Economists in the Room

George Papaconstantinou is a self-effacing and clearly a deeply knowledgeable economist-turned-politician-turned-academic.

  • Nicholas Karides

It is almost impossible to think that a decade ago he had been described as ‘the most hated man in Greece’, a remark, he later told Peter Spiegel of the Financial Times that felt like ‘a punch in the stomach’.

The former finance minister of Greece between 2009 and 2011 under George Papandreou’s Socialist Pasok was in Cyprus last week for a Life Changing Ideas Series presentation organised by Global Training and the University of Nicosia. He addressed a fairly receptive audience that included two Cypriot former finance ministers – Haris Georgiades and Michael Sarris – who had, in their time, also been dealt some metaphorical blows to the abdomen.

Papaconstantinou acknowledged their presence a few times, not, as it transpired, in terms of the camaraderie that stems from the public blame finance ministers inevitably receive, but more in terms of how the three of them shared the unique experience of enduring the wrath of a more elite gang, the Eurogroup.

In the course of his presentation Papaconstantinou used his two best selling books Game Over (2016) and Whatever it Takes (2019) to frame his narrative and to shine light on the dark days of the Eurozone crisis and sketch out the conditions of its purported recovery.

The titles are essentially pulled, the first, from Jean Claude Juncker’s remark in 2009 “The game is over… we need serious statistics (from Greece)” and the second from Mario Draghi’s now legendary statement: “Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough”.

In 2010 Papaconstantinou signed the first of Greece’s three bail-out agreements with the EU and the International Monetary Fund. At €110 billion it was the biggest ever rescue package granted to a collapsing economy.

He described Greece as the canary in the coalmine, a test state used to alert when the oxygen in the Eurozone’s mineshafts would begin to run out. He argued, quite convincingly, and without brushing over Greece’s long standing structural shortcomings, that after the collapse of the US subprime market his country was only a small part of a systemically precarious Eurozone.

There’s something distinctly unpolitician-like in Papaconstantinou. Perhaps out of modesty or an awareness of the cacophony of blame that floats around, he did not linger on the fact that when he did sign the bail-out, even if sabotaged by the previous conservative government’s unreliable data, things had begun to improve for Greece. So much so that the Financial Times ranked him as one of Europe’s top finance ministers for showing ‘panache’ in handling the crisis. One analyst had stated that he had undertaken “more budget and structural reform that any EU country ever”. Little of that received Greek media coverage at the time.

The one event that best fitted the Life Changing Experience billing of the lecture series is one that Papaconstantinou understandably preferred not to mention. It was how he was scapegoated and tried by a tribunal in Athens for allegedly removing the names of members of his family from the infamous [Christine] Lagarde List of wealthy Greeks with bank accounts in Switzerland. Papaconstantinou was acquitted of the charge but the ordeal, which he very candidly describes in his first book, scarred him.

It doesn’t show. Nor does it seem to have diminished his drive to remain engaged. These days he leads the Transformation of Global Governance project, a research and policy analysis initiative at the European University Institute in Florence that aims to assess the capacity for global cooperation.

Papaconstantinou believes in the essence of the EU. In the current geopolitical instability he describes Europe as ‘the only adult in the room’.

It is a curious choice of a phrase, one that immediately reminds of his more recent former colleague, Yanis Varoufakis, who used it as the title of his own provocative exposé of the European establishment. The phrase, as Varoufakis revealed, actually belonged to Christine Lagarde (her, again) who in the midst of Greece’s dramatic moments spoke of the need for adults in the Eurogroup. In Lagarde’s mind Papaconstantinou would be such an adult.

Unsurprisingly the audacious Varoufakis is absent from Papaconstantinou’s latest book apart from a reference to Adults in the Room in the bibliography. The fact is they both suffered in that ‘room’ mostly in the hands of Wolfgang Schauble, their German colleague. Papaconstantinou chose to go for the least-worst option and sign the bail-out while Varoufakis, having seen what five years of that option had brought, opted not to.

In both instances the system won. Papaconstantinou can’t take much courage from the continuing stagnation while Varoufakis’ only gain from his risk-taking was the birth of a resistance movement.

The bottom line is that the younger generation in Greece and in Europe – in whose name the battle is being waged – does not deserve populist politicians feeding on the inequality that market excesses and austerity have brought.

Both former ministers, the pragmatist and the radical, know that for European social democracy to stand any chance against the emerging right-wing nationalism their narratives would need to converge. We seem to have reached a whatever-it-takes point.

  • @NicholasKarides
  • This article also appeared in the Sunday Mail on 8 March 2020

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Back to top button