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A Finance Minister Fit for a Greek Tragedy?


Yanis Varoufakis knows when he will go. “I’m not going to humiliate myself, and I’m not going to become compromised in terms of principles and in terms of logic,” he told me in early May. The Greek finance minister had just returned to Athens from a hopscotch tour of European capitals, during which he warned his fellow European leaders that they faced a Continental crisis: If they didn’t lend money to his ailing country soon, Greece might end up forced to leave the eurozone. And yet Greece wouldn’t accept many of the conditions they were demanding in return. He sounded angry. “I’ll be damned if I will accept another package of economic policies that perpetuate this same crisis. This is not what I was elected for.” He would resign, he said, rather than push the Greek people deeper into economic despair: “It’s not good for Europe, and it’s not good for Greece.”


Varoufakis has been Greece’s finance minister for only four months, but the story of how he has thrown Europe into turmoil is one many years in the making. After Greece joined the European Union’s monetary union in 2001, the tiny country of 10 million was flooded with money from elsewhere on the Continent. Over the course of the next decade, Greek leaders, whose sclerotic and corrupt economy had long been rife with patronage and tax evasion, borrowed billions from imprudent European banks and then lied to E.U. officials about its mounting debts. When the financial crisis finally rolled into Greece in 2009 and 2010, the country was an estimated $430 billion in debt, a staggering figure that imperiled the economic health of its near and distant neighbors — indeed, all of Europe. The European Commission, International Monetary Fund and the European Central Bank (often referred to as the troika) agreed to bail out the sinking economy by loaning it $146 billion. In return, as Athenians rioted in the streets in protest, the government promised the troika it would reduce state spending by slashing pensions and wages, eliminating jobs and raising taxes, an approach to debt reduction known as “austerity.”

That bailout, along with another, even larger rescue in 2012, temporarily buoyed Greece, but the spending cuts have produced what many Greeks consider to be a humanitarian crisis. Twenty-five percent of the country’s population is unemployed; Greece’s gross domestic product has shrunk by a quarter; suicides and homelessness have increased; hospitals, woefully underfunded, scrounge for medicines. Just this month, Varoufakis warned that the country could run out of money in weeks.


In successive elections after the crisis, both dominant political parties — Pasok and New Democracy ruled Greece for the last 40 years — failed to transform the Greek economy or protect its people. In January, more than a third of the electorate voted into power the Coalition of the Radical Left, a collection of older leftist parties now known as Syriza, which pledged to end austerity. Its ascendance amounted to a kind of democratic revolution. Its victory, however, threatened an ominous evolution for the eurozone: The rise of a “radical” party in the region has frightened conservative and centrist European leaders facing anger at home amid declining living standards. And while most of Syriza’s officials, including its leader, Prime Minister Alexis Tsipras, want to stay in the eurozone, as much as a third of Syriza’s membership would be willing to abandon the euro to avoid more austerity. It’s an outcome more likely than ever before, and its consequences are frightening and unknowable.

The European Union has been a project in the making since the end of World War II, but its monetary union, the eurozone, is only 16 years old. There is no agreement on what might happen if a country were to leave it. A result could be catastrophe, especially for Greece itself, which would have to return to its former currency, a drachma vastly reduced in value. Banks could close, savings evaporate, businesses collapse, medicine and petroleum and all sorts of other goods become impossible to import. The uncertainty alone — could Greek companies or the state pay its bills? — would scare off foreign investment. Globally, meanwhile, the markets fluctuate every time bad news comes out of Greece.

Whether the eurozone as a whole is now prepared for these sorts of disruptions, as some experts believe, Greece’s official creditors, some of which are European governments, would still have to absorb losses. And the symbolic and moral failure of a union and monetary zone designed to prevent ethnic conflict and ensure prosperity for all European citizens would be incalculable. If the “Grexit” comes to pass, could Spain be the next country to leave? Could Italy? Without the Parthenon, without La Sagrada Familia, without the Colosseum, what is a European “union”?

These concerns clouded Syriza’s triumph, and in February the party faced the disheartening task of somehow wrenching a new agreement from Europe. During the campaign, Syriza promised its voters a range of seeming impossibilities that ran directly counter to the political realities inside the European Union. Austerity would end; the next installment toward paying off the second bailout would not happen; above all, dignity would be restored. At the same time, Syriza was now vowing to remain in the euro. As someone joked to me, Syriza essentially hoped that 1 plus 2 could equal 4. To negotiate an agreement that might accomplish this seemingly impossible outcome, Tsipras decided to send a pugnacious economist named Yanis Varoufakis.

It was a startling choice. Varoufakis is neither a politician nor a banker by training. He has been one of the most visible and vociferous critics of the Greek government, the European establishment and the Greek-European bailout. Imagine that President Obama had, instead of picking Timothy Geithner to be his Treasury secretary in the midst of the financial crisis, appointed a progressive academic economist like Paul Krugman or Joseph Stiglitz, only edgier and funnier, someone who had spoken out scathingly against bank bailouts, freely expressing himself however he wanted on television and in public debates because he wasn’t running for office. His popularity was undeniable, though. When Syriza did put Varoufakis on the ballot for Parliament in January, despite the fact that he was living in Austin, Tex., at the time, he won more votes than any other candidate.

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Tratto da www.nytimes.com