Family Feud: The Tortured Relationship between Schäuble and Varoufakis
Athens relented in the end. But prior to the compromise deal allowing for an extension of Greece's bailout program, Greek Finance Minister Varoufakis and his German counterpart Schäuble engaged in a bitter battle for supremacy.
The end began in the National Theater of Greece in Athens. It was the evening of Wednesday, Feb. 18, and the work on stage was "Happy Days," a two-character play by Samuel Beckett. On stage, a not-particularly-young woman slowly sank into a pile of dirt, talking all the while. Finally, she was stuck up to her neck, but continued talking and making plans even though she could move little more than her eyes and her mouth.
In hindsight, the scene seems like an omen -- like a screenplay for the days to come. Theater, after all, is a reflection of humanity's existence as a whole -- and sometimes it reflects the specific existence of a Greek finance minister.
At the same time as Varoufakis was enjoying his visit to the theater, his German counterpart Wolfgang Schäuble was attending a very different show, one in which the main character was Portuguese Finance Minister Maria Luís Albuquerque. She was a guest speaker at the Bertelsmann Stiftung and used her talk to review the significant progress her country has made since almost going broke four years ago. The country's finances are now under control and economic growth has returned.
"My dear friend," Schäuble addressed her pleasantly. The warmth in his voice made him sound like a teacher who had just barely managed to prevent a student from failing out of school. Why, he seemed to be thinking, can't all finance ministers in Europe be like Maria Luís Albuquerque?
A Two-Person Drama
Still, it was the Greek finance minister's Wednesday evening program that was more reflective of recent events. It has been a two-person drama, with the lead roles played by Varoufakis and Schäuble, a confrontation between two radically different characters. Only one could win in the end, but both would have to pay.
A telling episode in the clash between the two took place in Brussels last Friday. European finance ministers were gathered for a decisive meeting of the Euro Group, one that would decide whether emergency aid for Greece would be extended by four months. More than that, though, it would go a long way toward deciding if the country would remain in the euro zone. Varoufakis arrived early in the morning, flying second class without advisors and bodyguards in an effort to save money. He was still confident. "This is not the most difficult day of my life," he said prior to the meeting. "But perhaps it will be the most difficult in Schäuble's life." He then put in his earphones and began reviewing his papers.
Schäuble is Varoufakis's nemesis. And it is difficult to imagine two people being more different. The Greek finance minister is in excellent physical shape and nicely tanned. His German counterpart sits in a wheelchair, the result of a 1990 assassination attempt, and his shoulders are slumped, as if giving way under the weight of a long political career and the responsibility he has carried for decades -- in particular, responsibility for the euro, which he helped create.
Varoufakis is the newest finance minister in the Euro Group; Schäuble has served the longest. Varoufakis is a professor of economics, a man always good for a clever turn of phrase and a beaming smile. Schäuble is better known for being caustic and irritable. He is a lawyer by training and prefers practice to theory; he is matter-of-fact and deeply skeptical of those who seek to grab the spotlight. And he doesn't hold university professors in high regard.
Since Schäuble has gotten to know his new colleague from Athens, his appreciation for economy professors has dropped even further. He is suspicious of those who believe in their own theories and who think that the world is predictable. For Wolfgang Schäuble, societal behavior cannot be easily explained, not even by social scientists. That is why, he believes, negotiated rules -- and adherence to those rules -- is the best policy.
For Yanis Varoufakis, the euro is a defective currency. For Schäuble, it is his legacy.
The German minister is unconcerned with formalities. He doesn't care if his Greek counterpart tucks in his shirt or not, nor would he be bothered if Varoufakis were to wrap it around his head like a turban. Former Swedish Finance Minister Anders Borg, after all, used to come to Euro Group meetings with his hair in a ponytail. But Borg possessed competence, authority and political gravitas, qualities that, from Schäuble's perspective, the new Greek finance minister has not yet demonstrated.
Schäuble was annoyed by Varoufakis' insistence during his initial visit to Berlin that he could save not just his country, but the entire euro zone, from the clutches of austerity and install a new financial architecture. And he found the Greek finance minister's presentation during his first Euro Group meeting, full of well-prepared and well-meaning proposals, to be confused and muddled.
Indeed, by the time Schäuble arrived in Brussels for last Friday's meeting of euro-zone finance ministers, EU diplomats were finding it difficult to bring the two together in a single room. And tensions were high among others in the group as well. Jeroen Dijsselbloem, head of the Euro Group, had even planned to hold telephone conferences and individual meetings rather than bring everyone together.
His concern was the consequence of vigorous disagreement during the previous meeting -- a conflict which almost descended into blows. That, at least, is what the long-time Brussels correspondent Jean Quatremer reported, citing sources in the French delegation. Varoufakis, his report said, shouted "liar!" at Dijsselbloem over and over again until the meeting ended inconclusively.
Varoufakis denies that version of events. He says the disagreement had to do with different versions of the compromise paper. Varoufakis says he wasn't aware that, according to Brussels custom, only the version on Dijsselbloem's desk was official.
The result was that last Friday's Euro Group meeting was atomized, with small groups of two to four people meeting individually with Schäuble, with International Monetary Fund head Christine Lagarde, with European Central Bank head Mario Draghi and with Dijsselbloem.
Varoufakis quickly realized that he was alone, that the other 18 finance ministers were against him. But he took it as validation for his approach. Late that night, he forwarded an article from Foreign Policy to his Twitter followers headlined "Greece Should Not Give In to Germany's Bullying." The piece speaks of the "dead hand of Merkelism" and argues that economic logic lies with the Greek finance minister.
The Greek finance minister's defiance makes some sense. Voters in Greece had just made it eminently clear that they wanted their leaders to shed austerity and to come up with a radical alternative to the Schäuble-doctrine of growth-through-austerity. Furthermore, the entire European left was rooting for Varoufakis.
But time was short. Last Thursday and Friday alone, 2 billion was withdrawn from Greek banks and they were running out of cash. Furthermore, the political opposition in Athens was spreading the rumor that a new currency would be introduced when banks opened for business on Monday.
The beginning of the Euro Group meeting was repeatedly delayed -- and a Greek diplomat on the sidelines was in a gloomy mood. "The Greeks don't have anything left to lose," he said. "Even a Grexit isn't a horrifying scenario anymore." The man went on to speak of "Weimar conditions" of violence between Syriza followers and those of the right-wing extremist party Golden Dawn. "Tsipras has given what he could. What more do the Germans want? I can see only one rational reason: They want a new government."
Yet Schäuble is as unconcerned with the political leanings of the new Athens government as he is with the clothes they wear. In the days leading up to last Friday's Euro Group meeting, he was primarily concerned with preventing Varoufakis from isolating Germany.
But he had also become wary of what he saw as Athens' efforts to stoke resentment, particularly following the unflattering caricatures of him printed in leftist Greek newspapers. One, published in a newspaper affiliated with Varoufakis' Syriza party, showed Schäuble, one of the last architects of the euro remaining in office, wearing a Nazi military uniform. Another, in the leftist-intellectual weekly Bromos, depicted Schäuble in a chair with tank tracks instead of wheels and holding a flag on which the swastika had been replaced by a euro symbol. The minister is ordering the execution of 50 ("no, make it 100") Greek civilians for every financially burdened German taxpayer.
Schäuble believes the victim complex that many Greek politicians have adopted to be a mixture of misguided pride and prideful misguidedness. They believe that the crisis was triggered by Germany's trade surplus and then made worse by Germany's austerity demands. And they seem to believe that Greece's financial problems would disappear were Germany to simply pay World War II reparations.
Prior to the beginning of last Friday's meeting, Dijsselbloem had telephoned with European leaders to consolidate support behind his compromise proposal. German Chancellor Angela Merkel made it clear to Tsipras that there were no other alternatives. "It's either that, or it's over," she said. And Tsipras relayed his decision to his finance minister: He had decided to give in. Thereafter, Varoufakis was largely uninvolved in the talks, sources say.
When all 19 euro-zone ministers finally gathered to go through the text line by line, only Portugal and Spain had much to say, freeing Schäuble from the need to play the enforcer in the process. His "dear friend" Maria Luís Albuquerque took on the role herself, together with Spanish Finance Minister Luis de Guindos. Both of their countries implemented painful, but ultimately successful reform programs and the two finance ministers warned Schäuble that if concessions were granted to Greece, they could forget about being reelected. Voters, they said, would immediately replace their governments with political parties likewise interested in rolling back reforms.
The result was Schäuble's conclusion: "It won't be good for Europe if we are too generous with the Greeks."
A Default Leadership Role
Being from the Euro Group's strongest economy, Schäuble is essentially the body's informal leader. But because he prefers modesty, he often comes across as being uncomfortable in the role. "I surely don't speak the best English in the group, but everyone is always asking: Wolfgang, what do you think?"
At last Friday's meeting, the joint statement was finally finalized. It stated that Greece would only receive the promised IMF and ECB loans if it sticks to its promises and also presents a quantifiable list of its reform projects. In exchange, the aid program will be extended by four months. Relief will also be provided for Greece's 2015 budget.
The previous Greek government had hoped that around 10 billion from the bank bailout fund would be reallocated, but there are no plans now to shift that money. Athens has also assured it will refrain from unilateral steps that could "negatively impact" the declared stability goals.
Alexis Tsipras won the election based on his pledge that the current agreement with the troika would be terminated and that there would no longer be any commitments made to the Euro Group. The short joint Euro Group statement includes four references to the "current arrangement" and seven to "commitment." The word "troika," however, has been replaced with "institutions."
Christine Lagarde of the International Monetary Fund praised the document as being "very deep and dense." One floor lower, Yanis Varoufakis could be found sitting in a stuffy room filled with journalists. He spoke of a "constructive ambiguity," especially in terms of the future primary surplus.
"The times have passed when Greece's policies are dictated to it," he said. "From today we are going to be co-authors of our destiny." "Like Odysseus, sometimes you have to tie yourself to a mast in order to avoid the sirens and get where you need to go," he added. In this case, the siren call referred to is that of leftist Keynesians and their fiscal excesses. But it was also a reference to a Greece that is now being tamed.
Indeed, that was the moment that Varoufakis demonstrated that he is more of an intellectual than a political drone. He appeared to enjoy trying to transform defeat into victory using only the sheer power of words.
Just a few steps away, Wolfgang Schäuble could be found sitting in the German delegation's room. Visibly tired, he took pains not to come across as triumphant, even mentioning that Varoufakis would have difficulty explaining the result of the negotiations to voters back home. But he also noted that the outcome is one the Greeks also could have gotten 10 days earlier. Sometimes the German finance minister can came across like an aging math teacher counting his days until retirement.
Once again, Schäuble was witness to a much admired political newcomer falling prey to reality. After three weeks spent being a pop star among finance ministers, Varoufakis' spell had been broken -- in Schäuble's mind, at least. What he can still do, though, became apparent this week: He continues to have room to make the kind of derogatory remarks about Schäuble's ideas that got published in an interview with French satire magazine Charlie Hebdo. Schäuble was quoted as being "stunned" about the Greek politician's comments.
Still, Schäuble has been in politics long enough to have understanding for Tsipras and Varoufakis, who must now sell their defeat as a triumph back home. It's simply part of politics. What's important to him is that the wrangling doesn't leave Germany isolated in the end. Schäuble has a reputation for being a stubborn negotiator, uncompromising when it comes to austerity, and for sticking to his principles. He's been playing the role of grumpy old man for years now.
The truth, however, is more nuanced. Schäuble is disposed to seek conciliation and compromise, which he considers to be hallmarks of democracy. At the same time, Schäuble takes laws, treaties and agreements very seriously because he considers rule of law to be a fundamental trait of Western democracy and civilization. The casualness with which his newly elected Greek colleagues want to run roughshod over EU agreements is deeply abhorrent to Schäuble.
The German finance minister regards Europe as an educational project, one for which the past seven decades has been about civilizing the Europeans and educating them about peace and democracy. Indeed, a Kantian imperative is visible in EU regulations and directives. The rules issued in Brussels force member states to act in such a way that the union will not break apart, provided the others do so as well.
It's an imperative that is also a factor in the fight over Greek debts and Greek blame. Athens' revolt is reminiscent of a teenager who doesn't want to accept the limits to personal freedom that living in a mutually dependent collective necessitates -- moreover, in a collective designed by his predecessors.
'One Must Imagine Sisyphus Happy'
Schäuble's office in the Finance Ministry looked just as tidy as always this week. But the minister himself was exhausted and didn't try to conceal it. His eyes were red and he repeatedly rubbed them and yawned.
Schäuble used to be fond of comparing politicians in general, and himself specifically, with Sisyphus, the character from Greek mythology who is damned to spend eternity trying to roll a stone up a hill, to no avail. "One must imagine Sisyphus happy," Schäuble would say, quoting Albert Camus.
When asked if he could imagine simply allowing Greece to stumble out of the euro zone, Schäuble shakes his head. "We are on the right path towards leaving the euro crisis behind us," he says. "We can't allow that to be ruined by a country that doesn't follow any rules."
Just before midnight on Tuesday, Yanis Varoufakis sent the required list of reforms to Brussels. It includes a national plan to take on corruption, measures against tobacco and gasoline smuggling, higher taxes for the rich and the closing of tax loopholes. It includes food vouchers for the poor and the introduction of a Citizen Smart Card for access to the health system. There are 64 items in total.
Does Schäuble believe that the Greek government will fulfill its promises? The German finance minister stares at the table in front of him. The corners of his mouth fall and he shrugs his shoulders. Sisyphus is tired. And sad.
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