I hope you will forgive me if I correct a basic misunderstanding that is embedded in the question in a way that is totally understandable. This is not how I saw or experienced things. I didn’t see the referendum as a way of continuing the fight.
Sadly, my former comrade Alexis Tsipras called the referendum not to win it but to lose it. He had already capitulated, and I was already on the way out while maintaining my position in the finance ministry.
In order to explain what happened with the referendum and how we got to the third bailout program, which wrecked the Left and wrecked the Greek people and rendered Greece a nonviable social economy, I need to start right at the beginning. As I said earlier, Greece was in a debtors’ prison, unless our debt was substantially written off or manipulated in such a way as to be the equivalent of a write-off.
There are very innovative ways of disguising a write-off — debt swaps and this and that. This is what I was proposing to them as a face-saving exercise for the Troika. If you are going to do that, the only way you’re going to be able to do that is if you are ready to walk away. You have to be prepared to imagine exiting the negotiating room and saying, “Folks, there’s an impasse. I’m going to go my own way.”
What does going your own way mean? It means printing your own currency and defaulting on your debt in euros, because if you don’t have the euro, you cannot repay your huge debt in euros, and you suffer the consequences for that, but you regain your autonomy and monetary sovereignty, and you try to start afresh. Unless you’re prepared to do that, there’s no point in entering the negotiating room.
This is what I had said to my colleagues. Of course, it’s not just a question of pressing the nuclear button and saying, “I am stepping out, and I am leaving the eurozone.” There have to be gradations — you must have weapons in between that you must activate to signal your intention to walk out if need be. If you don’t do that, you might as well not get elected.
You’d never enter a negotiation if you were a trade unionist where you couldn’t even imagine walking out. That’s negotiations 101. The only reason why I accepted the finance ministry was because I had put to Alexis Tsipras a very specific proposal of what we needed to do.
I said to him, “Look, the moment we get elected, they will call you from Frankfurt or Brussels or Berlin, and they will say to you, ‘Congratulations, sign on the dotted line or we close down your banks.’ You have to have an answer to that. You have to have a deterrence plan for stopping them from doing it.”
I had come up with an idea. I still believe that if I had been allowed to use that weapon, they would not have shut down our banks. It was a technical issue, but effectively it concerned a small amount of debt that we owed to the ECB. If I was to restructure that debt, writing off part of it or even delaying repayment, it would have a knock-on effect.
I could have done this simply with an executive order from the ministry of finance — I had it on my desk; all I needed to do was to sign it. The ECB president Mario Draghi only had one thing on his mind: how to save Italy from falling into the same black hole by buying Italian public debt. For complicated reasons, he would not have been able to buy Italian public debt if I had been allowed to put my signature to that order.
That was my deterrence plan. I did essentially tell Draghi that if he shut down my banks, I was going to sign the document, and he wouldn’t be able to buy Italian debt. I believe that could have been enough to prevent that major move, which was effectively financial terrorism, to shut down our banks in order to blackmail the Greek people into accepting the third bailout.
The tragedy was that early on, I realized that my prime minister was very reluctant to let me do that. We had agreed on it as a condition for me accepting the Finance Ministry appointment, but he was preventing me from doing it. He was postponing action, saying, “We’ll do it next week.”
At some point, I discovered that two and a half months after I became finance minister, a message went from the office of Tsipras to Draghi’s team at the ECB: “Don’t worry about Varoufakis; we won’t let him do it.” This was a bit like sending David into the battlefield against Goliath having stolen his catapult.
I had a catapult — I thought it was a nuclear weapon — maybe it was a catapult, maybe it was a nuclear weapon. But it was stolen. I knew early on that it wasn’t looking good. We were elected in January. By June, the negotiations were not going anywhere, because why would they negotiate with us when our side was sending messages that we were not prepared to walk away and use our weaponry?
The reason why I didn’t resign was because I believed that as long as there was a 5 percent chance that the prime minister would come to his senses and fight on, I needed to be there to help him.
In addition, our people out there had no idea of what was going on behind the scenes. They were jubilant that at long last, there was a government fighting for them. If I had simply resigned out of the blue, it would have been a disaster for the morale of our people.
By June 20, it was clear that my prime minister was trying to surrender. But they wouldn’t let him, because they wanted to drag him through the mud. As you mentioned, you had the Labour Party minister telling the Sinn Féin people in the Irish parliament, “this is what happens when you vote for parties like Syriza.” Mariano Rajoy, the conservative prime minister of Spain, said to the Spanish people, “This is what you will get if you vote for Spain’s Syriza,” meaning Podemos.
At that point, they wouldn’t let him surrender. He had sidelined me, even though I was still the finance minister. I was there simply egging him on, “Come on, overcome your urge to surrender. Let’s keep fighting.” He called the referendum because he saw it as a way out.
He was convinced we would lose it, which was not so irrational of him when you think about it. In the first election of 2012, our party jumped from 4 percent to 17 percent of the vote. In 2015, we formed a government with 36 percent of the vote. Thirty-six percent is not a crushing majority — the majority were still voting against us.
Even though we had immense support during those five or six months of fighting with the troika, you have to remember that it shut down the banks so there would be five working days before the referendum on Sunday with people not able to access their own deposits. Tsipras was thinking that with every day of the banks being shut, we would be losing support, and all you need to do to lose a referendum is not get 51 percent.
From his perspective, he thought he was going to lose it. It wouldn’t have been such a great loss for him, because if he had scored 40 or 45 percent in favor of saying “no” to the troika, he would have pushed our percentage from 36 to 40 or 45 percent. He would have been able to claim this as a personal victory, while at the same time, he would have had a mandate to surrender to the troika, which he didn’t have before.
That is why, on the night of Sunday, July 5, he collapsed when that remarkable number lit up on our screens, with 61 percent saying “no” to the troika offer. I went to his office, and it was like a wake. He had black circles around his eyes. I went in there celebrating, and he was on the floor.
He said to me, “It’s time to surrender.” I said, “No, it’s exactly the opposite — people out there are celebrating — we have an ethical and political duty to fight on.” That’s how it happened.