Monday, June 11, 2012

Mr. Yiannis Dragasakis (SYRIZA) is right! And wrong, too!

This is an interview which EU-authorities should read very carefully. The interviewee is Mr. Yiannis Dragasakis who, I take from the article, might become Finance Minister should SYRIZA be able to form a government after June 17.

Mr. Dragasakis does not talk like the hot-blooded Sonny Corleone's of Greece who have recently rejoiced in "calling Germany's bluff" or declaring that they would reform the EU into the kind of EU "which Greece wants to have". Instead, Mr. Dragasakis talks more like the Godfather himself: "I'll make you an offer which..."

Note the following sentence: "It is self-evident that Greece’s relationship with the European Union is not an external relationship but a multifaceted one of structural interdependence between our country, EU institutions and member-states. Consequently, under no circumstances can we imagine a resolution of problems arising from conflictive procedures instead of consensual agreements". Hear, hear - no immature threats like some Greeks have come up with of late! (even renowned university professors!).

Or this one: "I would be surprised to face a stance that seeks to maintain the current impasse or make it even worse by cutting our credit lines. On the other hand, you are right to suggest that we should have suitable contingency plans for any eventuality in order not to be caught unawares. It’s good to have such plans without publicising them too much". This sounds like the Godfather wishing the Turk good luck with his new business in narcotics...

Mr. Dragasakis would not declare a moratorium or a unilateral default. No, not at all! However, "if a situation arises for which we are not responsible, but one which jeopardises our national or social security, the government will not hesitate to take all necessary and feasible measures, even beyond the constraints of formal legitimacy". "I hear you talking" is all I can come up with for that one.

And then, towards the end of the interview, he blows it. When asked whether he would seek the aid of the ECB to continue to fund the Greek banking sector, he answers as follows: "Financing the Greek banking system through the eurosystem is a paramount obligation of the ECB and national central banks which provide the liquidity necessary for eurozone economies to function properly. It’s not some sort of charity that the ECB grants to eurozone states whenever it so pleases".

Sorry, Mr. Dragasakis, this is where you are wrong, and you know it! The ECB is obligated to finance the Greek banking system (and the others) within collateral regulations. The Greek banking system has run out of collateral normally required a long time ago. I would not call it a charity on the part of the ECB to have continued to finance the Greek banking system without adequate collateral. The ECB didn't do that simply because it wanted to be nice to Greece but because not doing it would not only have brought down the Greek economy but would also have been a substantial threat to Europe's economy.

So, Mr. Dragasakis, you not only make friends and gain respect when you act like the Godfather instead of his son Sonny but also when you appreciate help where such appreciation is justified and even called for. The Godfather always thanked people for their favors and even suggested that he might never ask a favor from them in return.


  1. Klaus its not apparent the Athens News had its head screwed on correctly in that interview. Softball questions almost completely. Nothing asked of the man about how Syriza can fix anything. So what is he really saying?

    1. My comment relates to negotiating style. No more, no less.

  2. Mr. Kastner, you should be aware, that Mr. Dragasakis, is the IMHO, the only moderate economist inside SYRIZA. SYRIZA is a coalition of 12 lesser parties, most of which are maoist and trotckist in ideology. Before the elections 7 out of the 12, were against the euro and the EU. In sight of the elections they try to keep low profile for not scaring the people.

    The problem with SYRIZA is that ideology influences the perception of reality of even its economists. To give you an example, one of SYRIZA's chief economists, Mr. Tsakalotos, recently said on tv "There is no such thing as competitivity, there is only productivity".

    Mr. Dragasakis is actually the only reasonable voice in there, who keeps the more "aggressive" fellows at bay. If it wasn't for him, God knows what they 'd say.