Wolfgang Schaeuble’s Memoir Delves Into the Greek Debt Crisis

The memoir by Wolfgang Schaeuble, one of the key figures of the 2009-2018 Greek debt crisis who died in December 2023, is hitting bookstores in Germany on Monday.

The memoir, titled Memories. My Life in Politics, delves into the Greek crisis and its protagonists. Greek politicians of the period are subjected to the sarcastic narrative of the former German finance minister, who seems to have known how hated he had become among the Greeks, who accused him of championing austerity, resulting in an unprecedented drop in living standards and a meteoric rise in unemployment.

For a time, Schaeuble seemed ready to allow Greece to crash out of the euro before making any compromises.

In 2017, after he left the finance ministry, he said he felt vindicated by the results of often painful reforms carried out in exchange for EU loans in Greece, Portugal, Ireland, and Cyprus.

In an interview with the Financial Times (FT) he insisted the goal was never to impose austerity on Europe. The goal instead was “a predictable, reliable finance policy that built up trust and generated growth,” he told the British newspaper.

“I would argue with anyone; even more strongly now after eight years, that this policy generates more sustainable growth than any other,” he said.

The Kathimerini newspaper presented the memoir and the contents relating to Greece on Sunday.

Schaeuble considered asking Greece to leave the Eurozone

In his critique of the “usual blame game that the Greeks knew how to play so successfully,”  Schaeuble asks the rhetorical question: “Who likes to admit that he lived beyond his means?”

He points out, however, that the book by the former finance minister, Giorgos Papakonstantinou, Game Over, is a “relentless self-criticism of the way the Greek government secured a membership in the euro.”

“The fact that I became a scapegoat didn’t bother me, [and] one has to put up with that in politics, even inelegant parallels with the Nazis that were drawn from the history closet,” he recalls. “The social media hate was counterbalanced by an outpouring of acceptance and support through letters and emails.”

“The smear campaign, however, hit an unforgivable low in the spring of 2017, when an extremist group attacked then-interim Prime Minister Loukas Papademos and the IMF office in Paris with booby-trapped packages, injuring an employee. A bomb sent to me was detected in time at the ministry’s screening point and deactivated,” Schaeuble writes.

He adds: “My doubts (regarding Greece’s reform readiness) pushed me to consider alternative scenarios early on. As early as 2010, I did not rule out the possibility of a member leaving the Eurozone, as a last resort.”

“Would a temporary exit from the euro, to devalue the national currency and boost competitiveness, be a feasible path? Wouldn’t such a horror ending be better than a horror without an ending, since a single shock would be easier to deal with than years of austerity programs?” Schaeuble asks.

He recounts his first meeting with Evangelos Venizelos as finance minister in June 2011.

“I invited him to Berlin, not to the ministry, but in a relaxed atmosphere and as a token of appreciation to the award-winning restaurant (including two Michelin stars) of Tim Raue, to express my doubts to him…What I told him seemed to kill his appetite. He ate almost nothing when I explained my stance on both alternative considerations,” he says.

He clarified that Greece wanted to remain in the Eurozone at all costs and also refused the temporary exit from the monetary union during which it would be generously supported by the EU in return for reforms.

George Papandreou, Greece’s prime minister at the time, announced a referendum
on the €130 billion eurozone bail-out for Greece.

Describing the difficult situation for Papandreou in Cannes in November 2011, he recounts the pressures from Barack Obama, Nicolas Sarkozy, Angela Merkel, as well as Christine Lagarde and Mario Draghi, to dictate the text for the referendum to put before the Greek voters the dilemma of either accepting the aid program or deciding to leave the euro.

“The possibility of Greece leaving the monetary union was never discussed with such clarity as during the dramatic hours of Cannes,” Schaeuble says.

Meeting Tsipras during the Greek debt crisis

Schaeuble further wrote: “I had known Tsipras since 2013 as the leader of the opposition. I was interested in this man of an up-and-coming movement who was blowing the whistle on European politics. How did he think he could solve the crisis? Although nobody wanted to welcome him at that time in Berlin, I invited him to the Ministry of Finance to exchange views.”

“In a conversation that lasted an hour, he tried to explain to me that the austerity policy was wrong, he explained to me with disarming directness that he would promise during the upcoming election campaign to keep the country in the euro at all costs, but without, an austerity program.”

“I answered him with the same directness that I wish him not to win the election for his own sake because the promise that will ensure him electoral success cannot be kept in any way,” Schaeuble reveals. “Greece could not remain a member of the Eurozone without the necessary obligations. Tsipras knew this too. But my answer did not impress him.”

“From this discussion, however, I was impressed by his ruthless intention to advance a position, however weak it was.”

Since then, he realized that he would hardly find a field of compromise with the former president of SYRIZA and that the crisis would come back as a “farce,” as he characteristically writes.

Varoufakis “caused so much damage”

In his memoir, Schaeuble dedicates a separate sub-chapter to Yanis Varoufakis. “This crisis was largely caused by the man who, during the change of government, took over as Greece’s finance minister to implement the plan,” he writes.

The darkest moment in his relationship with Varoufakis, according to Schaeuble, is “when we learned that he was secretly recording our negotiations in the Eurogroup to make copies and release them to the public. It remains open which was more infuriating: the breach of trust in itself, or the interpretation that he had a ‘moral duty’ because he then had to answer to Parliament and the media?”

Schaeuble refers to Lagarde’s distaste for the incident and the need to return dialogue between adults in the room, noting that he has never read a more “devastating” verdict on a colleague than that of Jeroen Dijsselbloem, the former head of the Eurogroup, on Varoufakis.

“Never has a finance minister caused so much damage to his country in such a short time.”

The Greek 2015 referendum and the third bailout

In the opinion of the former German finance minister, Tsipras’s strategic goal in the referendum of July 2015 was to ensure a marginal “no,” which would, on the one hand, give him a strong argument in the negotiations in Brussels and, on the other hand, a way out to explain his retreat to the Greek public.

However, the overwhelming result of the referendum in favor of “no” took him by surprise since he was no longer able to get out of the predicament without losing his credibility.

After the referendum, an intergovernmental meeting was held in the chancellery. During that time, he argued again for a time-out for Greece from the Eurozone.

Surprisingly, the Social Democrat Vice-Chancellor Sigmar Gabriel seemed to agree with him, while the then Foreign Minister and current President of the country, Frank-Walter Steinmeier, also a member of the Social Democrats, remained silent.

“That’s why I confronted Merkel, who responded to my comments that this would only be possible in consultation with [French President] François Hollande, and he disagrees. She was not going to sacrifice the Franco-German relationship.”

“When the time-out was then discussed, 15 of the 19 finance ministers were in favor, while apart from [Greek Finance Minister] Tsakalotos, Chapin, the Italian Pier Carlo Padoan and the Cypriot Haris Georgiadis disagreed.”

At the EU summit that followed the Greek referendum, when Tsipras eventually agreed to a third bailout for Greece, participants found themselves at the end of the meeting in a  “comatose” state, Schaeuble says.

“This is consensus building through fatigue. Merkel is an expert at this,” he added.

Schaeuble also hails Tsipras’ eventual conversion by accepting the program. “It was a courageous step and Tsipras subsequently achieved remarkable things, which allowed the next government to stabilize Greece on this basis. That deserves recognition.”