Eurogroup: A ruthless gang

By Leonidas Chrysanthopoulos
Ambassador ad honorem
October 18,2018

Reading the last book of Y.Varoufakis,”Adults in the Room-My Battle with Europe’s Deep Establishment”,the interest of the reader may focus on the disgraceful methods employed by the members of the Eurozone and the EU against Greece in order to obtain the third MOU.Not that this is not known,but we now have a first hand account from the person who negotiated with the troika during the first months of 2015,which was Y.Varoufakis.

The methods used also indicate the difficulties that the first anti-memoranda government of Greece will have to face ,but by publishing them,the  preparation of  effective  counteractions is allowed..

The Eurogroup is an informal group of the ministers of finance of the eurozone .The EU Treaty in its Protocol 14 articles 1 and 2 mentions about these informal meetings.

The Eurogroup used the following methods against Greece during the first six months of 2015 when the country was considered as an enemy state.The examples are mentioned indicatively.

1.Extreme verbal pressure
2.Effective blackmail
4.Use of Greek turncoats
5.Pressures to third countries to abstain from financing Greece
6.Use of the major mass media networks of Europe for disinformation campaigns against Greece.

1.Extreme verbal pressure. 

On January 30,2015 during the first meeting of the President of the Eurogroup Jeroen Dijsselbloem with the Greek Minister of Finance Y.Varoufakis,after a long conversation,the Dutch Eurogroup President issued the following ultimatum:”The current program must be completed or there is nothing else.”On the margins of the first Eurogroup meeting in 2015,Christine Lagarde,the IMF’s Managing Director told Y.Varoufakis:”These targets they insist on can’t work(referring to the Troika programme on Greece).But you must understand that we have put too much on this programme.We cannot go back on it.Your credibility depends on accepting and working with this programme.”In March 2015,during a meeting he had with Klaus Regling,head of the EFSF,Y.Varoufakis asked him the following question”Given that,as it seems,in a week or two we shall run out of money with which both to repay the IMF and to pay salaries and pensions,what do you advise me to do Klaus? The choice is between defaulting on the old and frail or defaulting to the IMF.Which is of course an unecessary dilemma given that our central bank(ECB) owes us a similar amount.”,only to receive the following reply”You must never,ever default to the IMF.Suspend all pension payments instead.This is what you must do.”What a wonderful example of the EU’s social policies!Just before the Eurogroup meeting of june 27,2015,,Y.Varoufakis met with Dijssebloem,Weiser and Sapin,who pushed him to have the referendum cancelled.Another practice undermining the Greek positions was whenever the Greek minister took the floor during Eurogroup meetings  and presented concrete compromise proposals,a silence usually followed,organised on purpose,where no other minister took the floor to comment on the proposals,thus allowing Dijssebloem to close the discussion with negative conclusions.

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2.Εffective blackmail

Εffective blackmail was in fact committed by the European Central Bank against Greece,and particularly by its President Mario Draghi.In the meeting that Y.Varoufakis held with him on February 4,2015 ,and after having listened to the Greek proposals,Draghi replied by saying”And I must tell you that recent developments in Greece are putting us in a difficult position.Later today our governing board is meeting and it is very likely that your waiver will be withdrawn.”(The waiver allowed the ECB to provide Greek banks with liquidity in return for junk collateral.)The decision was taken that same evening and Greek banks were excluded from this liquidity and coud now only get liquidity by the ELA ,which was more expensive.In its meeting of March 4,the governing board of the ECB did not revoke its previous decision in spite of the fact that the loan agreement had been extended until June 30 by the Eurogroup tele -conference of February 24,which was a precondition for bringing back the waiver.When the Eurogroup of June 27 rejected rejected the extension of the loan agreement until 30 July so that the referendum can take place,on the 28th,the governing board of the ECB,revoked the ELA facility of the Central Bank of Greece,in an effort to influence the outcome of the referendum.

3. Non-truths

Αfter the impasse of the Eurogroup of June 27,Dijssebloem announced that for the first time there will be a joint communique without the agreement of Greece and in the afternoon meeting Greece would not participate.Y.Varoufakis then asked the Secretariat:”Is the Eurogroup president at liberty to issue communiques when there is no unanimity and also to exclude finance ministers at will from Eurogroup meetings”.The reply he got was the following:”Minister,the Eurogroup does not exist in law,as it is not part of any of the EU treaties.It is an informal group of the finance ministers of the eurozone member states.Thus there are no written rules about the way it conducts its business,and therefore its president is not legally bound.”The reply was erroneous since Protocol 10 of the EU Treaty,in its articles 1 and 2 mentions about the informal meetings of the ministers of finance of the eurozone.Had Varoufakis insisted he could have remained in the meeting ,but nothing ,of course would have changed.On February 4 in the evening Y.Varoufakis  was scheduled to have a secret dinner with Jorg Asmussen  and Jeromin Zettelmeyer,both key players in SPD.As Varoufakis writes in his book:”The purpose of the dinner was ostensibly to build bridges between the Syriza government and the section of the German Government controlled by the Social Democrats… The agreement was that I would go to the restaurant alone,incognito and by cab,and that I would not tell anyone we were meeting.The implication was that it would backfire on all of us if word leaked… Just as I was ready to to leave my hotel room,I received an e mail from Jeromin telling me that they had changed the restaurant booking because the original restaurant was too public,confirming once more the importance of discretion.”Some time later Asmussens phone rings and without saying anything on the phone gave it to Varoufakis.It was Draghi who announced to him the withdrawal of the waiver.

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It seems thaτ all Berlin knew with whom Varoufakis was having dinner that night.

4.Use of Greek turncoats.

Y.Varoufakis mentions two strong supporters of the Troika,the first one being the Governor of the Bank of Greece Y.Stournaras,who from his position did everything possible to support Troika policies and the other being G.Chouliarakis who was the Troikas man in the Eurogroup and President of the Council of Economic Advisors.He represented Greece in the working group of the Eurogroup and as a close advisor to Y.Varoufakis did everything possible to undermine his work.Today he is alternate Minister of Economy.

5.Pressure to third countries to abstain from financing Greece.

Particular and effective pressure was exercised on China.Varoufakis writes:”The intention was to restart the formal bidding process for the port of Piraeus under the new conditions that the Chinese had accepted,while behind the scenes the two governments agreed the Chinese loans to the Greek state…….First Beijing would inject the remaining 1.4 billion euros of the promised 1.5 billion into our T-Bills(Treasury Blls).Almost simultaneously the Deputy Prime Minister Dragasakis would make a formal trip to Beijing to strengthen relations between the two governments and informally seal the agreement.Lastly Alexis(Tsipras) would follow up with a full state visit in April or May to make public and sign the the comprehensive agreement between Athens and Beijing.”  At the end China purchased only 200 million euros of T-Bills.To quote again Varoufakis.”The next day Alexis relayed the news from Beijing.Someone had called Beijing from Berlin with a blunt message: stay out of any deals with the Greeks until we are finished with them.”In a footnote Varoufakis observes:”…Also lost was Beijing’s readiness to help the Greek state get back on its feet (by buying government bonds)when one day it regains solvency.In other words,Greece lost a strategic industrial partnership that went far beyond a port deal”. This constitutes a fine example of european solidarity.

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6.Use of major mass media networks of Europe to discredit the Greek Government.

The europeans had mobilized the major mass media networks to discredit the Greek government from the outset and to perform character assassination against Y.Varoufakis.He writes:”Of course it was the worse kept secret in Brussels and beyond that I was to be targeted in this way.In early February 2015,around the time of my first two Eurogroup meetings,some greek journalists were told as much by a reporter with first hand knowledge of the campaign.One of those Greek journalists later reported the conversation.Will mr.Varoufakis be able to survive the pressure ?asked the reporter.At least mr.Tsipras still trusts him ,we[the Greek journalist ]replied.Then inform them in Greece,both the government and the people,that they can expect even more of these attacks ,he said.” Which is exactly what happened.This can be called as “freedom of a manipulated mass media.”

After such a treatment,one may ask why is Greece still in the eurozone and in the EU.An entire country has been destroyed in order to implement economic policies that all knew and admit that would not work.Even W.Schauble,replying to a question of Y.Varoufakis ,if he would sign the memorandum,were he in his place,replied in a moment of sincerity:”As a patriot no.It is bad for your people.”

Finally in order to get rid of the bonds of the Memoranda,Greece must rely only on itself and on its people and once it has been freed from these bonds,only then will other external factors may come for assistance.