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Economy Professor Sent Open Letter to Greek PM – Invites Him to Syntagma Sq

“The policy of government and the Troika is on deadlock” said for one more time Yanis Varoufakis,  professor for economic theory at the University of Athens. Varoufakis, one of the main Greek opponents of the austerity program and the applied economic models,has repeatedly stressed that even if Greece achieves all goals by 2015, the public debt will have reached 200% of GDP in  three years. Such an unbearable loan cannot help and in 2013 a major restructuring will be imminent. He considers a European Marshall Plan as an alternative to Greece’s and Euro crisis. Now, Varoufakis has issued an open letter addressed to Prime Minister George Papandreou. and he even invites him to join Monday’s open discussion at Syntagma Square…

Open letter to the Greek Prime Minister, 6 June 2011

 Dear George,

A few days after the 2009 election that brought you to power, you told your cabinet in a televised meeting: “We are anti-authoritarians in authority”. Most of your cabinet, men and women who had been craving authority for years, looked at you incredulously, while your detractors mocked you. You seemed rather lonesome at that moment. And yet, to the degree that I know you, you were utterly authentic in uttering that thought.

Since then much poisoned water has flowed under the proverbial bridge. The utopian declarations were swamped by an angst-ridden effort to save the country. It forced you not only to clench your teeth, and to drown out your utopian self, but also to renounce some of your basic convictions about what ought, and what ought not, to be done by those in authority. To the extent that I know you, I am convinced you considered your harsh decisions to have been the best of a hideous lot. And I can imagine your loneliness just after you took each one of them.

Thus we arrived in May 2010, a juncture where you were ambushed by the most momentous decision any peacetime Prime Minister has had to face hitherto. You know that we disagreed on whether it was the correct decision. It matters little now. They convinced you that the deal you put your signature to was a genuine bailout; a lifejacket offered after a shocking shipwreck for the purposes of allowing the shipwrecked a chance to buy time and find their way, through stormy waters, toward some terra firma. I considered the same ‘bailout’ a massive ball-in-chain, attached to our collective ankles, dragging the whole of the eurozone toward the bottom (surplus and deficit nations alike, North and South bound together in a deathtrap). You chose to follow the advice of your councilors, and of the captains of finance, judging that the ‘bailout’ was, indeed, buying you precious time. Nevertheless, to the extent that I know you, your decision filled you with angst and sadness.

For months now you knew that the ‘bailout’ was failing because it was in its DNA to fail (and not because it was not followed as best as it could have been by your government). We, economists, as you well know, disagree on almost everything. History has, however, taught us two lessons: (1) You cannot save the bankrupt by means of expensive, new loans; and (2) Swinging austerity cannot and will not reduce the deficits and debts of a macro-economy caught in a savage recession, especially when it is unable to devalue its currency and, to boot, forced to operate in a recessionary global and regional environment. Last year’s ‘bailout’ violated both principles. Is it any wonder it failed?

Did you not know that it would? It is possible that you were hoping for a miracle of an economic (e.g. some major spurt of growth in the European economy that would help drag Greece out of the mire) or perhaps a political kind (some visitation upon Mrs Merkel by the holy spirit). Alas, it did not come. And now you are being called upon, for a second time in a year, to go against the grain of you beliefs, your facts, your instincts, your experiences (of the past year, at least). They tell you, just as they did last year: “Prime Minister, think of what will befall our nation if we do not secure fresh loans. How will we pay public sector wages and pensions?” To the extent that I know you, I know that you are biting your tongue.

Some months ago you became acquainted with a simple three step policy, called the Modest Proposal for Overcoming the Euro Crisis. My information is that you think of this proposal highly, both in terms of its technical merits and of its potential political appeal (even amongst German, Dutch, Austrian and Finnish audiences). Indeed, you have been recently informed that this proposal has been adopted by the European Trades Union Council, at the behest of its German and Austrian chapters.

As you know, the three policies inherent in the Modest Proposal address effectively (and without invoking the need for any substantial amendment to the Lisbon Treaty) the three sub-crises: (A) The banking crisis that is raging within the eurozone from France to Greece and from Germany to Spain; (B) The sovereign debt crisis that is dragging the periphery down (and along with it the ECB and the surplus regions of the eurozone), and (C) The crisis of under-investment that only a pan-European investment-led recovery program can deal with, thus putting the lasts nail in the Crisis’ coffin. If I thought you disagreed with this Modest Proposal, I would not have referred to it here. But I very much… fear you agree with it. (If not, please say so.)

You may say: “Let’s say I agree with your proposal. How can I, as PM of a small, bankrupt nation, go to Brussels and propose a revamp of the whole of the eurozone? Especially when my present advisors tell me to drop any such ideas?”

If you do say this, my answer will be: How can you, as PM of a small, bankrupt nation, go to Brussels to accept a new multi-billion loan which will, under all plausible assumptions (even if all privatisation and spending cut targets are met to the full), fail to slow down (let alone reverse) the explosive path of the country’s national debt? How will you, and the other EU leaders, deal a year from now with the legitimacy crisis both in Europe’s North and South which is inevitable as the loan guarantees of the German and Dutch taxpayers end up (via the Greek state) in the coffers of quasi-bankrupted zombie banks, while all along Greek debt continues to rise, Greek GDP is falling, the Greeks are pushed further into misery without anything to show for it, and the Dutch and Germans are asked to dig deeper one more time to ‘save’ them?

You may well ask: “So, what do I do then?”

I shall answer you in a manner that will sound utopian to many but which I am convinced is your last realistic chance. If anyone can understand the realism of my suggestion, that person is you: Hop on your pushbike this evening, alone, without bodyguards or advisors, and cycle to Syntagma Square, the central square in front of our Parliament where the anti-austerity, anti-government demonstrations occur every night. Once there, people will heckle you at first but, seeing that you are alone, the crowd will part like the Red Sea and a path will form that allows you to move to the square’s centre, where a Speaker’s Corner has been set up. Request from the organisers the right to speak for twelve minutes, the length of time allotted to all comers. And address the stunned crowd.

Tell them that the time has come for Greeks to reclaim our lost dignity. Announce that your government will not accept any more loans as long as the eurozone is refusing to debate its institutional restructuring and policy orientation along the lines of a set of rational principles. Proclaim that your government, if need be, will proceed within the eurozone but without loans. If anyone asks you what are the rational principles on which the eurozone must be refounded, and how this could be achieved expeditiously, you know the answer; we have provided it in the Modest Proposal. You have already studied it, anyway. Explain it yourself to the amassed people. And add that until a debate is held in Brussels along these lines (lines that serious European politicians like J.C. Yuncker and G. Tremonti have already drawn), you will not accept a single euro from our partners. State clearly that you will demand a debate on the idea of a eurobond and on the use of eurobonds in order to energise the European Investment Bank so as to effect a New Deal for Europe. Suggest that the EFSF should be recapitalising banks instead of lending to states. Show your people, and the world, that you know that there is an alternative. Make it abundantly clear that until this debate creates new prospects for growth and prosperity in the eurozone, Greece will do that which it ought to have done ages ago: To live within its means! And if they ask you about how you will pay for wages and pensions, answer that you will reduce the highest public sector salary to the level of the second largest and then both to the level of the third largest and then these three to the level of the fourth largest; and so on until all the necessary reductions are effected so that the Greek state breaks even. Add that we shall end all defence contracts till further notice. That the Greek state will do all that is necessary so as to survive without one euro of additional, expensive loans from the EU.

As you are approaching the end of your talk, raise your voice and say that it is preposterous that the same people who accuse Greece of living off borrowed money are now insisting that today’s bankrupt and humbled Greece take out many more billions of loans when everyone knows that it will be impossible to repay them. Finish up by drawing a comparison with the spivs in the US who, prior to 2008, forced expensive loans upon insolvent poor families, only this time the deed is aimed against a whole country. Declare once and for all that as a European citizen, and Chair of the Socialist International, you do not feel you have the right to sign another loan agreement that jeopardises not only a small Mediterranean country but the whole of the eurozone and, even, the idea of a united, democratic Europe.

At the very end, look into one of the cameras trained in your direction by some member of the audience, the video of which will soon find its way onto youtube; look into its lens and address the German viewer, in English, saying: “It is a scandal of the first degree that you, the hard working German, should be furnishing loans to my government which, tragically, I am forced not to use to reinvigorate our ailing economy but which I am coerced to pay back zombie banks which, fully aware of their awful state, hoard the money, refuse to loan it to business and, thus, end up like black holes that absorb your economic energy at the same time that you Greek counterpart here is suffering with no hope for the future.”

At that point, wave a short goodbye and walk toward your parked pushbike. For the first time in a long while you will not feel lonely anymore. You will have contributed toward a moving moment of participatory democracy; the form of democracy that you and I discussed quite a few times, and shed a lot of ink as well as sweat trying to incorporate into your party’s platform all those years ago. Syntagma Square may not be, as the demonstrators would have liked it, a locus of Direct Democracy (something that requires not just participation but also real executive power) but it does, I think, constitute a modern rendition of the Ancient Agora in which the anti-authoritarian George I know fits like a glove.

We await you tonight. Around 7pm would be nice!

PS. Now that I think of it, perhaps it is better not to come alone. Why not bring along (as long he too possesses a pushbike and wants to partake) your old friend from college, Antonis Samaras (the leader of the Official Opposition). Take turns to address the crowd, singing from more or less the same hymn book, thus mkaing history. Did our European partners not demand of you consensus with the opposition at this pivotal juncture? Let’s give them consensus then.


You can visit Varoufakis official page in English here

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  1. Ah yes, what a great speech. As with most great speeches that were later reported to posterity but never held it requires a man with balls, and balls of steel for good measure.
    However, if that man were him – he wouldn’t be where he and his people are now. That is the tragedy that no leader emerges from a government of oafs in times of crisis. And the reason for that tragedy is that the voters wouldn’t have voted for such balls when they could have. They voted for those guys who lined their pockets while enjoying sleazy sex deals and drinking champagne at the public’s expense. Because – if they can afford to be so relaxed, mustn’t everything turn out ok in the end?
    Looking at it that way, it is (most of) those demonstrators on the Syntagma square who created this nuisance of a political class that is a caricature of Pericles – bellies where he had brains.
    A slogan of “enough is enough” is so phony when only weeks before and I’m sure only weeks later everyone will chant “we want more” …

    • keeptalkinggreece

      what makes you think that the majority of the protesters are civil servants, if I may ask?

  2. Oh, great speach! And after all that? What will we do with that money from those Eurobonds? Feeding The Monster (political and union class and those ‘entrepeneurs’ that live of the state) again? The professor did not tell us, did he? Might it be because he is part of The Monster?

    The solution is really simple if we are willing to kill of The Monster:
    1. Take the load to bridge one year
    2. In this year totally reorganize the state and it’s dependencies until we do not spent more than we earn.
    3. Go for restructuring. And with this ‘clean slate’ we will have very angry markets that won’t lend us any money. But, hey! we don’t need it anymore. So they can shut us out for ever from the financial markets, but we won’t need them.

    Greeks will have their pride back. The other European citizens don’t have to bail us and their banks out with no result other then lost money and cutting in their pensions. And the financial markets will have a bleeding nose so bad that they will beg for regulatory measures.

    So, PM, THIS is the plan. You should have started last year, but you might get another chance?

    One can dream, can’t I? 😉

  3. TroubledCitizen

    An interesting speech, the issue here is how one can transform words into deeds and evaluate the repercussions of such deeds. When one is in the opposition it is easy to convey ideas and actions to your opponent who must implement such actions without taking into serious consideration the political and economic repercussions that may manifest and have dire consequences to all concerned.
    Let’s focus on why we are in this dire situation and in my opinion what events transpired that led to these economic conditions.

    Here in Greece we have to analyze what went wrong and how do we remedy the situation. I believe the recession we are enduring is not linked to the mechanism of the capitalist system. The major problem here (not the only problem) is prevalent corruption that exists in the public sector that spread to the private sector and wrong policies pursued in the past. The previous governments never endeavored to assist the private sector to be the engine of growth in the economy. Instead with all the red tape involved, inflexible labor laws, the syndicates which in many ways abuse their powers, lack of
    tax incentives and high interest loans led to the private sector become stagnant, hence as a result of the above we had factories closing down,for example GM Opel, Nissan, GoodYear, Pirelli, etc. The government instead focused on expanding the public sector to employ people and to manipulate situations in their favour with the result that we have a public sector (1M people including DEKO) which is far larger than other countries with similar population levels who have smaller public sectors.
    The above policy with the massive tax evasion, which according to formal figures is approx between 30% to 40% of GDP, is outrageous. These issues along with the scandals that have plagued the greek economy and society (from Koskotas and onwards) is totally unrelated to a communist or capitalist socio-economic system or even our partners in the EU. It has to do with ATTITUDE of all the people in this country, politicians and private individuals alike. If the economy ( like a profitable organization) was run more efficiently and we took measures to limit goverment.
    spending by limiting the public sector, provide incentives to the private sector, make sure and monitor as best as possible that taxes are paid,etc, we may have had (lets say for arguments sake) a debt of 150B and not 350B. In such a scenario we could have been in a situation to finance and control the debt without the involvement of the IMF and Co.
    Alot of the things that go on in this country from tax evasion to violation of the laws by public officials would never be tolerated in other countries. Many countries of the developed world have their banks on-line with the IRS (DOY) and they monitor everybody’s accounts.
    I am not insinuating that corruption is fully to blame for the current economic debacle in Greece, of course our creditors are to blame who are attempting to exploit our resources as was emphatically pointed out in various speeches in Syntagma. But let’s not forget that corruption is directly linked to lack of productivity that will inevitably manifest problems in the economy. Who will desire to invest here under such conditions?
    It is imperative that prior to criticizing others for our economic woes, we better look into the mirror and exercise self-criticism and try to evaluate where we are to blame.

    One last note, we should teach our students “business ethics” We can only hope that the new generation will have more integrity than the current and especially the previous generation for things to change in this country.