsipras’s economic advisors, several key people were also opposed to the debt audit and suspension of payment. Yannis Dragasakis, one of the people in charge of economic matters for Syriza (and who became Deputy Prime Minister in the first and second Tsipras governments) was ill-disposed towards it, and had said so to Giorgos Mitralias when the latter had tried to convince him in 2010 to support the idea of creating an audit commission. Giorgos Stathakis, a member of the team of economists close to Tsipras, had declared in 2013 to the press that there was no need to raise the question of odious debt in Greece’s case, since the odious share accounted for no more than 5% of total debt. Stathakis was Minister of Economy in the first Tsipras government and for one year in the second, before he became Minister for Energy and Environment in September 2016.

Varoufakis’s collaboration with Tsipras and Pappas intensifies in late 2011

In late 2011 Varoufakis was again contacted by Pappas and they held another meeting.

At our second meeting and in the meetings that followed I was pleasantly surprised: Alexis seemed transformed. Gone was the complacency, the fixation on Syriza’s internal affairs and the casual attitude towards Grexit. He had clearly done his homework…. He also told me proudly that he had engaged an English language tutor and was making good progress.… The best thing about our meetings was the emergent clarity and unity of purpose.

2012: Varoufakis helps Tsipras find support from the Democrats in the USA

Varoufakis, while he was working in the USA, tried to open doors for Tsipras in Democratic Party circles.

Varoufakis explains that his sojourn in Texas “also offered an opportunity to build a bridge between Washington and my new Syriza friends, not the most natural of allies.” He goes on:

It seemed safe to assume that a future Syriza government would precipitate an almighty clash with Germany, the European Commission and the European Central Bank. The last thing Alexis and Pappas needed was a hostile administration in the United States. So, from 2012 to 2015, with Jamie Galbraith’s assistance and connections, I would do all I could to explain to American opinion makers and the Obama administration that the United States had nothing to fear from a Syriza government, whose priority would be first and foremost to liberate Greece from its crushing debt.

Varoufakis opposes Syriza’s platform in May-June 2012

Varoufakis sums up his position:

My preference was for Syriza to present voters with a basic, progressive, Europeanist, logically coherent, non-populist programme as a foundation on which to build an image of a credible future government, one capable of negotiating the country’s escape plan with the EU and the IMF. Alexis and Pappas were inclined to a different political program, one that maximized short-term electoral gains at the expense (in my view) of long-term logical coherence. When I read the economic policy segment of Syriza’s 2012 electoral manifesto, my irritation was such that I stopped after a few pages. The next day I was asked to comment on it by a Greek television reporter. I said I was inclined to support Syriza but that my resolve to vote for the party was conditional on my capacity to resist reading its economic program.

What was it in Syriza’s platform that so irritated Varoufakis?

Syriza’s 40-point programme for the 6 May 2012 elections

Syriza’s programme, containing some forty points, was clearly radical. The first point had to do with debt and was articulated as follows: Audit public debt and renegotiate the interest due, and suspend payments until the economy has revived and growth and employment return.

Among other measures, alongside a series of emergency measures to be taken due to the humanitarian crisis, we underline: raise income tax to 75% for all incomes over 500,000 euros; increase taxes on big companies; abolish financial privileges for the Church and shipbuilding industry; cut military expenditure drastically; raise the minimum wage to bring it back to its level prior to the Memorandum of Understanding of 2010 (that is, 750 euros per month); use government, bank, and Church-owned buildings for the homeless; nationalise the banks; nationalise ex-public (service & utilities) companies in strategic sectors for the growth of the country; take measures to restore and improve workers’ rights; bring constitutional reforms to guarantee separation of Church and State; hold referendums on treaties and other accords with Europe; abolish privileges for MPs; lift immunity from prosecution for ministers and authorise courts to take action against members of the government; take measures to protect refugees and migrants; increase funding for public health up to the average European level (the European average is 6% of GDP; in Greece it was 3%); eliminate payments by citizens for national health services; nationalise private hospitals; eliminate participation in the national public-health system by the private sector; withdraw Greek troops from Afghanistan and the Balkans; abolish military cooperation with Israel; support the creation of a Palestinian State with the 1967 borders; negotiate a stable accord with Turkey; and last but not least: close all foreign bases in Greece and withdraw from NATO. 14

With this programme, Syriza, who added the watchword “No sacrifices for the euro,” saw its election results multiplied by four between 2009 and May 2012, from 4% to 16%.

Syriza’s 2012 programme is very interesting and useful to read. It contains the principal measures that indeed need to be put into practice.

Nevertheless there are weak points:

• There is no hierarchising of the 40 points; but such a programme should state what a government will do first (say in the first 100 or 200 days). Also, the programme is not presented in operational terms. Yet it is important to present a roadmap specifying exactly how the government plans on attaining the goals it has set itself. In the present case, it was important to present a plan A and a plan B. Plan A is the first one to be applied and Plan B is a back-up solution should obstacles prevent the implementation of Plan A. For example: Plan A calls for a significant reduction of debt by striking an amicable agreement with the creditors (this is what the Thessaloniki Programme adopted in 2014 proposed — see below). If the country’s creditors refuse to accept a radical reduction of the debt, the broad outlines must be given of what the government would do as its Plan B (suspend repayment of the debt, conduct an audit the debt with citizen participation, take targeted debt repudiation measures — see below).

• The need for constitutional reforms is mentioned, but without saying whether a general election is to be called to elect a constituent assembly. However it was very important to say exactly how these constitutional reforms were to be carried out. Finding a qualified majority within the Parliament as it is currently constituted is not at all the same thing as initiating a process involving the entire society by convening a constituent assembly.

The results of the elections held on May 2012 in Greece did not make it possible for a party or a coalition of parties to form a government. That led to new elections in June 2012. Between the two elections, Tsipras put forward five concrete proposals for beginning negotiations with the parties opposed to the Troika (except Golden Dawn, which was excluded though also opposed to the Memorandum of Understanding):

• Abolition of all anti-social measures (including the reductions of wages and retirement pensions);

• Abolition of all measures that reduced workers’ rights as regards protection and negotiation;

• Immediate abolition of parliamentary immunity and reform of the election system;

• An audit of the Greek banks;

• The creation of an international debt audit committee combined with suspension of repayment of the debt until the end of the committee’s work.

In the June 2012 elections, Syriza received 26.5% of the vote with this radical orientation, which went against Varoufakis.

Despite Varoufakis’s disagreement with Syriza’s 2012 program, Tsipras and Pappas asked him to write a strategy paper.

Between the elections, Varoufakis was again contacted by Pappas and a new meeting took place with Tsipras. Pappas told him "Do you realize that, if we win, you will be handling our negotiations with the EU and the IMF?"

Pappas asked Varoufakis to prepare a document explaining the broad outlines of the best negotiation strategy should Syriza win the elections to be held three weeks later, on 17 June. Varoufakis set to work that same evening and developed the idea that the capital of the Greek banks must be taken over by the EU.

As Varoufakis puts it, this would amount to

turning Europe’s taxpayers into the owners of the Greek banks so that they were no longer the de facto liability of the Greek state but were backed instead by the European people, and by having the EU institutions run them on their behalf. This was the only way confidence in the banks could be restored.

As indicated in the first part of this series, in proposing that the shares in the country’s banks owned by the Greek State be transferred to the EU, Varoufakis was making an additional and dramatic step towards Greece’s complete surrendering of sovereignty. According to Varoufakis, the move would facilitate restructuring the public debt.

He added a second proposal:

Second, any repayments of the Greek state’s debt to the EU and the IMF arising from its two bailouts should be conditional on the country’s recovery first reaching a certain momentum. This was the only way the national economy could be given a chance to revive.

It’s important to point out that for Varoufakis the suspension of repayment of the debt we referred to earlier was part of the negotiations. But that suspension had to be authorised by the creditors and must not constitute a sovereign act. Varoufakis continues describing his fantasy:

Taken together, these two debt restructuring exercises would signal a new era: the EU and the IMF would no longer operate like a pre-Christmas Ebenezer Scrooge. Rather, they would become Greece’s partners in promoting its economic recovery, without which their bailout loans would be haircut savagely anyway.

Instead of unilaterally suspending repayment of the debt, Varoufakis proposed refusing any new credits:

If you are prepared to issue moderate, sensible demands and at the same time say no to their extending-and-pretending …, the EU and the IMF will most certainly come to the table — it would cost them too much not to, both financially and politically.

Tsipras had doubts about Varoufakis’s proposal concerning the Greek banks. "Are you advising me to call for the Greek banks to be given to foreigners? How can I sell this idea to Syriza?," Tsipras asked during a later meeting at the party’s offices.

"Yes, this is precisely what you must do,"

"...Alexis got it. But that did not mean he liked it. Particularly as Syriza’s central committee was naturally drawn to the idea of nationalizing the banks.

Nevertheless Tsipras objected: "without any influence over the commercial banks operating in Greece, he argued, it would be impossible for a government to implement an industry policy or a development and reconstruction plan. He just couldn’t see the Syriza central committee swallowing it."

Varoufakis, seeing that Tsipras “had a point,” responded:

As true internationalists, as progressive Europeanists, we would be taking bankrupt banks away from corrupt Greek privateers and handing them over to Europe’s common people, to the same European citizenry injecting their money into those banks.

The contacts Varoufakis described took place after the general election held on 6 May 2012.

Since it was impossible to form a government, a new general election was called for 17 June 2012.

Varoufakis explains that when he learned about Tsipras’s speech of 24 May detailing Syriza’s economic policies, he realised that there was a gulf between what was being proposed and what could concretely be implemented in the Eurozone. "Within an hour I had dispatched a long scathing email to both Alexis and Pappas which highlighted the numerous logical flaws in what they had just promised voters….”

Tsipras turned to the right and drew closer to Varoufakis after the May-June 2012 elections

I myself can contribute to Varoufakis’s narrative, since I had direct contact with Tsipras in October 2012.

In the space of a few months, the commitment to conducting an audit of the debt and in the meantime suspending repayment gradually disappeared from the discourse of Alexis Tsipras and the other Syriza leaders. This was done discreetly and the fifth measure proposed by Tsipras in May 2012 (see above) was replaced by a proposal to hold a European conference to reduce Greece’s debt.

In October 2012, during an interview with Tsipras, my suspicion that he was backing down was confirmed. Two days earlier, the Wall Street Journal had published the secret notes of an IMF meeting of May 9, 2010. It was clear that a dozen IMF Directors (out of a total 24) had opposed the Memorandum since it implied a bailout plan for the French and German banks, not Greece. I told Tsipras and his economic adviser: That is a solid reason for you to go against the IMF. If the IMF evidently knew that its programme would fail and the debt would not be sustainable, there is enough evidence for us to wage war against the illegitimacy and illegality of the debt.

Tsipras replied, “But listen ... the IMF keeps its distance from the European Commission.”

I could well understand that he was envisaging the IMF as a possible ally of Syriza in case the latter formed a government. I also told Tsipras that I had noticed that he was no longer talking about the five proposals he had advanced as being priorities after the May 2012 election and that the question of the audit was no longer being stressed. He answered without conviction that he was maintaining these five proposals and that there was nothing to worry about.

The next day, October 6, 2012, Tsipras and I spoke publicly in front of 3,000 people at the first Syriza youth festival. I realised that he did not appreciate my emphasis on the need for a radical outlook on a European scale. 15

I am convinced that it was after the May-June 2012 election that Tsipras and Pappas really made the choice to make Varoufakis part of a government. Until then, they met with him and get his ideas and then reflected on how to emancipate themselves from Syriza’s decisions.

Varoufakis again discusses his collaboration with Tsipras and Pappas in early 2013

Varoufakis tells how he wrote the speech Tsipras gave at the Brookings Institution, a Washington-based think tank closely linked to the Democrats. Varoufakis sums up the speech in two points. First, Syriza was a pro-European party that would do all it could so that Greece remained in the Eurozone; to remain in the Eurozone and in order for it to survive, a new plan was needed in which the priority of priorities was debt restructuring, followed by reforms that would reduce the influence of the Greek oligarchy on the economy. Second, the USA had nothing to fear from the economic or foreign policies of a possible Syriza government.

That orientation, defended by Varoufakis and supported by Tsipras, was clearly in opposition to the Syriza program that promised that Greece would leave NATO.

Varoufakis meets with the Syriza team of economists in May 2013

In May 2013, in Athens, Varoufakis met Tsipras’s team of economists.

As well as Pappas and Dragasakis, the shadow finance minister, it included two other Syriza members of parliament whom I knew and liked well: Euclid Tsakalotos, a dear colleague at the University of Athens, and George Stathakis, an economics professor from the University of Crete.

He submitted the proposed program Tsipras had asked him to write to them.

The mood in the room was ebullient, which confirmed that my earlier efforts to dissuade Alexis from turning Grexit into an objective, or from using it as a threat, had not been wasted. While I lost a great many friends on the broader Left and within Syriza, who never forgave me for my role in expunging Grexit from Syriza’s policy objectives, Alexis’s inner economic sanctum was evidently keen to pursue a viable solution within the eurozone.

A new “London Conference”? The hope for international cooperation versus “unilateral sovereign action”

I’d like to relate another personal experience concerning the second working meeting I had with Tsipras. It took place in Athens in late October 2013 in his office as member of the Greek Parliament.

Tsipras wanted to convene a major international conference on debt reduction in Athens in March 2014. This was one of his planned initiatives. Urged by Sofia Sakorafa, Syriza MP since 2012, Tsipras met me again in October 2013 and asked me to help with the preparations for such a conference by convincing a number of international personalities to accept the invitation. I had compiled a list of participants and I discussed it with Tsipras, Sofia Sakorafa, Kostas Bitsanis (Sofia’s husband) and Dimitri Vitsas, general secretary of Syriza at that time. I proposed to invite the following personalities to the conference: Rafael Correa, Diego Borja (former director of Ecuador’s Central Bank), Joseph Stiglitz, James Galbraith, Noam Chomsky, Susan George, David Graeber, Naomi Klein, as well as the members of Ecuador’s debt audit commission. The latter had worked with me in 2007 and 2008. I noticed that Rafael Correa, from my list, did not interest him at all. On the contrary, he wanted the former president of Brazil, Lula, and the president of Argentina, Cristina Fernandez. Ecuador was too radical for him, and of course he wanted Joseph Stiglitz and James Galbraith, which was justified. But his plan was not to launch an audit committee; it was to convene the various member countries of the EU at a European conference on debt, similar to the London Agreement of 1953, where the winners of World War II considerably reduced West Germany’s debt (See here and here). I told him that it would never happen. As the leader of Syriza, it was perfectly legitimate for him to propose that plan A, but it was absurd to think that Draghi, Hollande, Merkel, and Rajoy would agree. I told him that he needed a plan B which would include an audit committee. I also declared it to the Greek media. Here is an excerpt from an interview with me that the Daily Editors, near Syriza, published in October 2014. The journalist asked me what I thought of the European Debt Conference proposed by Tsipras, and I said,

Although this request is legitimate… it will not be possible to bring the governments of the main European economies and the EU institutions to the table on this agenda. The experience of the last ten years has shown that unilateral sovereign acts can get results. The creditors that reclaim the payment of an illegitimate debt and impose violent measures that attack fundamental human rights, including economic and social rights, must be refused. I think that Greece has strong arguments for forming a government that would have popular support for working in this direction. Such a popular leftist government could establish a debt audit committee that would include a large popular democratic participation. This audit committee would unilaterally suspend repayments and finally repudiate the part of the debt that it identifies as illegal and/or odious. 16

Finally, Alexis Tsipras asked me collaborate with him and Pierre Laurent (president of the Party of the European Left at that time) towards preparing for a European conference where debt would be one of the issues. It was to be held in March 2014 in Athens. This never materialised because during a meeting held in December 2013 in Madrid, the Party of the European Left had decided to hold a conference in Brussels, instead of Athens, during spring 2014. This Brussels conference had very little impact. Tsipras, Laurent, and Gabi Zimmer (member of Die Linke, Germany, and President of the parliamentary group GUE / NGL in the European parliament) were present among others. I participated as speaker in a panel along with Euclid Tsakalotos. 17 I realised straightaway that he did not at all support a plan B on debt, banking, and taxation. Tsakalotos’ plan was to negotiate with the European institutions at all costs in order to obtain a reduction of austerity without resorting to default and audit of debt. During this conference I again argued for a plan B including debt audit and suspension of debt payment.

So, the discussion on the need for a plan B did not start in 2015; it clearly goes back to 2013-2014. The leadership hub around Tsipras decided to exclude the groundwork of plan B and has stuck to plan A, which is an impracticable one.

Let’s go back to Varoufakis’s narrative. A few days after the meeting I had in late October 2013 in Athens with Tsípras, he went to Texas to a seminar organized by Varoufakis and his friend and colleague James Galbraith.

November 2013: Varoufakis organises an appearance by Tsipras at Lyndon B. Johnson School of Public Affairs in Austin, Texas

In November 2013 Jamie and I organized a two-day conference at the University of Texas on the theme ‘Can the eurozone be saved?’ with Alexis, Pappas and Stathakis attending and giving well-received speeches. The idea was to introduce the three Syriza leaders to establishment figures from Europe and the United States, trade union leaders, academics and journalists. …

During the conference he and Pappas were present at a heated debate between me and Heiner Flassbeck, a left-wing German economist and former junior finance minister in the Schroeder administration, who argued that Greece’s liberation from debtors’ prison was impossible within the eurozone. He maintained that Grexit was the correct objective for a Syriza government, or at least the best threat to use against its creditors — the same position as that of the Left Platform, an official faction within Syriza that numbered among its supporters one-third of Syriza’s central committee. It was in Austin that I became convinced of Alexis’s rejection of this position and his belief that if anyone were to threaten Grexit, it must be the troika, not Syriza.

June 2014: another meeting with Tsipras’ team of economists

“That June, back in Greece once more for the summer, I met Alexis and his economics team to warn them about a new threat." Varoufakis explains that he warned them about the action the ECB was planning to take from early 2015: shut off the flow of cash to the banks in certain countries of the Eurozone and make only emergency liquidity assistance available to them. Greece was one target of these measures.

“A couple of days afterwards, Alexis, Pappas and I met again. ‘Do you realize,’ asked Pappas, ‘that no one else but you can oversee the implementation of the negotiating strategy you are proposing? Are you ready to do this?’”

Varoufakis continues:

A week later, Wassily Kafouros, a dear friend from my undergraduate years in England, added to my misgivings. He asked me if I was the only person not to know that Dragasakis was extremely close to the bankers. I said I didn’t believe him. ‘Where is your evidence, Wassily?’ I demanded.

‘Evidence I do not have,’ he admitted, ‘but it is commonly known that he has made it his business, even back in his communist party days, to keep the bankers close.’

Varoufakis’s misunderstanding of Syriza and its leaders is clear here. Dragasakis had in fact had ties to bankers for years. He had been a board member of an average-sized commercial bank. He was a kind of bridge between Tsipras and the bankers. Syriza was a new formation, and therefore its political leaders had relatively few connections with the spheres of the State — unlike PASOK, for example, whose history is linked to the Republic and to management of State affairs. Whereas before January 2015, none of Syriza’s leaders had ever held a national position, and the only one who had been a minister at a given time, for a few months in 1989, was... Dragasakis. The government he served in was a coalition between the right-wing New Democracy and the Communist Party (KKE), of which Dragasakis was a member at the time. Dragasakis was clearly opposed to any measure that would be against the interests of the private Greek banks, and was also opposed to an audit of the debt and to suspension of payment. He was favourable to remaining in the Eurozone.

August 2014: doubts about Dragasakis and changes to Syriza’s program

In August 2014, Varoufakis finally shared his doubts regarding Dragasakis.

‘Alexi,’ I said, trying to sound as nonchalant as I could, ‘I hear Dragasakis is too close to bankers. And, generally, that he may be going along with our escape plans while in reality he is working to maintain the status quo.’

He did not answer right away. Instead he looked towards the Peloponnese in the distance, before turning back to me. ‘No, I do not think so. He is OK.’

I did not know what to make of his brevity. Did he harbour doubts too but on balance trusted in his senior comrade’s probity or was he dismissing my question? To this day I do not know the answer. What I do know is that he kept insisting I had no choice: when the moment came, I had to play a leading role in the negotiations. 18

Varoufakis confirmed that Tsipras could count on him, but on one condition: that he take part in developing Syriza’s economic program before the election. Tsipras accepted.

Varoufakis: against the Thessaloniki Programme of September 2014

A month later, back in Austin, I heard on the news that Alexis had delivered a major speech in Thessaloniki outlining Syriza’s economic platform. Gobsmacked, I got hold of the text and read it. A wave of nausea and indignation permeated my gut.

Varoufakis made a public statement harshly criticising the program and fully expected it to put an end to his collaboration with Tsipras.

But in a dramatic turn of events, Pappas telephoned him, “sounding chipper and as if nothing had happened” and proposed another meeting. Varoufakis expressed astonishment and Pappas answered: “‘It changes nothing,’ he retorted light-heartedly. ‘You will get to shape the actual economic programme. The Thessaloniki Programme was a rallying call for our troops. That’s all.’”

Under those conditions Varoufakis agreed to continue the collaboration, and eventually agreed to become Minister of Finance. He explains that the following exchange took place during the meeting during which he agreed:

‘As you know,’ I said, ‘I have serious reservations about the Thessaloniki Programme. Indeed I have very little respect for it and, given that it has been presented as your pledge to the Greek people on economic matters, I cannot see how I can, in all honesty, assume the responsibility of implementing it as finance minister.’

Predictably, Pappas jumped in at this point to restate his insistence that the Thessaloniki Programme was not binding for me. ‘You are not even a member of Syriza,’ he pointed out.

‘But would I not be expected to join if I am to become your finance minister?’ I asked.

Alexis interjected with a studied response: ‘No, under no circumstances. I don’t want you to become a member of Syriza. You need to remain unburdened by our party’s tortuous collective decision-making.’


Varoufakis was a free agent, without influence inside Syriza (of which he was not a member). Tsipras felt that if need be he could revoke Varoufakis’s appointment without causing a major disturbance within the party. Varoufakis’s profile corresponded to the casting defined by Tsipras and Pappas: an academic economist, brilliant, and a good communicator who can use both provocation and conciliation with a smile, and with a perfect command of English.

Alexis Tsipras decided to operate in a small group behind the back of his own party rather than implement a political orientation that had been decided on collectively within Syriza and approved democratically by Greece’s people. Appointing Yanis Varoufakis Finance Minister and recommending that he not become a member of Syriza reveals a technocratic approach to governance in which Varoufakis would not be responsible either to Syriza or to Greek voters, but only to Tsipras and his small circle. It is clear that this absence of popular participation and failure to take a democratic approach to setting the political orientation was not compatible with a Leftist government’s need to rely on popular mobilisation to ensure application of the radical political program on which it had been elected. A review of events between 2011 and late 2014 is indispensable for understanding what happened subsequent to Syriza’s election victory in January 2015.


1. Y. Varoufakis, Adults in the Room, Bodley Head, London, 2017, chap. 3, p. 57. All citations are from chapters 3 and 4.

2. See the text of this letter in James K. Galbraith, Welcome to the Poisoned Chalice: The Destruction of Greece and the Future of Europe, Yale University Press, 2016.

3. Five years later, Leonidas Vatikiotis would be part of the Truth Commission on Greek Debt.


5. In January 2015, Costas Lapavitsas was elected from Syriza to the Greek parliament. After the capitulation he helped found the Popular Unity. His biography is available here:

6. Article published by the daily Eleftherotypia on 5 December 2010. See: (in French) (Translation: CADTM)

7. In 2011, the centre-left Ethnos tis Kyriakis was the third Greek daily in terms of circulation (100,000 copies). The interview was originally published in Greek on 9 January 2011, For an English translation see:

8. In a book published in 2016, Varoufakis does not at all mention the Truth Committee on Greek Public Debt. He also does not mention the action of Zoe Konstantopoulou, the President of the Hellenic Parliament. The book is: And The Weak Suffer What They Must?: Europe, Austerity and the Threat to Global Stability by Yanis Varoufakis, published by The Bodley Head, London, 2016.

9. See ΣχόλιαΓιάνης Βαρουφάκης Debtocracy: Γιατί δεν συνυπέγραψα (in Greek), published 11 April 2011. In this long letter, Varoufakis also gave his critical opinion on the documentary Debtocracy.

10. Concerning Debtocracy, see: “Debt: The Greeks and Debtocracy”,, published 18 March 2012.

11. See the slideshow of my presentation here:
See my main proposals in this presentation here: Eric Toussaint. Eight key proposals for another Europe, published on April 17, 2011.

12. Elena Papadopoulou and Gabriel Sakellaridis (eds.), The Political Economy of Public Debt and Austerity in the EU, Athens, Nissos Publications 2012, 290 p., ISBN : 9-789609-535465. It will be useful to reproduce the contents of this interesting book as the names of the key players from Syriza appear there.

Table of Contents:

Elena Papadopoulou and Gabriel Sakellaridis: Introduction. (Gabriel Sakellaridis was the Syriza spokesperson in the Greek parliament in 2015. He resigned in December 2015 due to his disagreement with the implementation of the third memorandum. He is no longer a member of Syriza.)

Section 1 - Understanding the European Debt Crisis in a Global Perspective
George Stathakis: “The World Public Debt Crisis.” (George Stathakis is the present Minister for energy and Environment. He was part of Syriza’s right wing and was totally opposed to the Greek debt audit. At the end of 2015, the press reported that he had not declared € 1.8 million and 38 properties to the tax authorities)

Brigitte Unger: “Causes of the Debt Crisis: Greek Problem or Systemic Problem?”

Euclid Tsakalotos: “Crisis, Inequality and Capitalist Legitimacy” (E. Tsakalotos is the Finance Minister since July, 2015).

Dimitris Sotiropoulos: “Thoughts on the On-going European Debt Crisis: A New Theoretical and Political Perspective.”

Section 2 - The Management of the Debt Crisis by the EU and the European Elites

Marica Frangakis: “From Banking Crisis to Austerity in the EU - The Need for Solidarity.”

Jan Toporowski: “Government Bonds and European Debt Markets.”
Riccardo Bellofiore: “The Postman Always Rings Twice: The Euro Crisis inside the Global Crisis.”

Section 3 - Facets of the Social and Political Consequences of the Crisis in Europe

Maria Karamessini: “Global Economic Crisis and the European Union - Implications, Policies and Challenges.”
Giovanna Vertova: “Women on the Verge of a Nervous Breakdown: The Gender Impact of the Crisis.”
Elisabeth Gauthier: “The Rule of the Markets: Democracy in Shambles.”

Section 4 - The PIGS as (Scape)Goats

Portugal - Marianna Mortagua
Ireland - Daniel Finn
Greece - Eric Toussaint
Spain - Javier Navascues
Hungary - Tamas Morva

Section 5 - Overcoming the Crisis: The Imperative of Alternative Proposals

Yiannis Dragasakis: “A Radical Solution only through a Common Left European Strategy.”

(Y. Dragasakis has been the Deputy Prime Minister in both the first and second Tsipras governments)
Kunibert Raffer: “Insolvency Protection and Fairness for Greece: Implementing the Raffer Proposal.”
Pedro Páez Pérez: “A Latin-American Perspective on Austerity Policies, Debt and the New Financial Architecture.”
Nicos Chountis: “The Debt Crisis and the Alternative Strategies of the Left.”

(N. Chountis was the former Alternate Minister for European Affairs in the first Tsipras government. Tsipras ousted him for his refusal to capitulate. Since September 2015 he has been Popular Unity's MEP).
Yanis Varoufakis: “A Modest Proposal for Overcoming the Euro Crisis.”

Section 6 - The Crucial Role of the European Left - Political Interventions

Alexis Tsipras: “A European Solution for a European Problem: The Debt Crisis as a Social Crisis”
Pierre Laurent: “People Should Not Pay for the Crisis of Capitalism”

The book is freely available in PDF format here.

13. Daniel Munevar also took part in this discussion. Daniel was one of Varoufakis’s team of advisors when he was Finance Minister.

14. Source

15. See Eric Toussaint: “The Greek people are currently at the epicentre of the capitalism crisis.”

16. See Eric Toussaint: “Alexis Tsipras is right to call for an international conference on debt” The original Greek version is available here :

17. Euclid Tsakalotos was Professor of Economics in the UK in 2014. He replaced Varoufakis as the Finance Minister from July 2015. He still holds this position in the second-term government of Tsipras.

18. Varoufakis, Adults in the Room, Bodley Head, London, 2017, chap. 4, p. 85. The following citations also come from Chapter 4.

[book-strip index="1" style="display"]
Against the Troika

Against the Troika

On the 25th January 2015 the Greek people voted in an election of historic importance—not just for Greece but potentially all of Europe. The radical party Syriza was elected and austerity and the...
Greece and the Reinvention of Politics
In a series of seven trenchant interventions Alain Badou analyses the decisive developments in Greece since 2011. Badiou considers this Mediterranean country “a sort of open-air political lesson”, ...
Crisis in the Eurozone
First, there was the credit crunch, and governments around the world stepped in to bail out the banks. The sequel to that debacle is the sovereign debt crisis, which has hit the eurozone hard. The ...
The EU
With Britain leaving the EU, now is the time for an obituary for the EU as an institution. In this short, rigorously argued book, updated after Brexit, John R. Gillingham tells the history of an id...

Filed under: eurozone, greece, yanis-varoufakis-s-account-of-the-greek-crisis-a-self-condemnation