Adults in the Room: My Battle with Europe’s Deep Establishment by Yanis Varoufakis (review)

Yanis Varoufakis—an articulate, Western-educated economist and a self-professed game theory fan—was appointed minister of finance in the first anti-austerity, left-wing SYRIZA-led government that came to power in Greece in January 2015, following two emergency bailout agreements (also known as “memoranda”) and nearly six years of sharp tax hikes and deep wage and pension cuts imposed by the lenders (the so-called Troika): the International Monetary Fund (IMF), European Central Bank, and European Union. Even though Varoufakis’s stint lasted a mere 162 days (January–July 2015), his tenure was nothing short of dramatic, associated with intense and often very public sparring with representatives of Greece’s lenders, threats of Grexit, and the imposition of capital controls. Shortly after leaving the post, Varoufakis promised an account of his tumultuous days at the helm of the country’s economy. And he delivered. Although self-serving, as is the case with nearly all memoirs, Adults in the Room is a first-hand account detailing the suspenseful events, the twist and turns, and the roles and behavior of the key players involved in what is arguably the most dramatic chapter in the sovereign debt saga that has engulfed Greece since 2008. The former minister’s chronicle is based on his recollections, notes he kept during official meetings, conversations with various participants, “corroboration of other witnesses,” as well as “audio recordings that [he] made on [his] phone.”

Until the crisis hit, political power in Greece alternated between the center-right New Democracy party and the center-left Panhellenic Socialist Movement (PASOK). But the suddenness and severity of the crisis diminished these two political formations and catapulted to power the anti-austerity SYRIZA led by the young and inexperienced, but telegenic, Alexis Tsipras. Before its advent to power, SYRIZA was a marginal amalgam of various leftist groups—akin to a protest group rather than a political party—that struggled to meet the 3 percent threshold of the vote required to enter parliament. SYRIZA promised that upon taking office it would tear up the memoranda, restore salary and pension cuts, roll back tax increases, and demand immediate and total debt forgiveness. All this would be accomplished through tough and proud negotiations with the lenders. Varoufakis was chosen as the point man to bring this about. Although he did not seem to disagree with his party’s declarations, he claims that as a candidate for parliament the only promise he made was that he “would do everything [he] could to rescue [his] country from the debt bondage and crushing austerity being imposed on it by its European neighbors and the IMF.”

Varoufakis’s approach emanated from two premises. One, the Greek debt was fundamentally an EU problem. Nothing but “a cynical transfer of losses from the books of Franco-German banks to the shoulders of Europe’s weakest taxpayers (the Greeks).” In his view, Greece did not owe money to EU creditors because they had loaned funds that were not theirs. The bailout funds came from contributions from eurozone member states—like Slovakia and Finland—who had been duped into believing “they were having to shoulder another country’s (Greece) debts.” The second premise was that given the gargantuan and growing size of the debt, there was no way a bankrupt Greece could meet the terms of the loan agreement spelled out in the two memoranda that previous governments had signed. With an evident penchant for publicity and clad in jeans and untucked shirts, Varoufakis trotted to various EU capitals, as well as the United States, to expose the reality of “what the Greek bailout had been about” and ask for debt relief. As a game theory advocate, he reckoned that the threat of Greek default would hold very serious and unmanageable consequences for the future of the EU, forcing them to give in to his demands of favorable consideration...