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The New Yorker, September 17, 2013. © 2013 Condé Nast. All Rights Reserved.


A bullet hole mars the window in the office of Yannis Stournaras, the finance minister of Greece. It is tempting to see it as yet another unpleasant outcome of austerity: in the face of crippling government debt, maybe he can’t afford to fix it.

But he insists that austerity has nothing to do with his decision to leave the window unrepaired; he’s kept the hole, a pot shot at a predecessor from a 2010 protest, as a “memoir” of the rough path he’s had to hew. The central figure in Greece’s economic maelstrom, Stournaras, a fifty-six-year-old economics professor, has become the face of painful deprivations—firings, tax hikes, slashed wages and pensions—as the country struggles to emerge from its fiscal troubles.

The concern about whether he has money for renovations isn’t too far-fetched. Recently, the aging wallpaper in a number of Ministry of Finance offices began to crumble, and Stournaras had the rooms painted at a cost of fifteen hundred euros. When word of this extravagance leaked, the rightist newspaper Democracy condemned him as “wasteful.”

Stournaras laughed as he told me this story; his office appeared to have been furnished sometime during the first Bush Administration. It featured laminate floors, scruffy wood bookshelves, and shiny red sofas arranged in an L. In the waiting room, a month-old copy of the Financial Times grew brittle on an unused coffee table.

The underlying rot—in the walls and in the economy—long preceded Stournaras’s ascendance. And, by some measures, the belt-tightening is working: two weeks after we spoke, the government reported that the shrinking of Greece’s economy had slowed in the second quarter of this year. Yet Stournaras has, perhaps inevitably, become a target for criticism. In February, a prominent parliamentarian slammed him as “arrogant” after he questioned a prior government’s proclivity for spending. In July, another blasted the “knife he puts against our throats.” In August, a third member of Parliament threatened to seek Stournaras’s removal.

It is worth noting that the politicians unleashing these attacks were members of Stournaras’s own governing coalition, which includes the conservative New Democracy and the socialist Pasok parties, historical adversaries.

“There is no friendship at all,” said Theodore Pelagidis, an economist and friend of Stournaras’s. “Yannis is alone.”
 

In 2010, an alliance of international creditors known as the troika—the European Commission, European Central Bank, and International Monetary Fund—agreed to bail out Greece to the tune of a hundred and ten billion euros, on the condition that the country starve itself into solvency. When economic problems persisted, the troika agreed to a second rescue package, to be doled out in stages, this one running a hundred and thirty billion euros. By the time Antonis Samaras became Prime Minister in the summer of 2012, Greece was still living up to its reputation as “the last Soviet economy.” The bloated public sector was addicted to outsize salaries and pensions, patronage was rampant, and tax evasion seemed to outpace soccer as the national sport.

Samaras, representing the New Democracy party, was elected on a promise to slow austerity. Yet in appointing a finance minister, he chose Stournars, an Oxford-educated economist whose work had called for public-sector reductions. Stournaras is widely seen as a straight-talking “technocrat” and not a politician. If the troika demanded austerity, he could push reforms forward without being distracted by an angry political base.

Within hours of taking office in July of 2012, Stournaras found himself across a table from representatives of the troika. They were back in Athens to decide whether to award a tranche of thirty-one and a half billion euros to a desperate Greece. This time, in return, they wanted even deeper spending cuts.

Without the billions of euros, Greece risked going broke and being forced out of the eurozone, which Stournaras believed could lead to the collapse of Greek banks and, he told me, “looting of supermarkets.” Squeezed between intense domestic pressure to roll back reductions and what he believed was economic necessity, Stournaras sided with the troika and its austerity program. “We can’t ask for anything from our creditors before we get it back on course,” he had told journalists shortly after taking office. This was not the message many ordinary Greeks wanted to hear, and their representatives in Parliament castigated him. In his defense, Stournaras reëmphasized that Greece had to show skeptical creditors that it could be trusted, by owning up to past indulgences and trying to correct them.

Negotiations with the troika dragged on for five months. Then, in November of 2012, European finance ministers gathered in Brussels for a series of dramatic meetings to determine Greece’s fate.

In Belgium, Stournaras negotiated constantly. He went two days without sleep. He quarreled with Austria’s finance minister. He communicated constantly with Samaras. “Our two mobile phones were on fire,” the Prime Minister told me.

Between meetings, Stournaras shuttled home to Athens to help cajole a reluctant Parliament into passing new austerity legislation to pacify the paymasters in Brussels. The omnibus bill would, among other things, raise the retirement age, cut pensions, and slash lump-sum payments for retirees. A vote was slated for midnight on November 8th—just in time to meet a troika deadline.

At six o’clock on the evening before the vote, Stournaras introduced an amendment that would have ended the “special salaries” enjoyed by employees at the Hellenic Parliament. The staffers revolted: their union announced an immediate strike that threatened to paralyze Parliament and prevent a vote altogether. With the troika deadline looming, Stournaras was forced to relent. He withdrew his amendment, but did not do so quietly. In an address to Parliament later that evening, he denounced the bitterly anti-austerity parties who had painted him as a puppet of the troika: "We condemn them. Because of what’s at stake tonight, and because of the urgent nature of the bill, I am forced to withdraw the amendment in question. He who has eyes let him see."

The measures passed, narrowly, setting up Greece’s moment of truth. Would it all be enough to convince the troika that Greece had changed its ways?

“I’ve called it the ‘thriller,’” said Raphael Moissis, the deputy chairman of the Foundation for Economic and Industrial Research, the think tank from which Stournaras was plucked to lead the Ministry of Finance. “We literally stayed up the night to hear whether the Europeans were going to say yes to a restructuring program for Greece, or whether they were going to say ‘the hell with you.’”

On November 27th, the troika announced that it would release the next round of loans. Greece would remain in the Eurozone. The decision was a victory for Stournaras, one step forward in what he described as a “multifaceted war.”

But was the triumph really so clear-cut?

One morning in 2009, Chris Spirou was laid off by an Athens bakery. A divorced father, he spent three months looking diligently for a job but found nothing, eventually making his way to Norway and the Netherlands to find work before returning home when his father died. After getting the boot from a friend’s trailer, he suddenly became homeless—an “indescribable” realization, he said.

“I am below zero. Wrecked. Devastated,” said Spirou, who is fifty-four. He said he feels “hate” for the people who put him in this position: members of Parliament and technocrats like Stournaras. “He doesn’t look at the political cost even if human beings are committing suicide, losing their jobs, their children are hungry.” Austerity, Spirou said, has killed the economy.

Some prominent economists echo Spirou’s analysis. Dimitri Papadimitriou, president of the Levy Economics Institute of Bard College, said that although large-scale cutbacks may in fact be reducing Greece’s budget deficit, these gains have come with “catastrophic consequences”: homelessness, suicides, unemployment, once-comfortable families reduced to rummaging through trash bins.

Other economists, meanwhile, are asking a larger question: Does austerity even work? Paul Krugman has argued that Europe’s reliance on austerity—not just in Greece—is precisely the opposite of what should be done: according to the logic popularized by John Maynard Keynes, economies falter when people stop spending, and when that happens, only governments can step in as spenders to get things going again.

Of course, given Greece’s economic woes, the country could not have implemented this theory on its own. Other Europeans, with Germany in the lead, were willing to kick in enough for Athens to close its deficits over a period of years, but they would not offer up sufficient sums for the Greeks to spend their way out of the desert. To the contrary, they insisted on cuts.

Describing the decisions he made, Stournaras, whose compact, athletic build and frequent smile made him look younger than his years, was resolute. Along with Prime Minister Samaras, he said, he fought to mitigate the pain—by cutting property taxes, for example. But even now, Stournaras—who calls himself a “reconstructed Keynesian”—believes that cuts, though upsetting, are working; unfortunately, there aren’t many other ways to reduce the public-sector deficit, and to forgo the cuts would only damage the economy further.

“But this is not something easy that you can tell the public,” he said. “That the alternative is Argentina or even Syria.”

It was muggy during my visit, and while Stournaras spoke, he wore shirtsleeves and a tightly cinched purple tie, having removed a dark suit jacket. He ticked off the government’s accomplishments: an operating budget surplus for the first seven months of this year, increased competitiveness in once-closed markets, and a slowing of the economy’s contraction. Most of which means little to the twenty-eight per cent of Greeks who are out of work, or to those who have suffered debilitating cuts to their pay and pensions.

“It’s not easy for somebody who was earning two thousand euros suddenly to earn one thousand,” Stournaras said. The cuts he has championed have affected even his own mother. “A poor woman, because my father had died very young,” he said. “So she lives on the minimum pension.”

How does that make you feel? I asked.

“Very bad,” said the father of two, his eyes now fixed on his desk. “Very bad, really.”


Stournaras was born in Athens, in 1956. His father was a Communist, he told me, whom “ultra-rightist” gangs persecuted and tried to have arrested; years later, when Stournaras was doing graduate work at Oxford, his father, who died at the age of sixty-two, asked him not to return home because he feared his own politics would haunt his son. Early on, Stournaras took up swimming and still regularly swims long distances. (He also jogs and plays ping-pong.) In his car on the way to a meeting with the Prime Minister, he told me that swimming was the best preparation he received for the rigors of his position. These days, he avoids swimming in pools, which could seem luxurious while other Greeks are forced into homeless shelters. “So I have to train myself and go to the sea,” he said. During a recent six-kilometre swim, the waters near his vacation home on the island of Syros turned rough. When I met him, he was unable to hear from his right ear.

In many ways, Stournaras is the ideal messenger for Greece’s tough news: he is respected in European economic circles, seen as someone who operates above partisan politics. Before taking office, he was a professor at the University of Athens, chairman and C.E.O. of Emporiki Bank, and advised prior governments. Stournaras was appointed to the Ministry of Finance, not elected. This gives him the freedom to make controversial decisions, but on the flip side, of course, if his policies become too unpopular, Prime Minister Samaras can summarily fire him. The afternoon before I met Stournaras, Michael Massourakis, the chief economist at Alpha Bank, told me that in choosing Stournaras, “the political parties wanted to find somebody who is nonpolitical so they can scapegoat him if things go bad.”

For the moment that seems unlikely. Although Samaras came to office on a pledge to slow austerity measures and Stournaras has supported them, the two are now friends who work together closely, meeting often, sharing jokes.

In the midst of our discussion, Stournaras’s phone rang. It was the Prime Minister.

“I have a reporter here from the The New Yorker,” Stournaras told him. “Shall I put you on?”

Stournaras activated the speakerphone setting so I could hear. Samaras—laughing knowingly—informed me that despite “previous ideological differences” he and Stournaras share a common goal: keeping Greece in the eurozone.

“That’s what I told him!” Stournaras said.

“Do you hear me, Yannis?”

“Yeah, yeah, I do.”

“Am I correct in this assessment?”

“Absolutely.”

Then Samaras quoted Neil Diamond. “You know that song that says, ‘Used-to-bes don’t count anymore, they just lay on the floor till we sweep them away?’” he said. “The idea is that differences don’t matter as long as there is a common cause that links us together.”

As Samaras spoke, Stournaras smiled appreciatively. Despite this display of seemingly genuine affection, it was hard for me to forget what I’d been told a day earlier: that for all this friendship, Stournaras could yet prove dispensable.



Greece still has a long way to go. The government is again under pressure from its lenders, with the troika evaluating the country’s economic recovery and money-saving efforts as it weighs a third bailout package. “All the low-hanging fruit has been reaped at this point,” Alpha Bank’s Massourakis said. “It has to do major things that Greek governments were not very eager to do.”

Future objectives include reforming Greece’s tax system, opening closed markets, and restructuring or even privatizing some public businesses. A new round of protest marches has already begun, with civil servants taking to the streets in late August to oppose planned suspensions and firings.

“Stournaras is very unlucky in the sense that now people are very tired,” Alexis Papahelas, the executive editor of the respected newspaper Kathimerini, said. “Every time someone hears about a reform, they think they’re going to lose part of their income.”

Compounding Stournaras’s problems, observers said, is the fact that the Samaras-led coalition, with an advantage of just five seats in Parliament, could be sunk by even a small disagreement. And if the coalition falls apart, many believe it will be succeeded by extremists—from either the far right or the far left, a scenario Samaras called “catastrophic.”

Nonetheless, a March poll found that Stournaras’s approval rating was unusually high for a finance minister. This may reflect his penchant for directness, and his distance from the political elite that has ruled Greece for decades. When I asked Stournaras why he took his current job—and with it a large pay cut—after having rejected several prior ministerial appointments, he sounded a philosophical note. “Patriotic duty,” he responded. “It’s like being at war and you’re asked to participate and you say no. You cannot say no.”

Chanan Tigay is the author of the forthcoming book “Unholy Scriptures: Fraud, Suicide, Scandal & the Bible that Rocked the Holy City” (Ecco/HarperCollins).