Yanis Varoufakis, former finance minister, Greece HARDtalk


Yanis Varoufakis, former finance minister, Greece

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Now on BBC News, it's time for Hardtalk.

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Welcome to HARDtalk.

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I'm Stephen Sackur.

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Frustration and anger are the common currency

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of today's European politics.

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On the right, there's a resurgent nationalism, fuelled

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by fears of immigration, and, on the left, well, on the left, the

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enemy is austerity and an economic system seen as serving the elite.

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My guest today is one of the most powerful voices

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in Europe's radical left, Yanis Varoufakis, the motorbike

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riding, former Greek Finance Minister who confronted the powers

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that be during the darkest days of Greece's debt crisis and lost...

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Or did he?

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Yanis Varoufakis, welcome to HARDtalk.

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Yanis Varoufakis, welcome to HARDtalk.

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It's great to be here.

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When you reflect on your own life and Greece's turbulent

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life over the last, say, 15 months or so, do you reflect with a deep

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sense of disappointment, failure?

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Oh, no.

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Nothing could be further from the truth.

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Life is a constant battle and waging it is where

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the satisfaction comes out of.

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In the end, we are all dead - it does not mean we do not wake up

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in the morning full of zest.

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Well, that's a very interesting way of putting it.

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Life is a constant battle but nobody wants to spend life losing battles

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and you fought and you lost?

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Not necessarily.

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Losing the good battle, waging the fight that has to be

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fought, if you feel that it is a good cause, is a source

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of great satisfaction and pride.

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Even when you look at Greece today, you a country that is still tied to

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the so-called Troika bailout package, desperately trying to

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negotiate the latest instalment of the third bailout, you see former

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comrades like Alexis Tsipras, the prime minister,

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now managing a process which you have described in the past

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as little more than terrorism inflicted upon your country?

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Well, there is no doubt we have an extremely sad affair

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in the case of Greece.

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Greece went bankrupt in 2010 and since then the powers that be,

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including in Athens but everywhere in Europe...

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Including your former comrades, the party that you served for -

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what was it?

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- 6-7 months...

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Including every government that has served since 2010, the IMF...

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they have all been, in the end serving a gross denial

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by extending the crisis into the future, pretending they have solved

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it through, you know, just adding unsustainable debt on unpayable debt

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and this sounds like a historical incident of some interest but,

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in reality - that is why it is extremely disappointing - because we

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are talking about real people, here, we are talking about kids that faint

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at school from malnutrition, we are talking about a lost generation.

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But I suppose what interests me most is that it was supposed to

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be different after 2015.

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You know, you talk about the crisis going back to 2010, and you're quite

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right to do so, the crisis has been deep and long, but something

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happened in 2015 - the Greek people voted for a radical left alternative

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- the Syriza party.

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You, having said that you would "never, never, never" - and that'sa

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direct quote - "serve in politics," answered the call from Alexis

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Tsipras, and joined the Syriza-led government in an effort to

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fundamentally change the deal in Greece and Greece's deal with

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the European Union.

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Precisely.

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We stood on a platform of speaking through to power -

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and power of course is the Troika lenders, of creditors of Greece.

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Our pact was based - the pact of those who served in the

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first government that was elected in January, 2015 - was very simple.

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We are going to go to Brussels, and we're going to go to Washington,

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and we're going to go to Frankfurt and say to them, the program that

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you have been implementing in Greece has been a spectacular failure, the

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greatest macro-economic disaster in the history of the IMF,

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for instance - a third of our income dissipated, unemployment

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jumped up by 20% - imagine that, one in two families do not have

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a waged person in their midst.

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And we are going to say to them, we need to reboot.

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We're no longer going to sign on the dotted line of loan

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agreements without having secured that these new loan agreement is

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going to be sustainable.

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And we were, I thought, absolutely united in that and we were not going

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to back away, but in the end, a wedge was pushed between us.

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We were divided by the end, and once you get divided, you fall.

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Yeah, you fell.

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I mean, I look back at some of the things you said

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at the time you took the job.

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Having said you wouldn't do politics, you said, well,

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I can't resist this call, it's too important, my country's at stake.

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You said that we are going to do things differently -

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"we are going to destroy the country's oligarch who viciously

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sucks the energy and the economic power from everybody else."

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Your message was we are going to be truly radical to change Greece

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for ever.

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Why?

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(CROSSTALK).

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Not necessarily...

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I am not accusing left or right, at the moment,

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I'm just saying you refused...

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The crisis was so deep that left, right, commonsense could prevail.

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We needed to do three things - first, we needed to restructure

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and negotiate an unsustainable debt because,

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if you are bankrupt, that's it.

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There is no life beyond that.

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It's like being in the shadow of Mephistopheles all the time.

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Secondly, we would have to have credible fiscal targets so that we

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would never fall back into deficit position but, at the same time not

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have huge surplus targets that are unbelievable and therefore deeply

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further your credibility stock.

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And thirdly, attack the oligarchy, attack corruption,

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reform Greece deeply.

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These were the three things we needed to do.

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But there is arrogance, a hubris there, because the assumption you're

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making is it was within your power and remit to decide how

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to prioritise and what to do?

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But, of course, Greece was essentially bust.

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It was totally reliant on the money coming from outsiders and

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therefore outsiders had - clearly had - the right to decide how Greece

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should get itself out of this mess?

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Well, I think you are overstating it.

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Since when does debt mean that you have lost formally

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and fully your national sovereignty and foreigners will decide

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everything about your country...?

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Well, I am not saying everything.

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Think about any arrangement which involves a loan and a debt -

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there is a choice to be made on both sides.

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You only loan the money if you are sure and have promises...

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Ah-ha.

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About how that money is going to be used.

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So why did they land this money to a bankrupt state?

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2010 where the largest loan in absolute terms

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in human history given to the most bankrupt European state,

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you know, it takes an irresponsible lender and an irresponsible borrower

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to forge this kind of pact.

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(CROSSTALK).

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Indeed but the power and the cards lie...

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But to answer your question...

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Going forward the real power lies with the lender

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not with the borrower because the borrower is going to go bust...

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Not exactly.

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If you owe 320 billion euros, you have some power.

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Yeah?

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If you owe ?3,000 to the bank then you have no power.

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But if you owe 300 billion, and you are part of

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an interconnected financial system, you are not completely devoid

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of power but that is not the issue.

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Let's set aside for the moment the question of bargaining power.

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When I went to Europe group and to meet Dr Schauble...

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I want to talk a lot about that...

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I am referring to what you just said.

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What I took with me, in my suitcase, was a willingness to sit

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down with them, not to dictate to them what should happen in Greece

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but sit down with them and work out a manageable fiscal

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and reform consolidation programme.

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The trouble was, they were not interested.

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This is the very first time in history that creditors did not

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want their money back.

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Hang on a minute.

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You talk about going to the euro group,

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and sitting there with Schauble and all the others - you took a style

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with you, a style that was designed to antagonise, send a message...

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What, I do not wear a tie?

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Of course, you wore your leather jacket, we all know that...

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No, I did not wear my leather jacket (CROSSTALK).

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I can assure you.

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It was not about what you wore, whether you had atie on, whether you

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came on your motorbike - it wasn't about any of that - it was about

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the inflammatory language, accusing them of fiscal waterboarding...

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There was no inflammatory language.

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You called them terrorists!

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No, no, no.

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Get your chronology right.

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I used...

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Firstly I never caught anyone a terrorist.

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What I said was, in the first week of July, after our banks were closed

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down by our central bank, why?

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Was there a problem with the banks?

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No.

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The central bank of Europe - the ECB - had proclaimed our banks to be

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solvent and why did they close them?

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In order to force us, the elected government,

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to accept massive pension cuts, massive austerity cuts.

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Yeah?

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Now, what is the spread of fear in order

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to attain political objectives?

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It is terrorism.

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And so, by that stage...

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Fiscal waterboarding as well, that is torture.

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These are people you say, "I approach with an open mind, trying

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collectively to find a way out of this crisis that would help the

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Greek economy and the Greek people."

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You say that and then I refer back to every

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attitude you took into the room.

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You made a point of being the antipolitics politician but the

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way you did it just does not work.

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Stephen, Stephen, when a new government is elected to

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confront creditors and to say to them that in your

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interest, too, and in the interest of our long-suffering nation

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in a great depression, we have to sit down and find common ground.

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At that moment, you have to set aside all this brimstone

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and noise and get down to work.

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The fact that for five years, all previous governments were being

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fiscally waterboarded is indisputable.

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Think of what has been happening since today.

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It is happening as we speak.

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You can continue to use that language if you like but I then

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reflect upon Christine Lagarde, at the height of the crisis, in June,

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2015, coming out of a meeting with you and saying, with just total

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frustration, "it would be nice if we had some adults in the room."

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Stephen, she had not come out of a meeting with me when she said that.

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Who do you think she was talking about?

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Well, I'm not going to divulge this.

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It is not for me, you have to ask her.

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But, look, when I first met Christine Lagarde -

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since you're refering to Christine - we had conversation

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one-hour long conversation and we actually agreed on all the basic

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failures of the previous programme.

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Indeed, with Paul Thompson, who is the European chief

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of the International Monetary Fund, a very close associate of Christine

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Lagarde, we had agreed that the previous programmes had failed

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because there was no serious debt restruction involved,

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that the way of managing previous Greek governments by the Troika was

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effectively the strategy of fiscal waterboarding, which is what?

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You bring the subject to the point of no return

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and then you let the subject have a gulp of air - or liquidity, in the

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case of Greece - and then you repeat and you repeat and you repeat.

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This has been the pattern since May, 2010, and the result is the loss of

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one third of income and an ability to repay our debts to our creditors.

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The point is, and we come back to the opening of

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this conversation about senses pf failure - the point is that you, in

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the end, were thrown overboard by your former colleague, and the guy

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who hired you, Alexis Tsipras.

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No, this is not what happened...

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This is not what happened.

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It is what happened.

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No, it's not.

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Essentially, he said I'm going to let you go because the euro group

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cannot work with you anymore.

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That's not what happened.

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Do you want me to tell you what happened?

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You tell me what happened.

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From the end of April onwards, Alexis Tsipras and I started

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diverging in our views of what the right strategy should be.

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He was making compromises which, as far as I was concerned, were lethal,

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in the sense that they were...

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he was accepting for instant fiscal targets impossible to achieve.

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My view was, the moment you start doing that, you lose credibility and

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then at some point you're going to have to surrender and capitulate.

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That happened.

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Let me tell you...

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(CROSSTALK) when that happened, when he said to me on

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the referendum, when we called upon the Greek people to back us, not to

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capitulate, that night we met and he said it is time to surrender and

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at that point I said, not for me.

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We parted amicably, having disagreed on whether the right course

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of action at that moment was to continue the confrontation with the

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Troika creditors that were imposing upon us strings and measures that

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made it absolutely impossible for Greece, firstly,

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to recover and, secondly, to pay its debts, or to capitulate.

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When he decided as a Prime Minister's want is, to capitulate,

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it was time for me to resign.

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I was not thrown overboard.

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I was made aware of the absence and it was supposed to be

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potentially helpful.

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So the Tsipras did not want you and he knew that, and...

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It is not one voice.

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We can talk about individuals.

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You became toxic.

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I did not become toxic and I was a major inconvenience.

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Because I was the first Finance Minister.

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And this gets personal.

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Before you get there...

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Let me tell you why I was so despised.

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Either we capitulate and accept the programme

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of the previous governments that had failed so spectacularly or

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the banks would be closed.

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I made it abundantly clear that I shall never submit to such

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blackmail.

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Tsipras understood that.

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It was very important to him that I should be sidelined.

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As the Finance Minister of the Bank of State I would not sign

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on another loan knowing that we would not be able to repay it.

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This is what a sensible, rational, moderate Finance Minister should do.

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If you are running a business, the BBC or a company, you should

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never accept a loan if your existing loans and not sustainable.

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You were a radical.

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When radicalism hits it, reality trumps radicalism.

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That was the message that came out in the summer of 2015 and it is

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the message that comes out today in many different parts of Europe.

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There are powerful voices like yours that propounded a very radical

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leftist view of European economics.

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That is not the basis of it.

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Explain to me why?

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I ask you all to go to my website or any Google search engine and look

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at my proposals as Minister of Finance on the 11th of May 2015.

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What were our proposals to the Troika of lenders?

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They were the most moderate proposals we have.

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You are not in power any more.

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Greece is desperately trying to maintain the third bailout deal.

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You, in all respect...

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Ran a county that did not fail.

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We needed to have a radical minister.

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This is the depth of the European crisis.

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You need to have a radical left wing minister to propose common sense.

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Commonsense is in very short supply in Europe.

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Is Greece better off as a result of my defeat and my removal?

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No.

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We are deeper into the mire than we were a year ago.

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If my proposals had been accepted instead of the Troika,

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would we be better off?

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Definitely.

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It is indisputable.

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Look at the proposals and ask top-notch economists

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around the world, which are better or more sensible?

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Which would have given the Greek Nationals a chance to recover?

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After my removal, why did it happen?

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I don't want to get stuck on the past because there are

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important things to talk about.

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You are leaving an impression that a radical minister left

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and moderation prevailed.

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And moderate minister, released a radical minister

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proposing moderate policies was removed, and idiocy prevailed.

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Let me give you one example because your audience has to hear this.

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One of the things I would not sign into

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law was increasing the corporate tax in a country that was broken

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and the imposition of prepaying next year's tax a year in advance for

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small businesses that were broken.

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You are not reconciled to your defeat, are you?

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Well...

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You are not reconciled and you now run a movement that you

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say has the capacity to completely reshape Europe in a democratic way.

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Your argument is that the European Union

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as they are currently constituted is currently undemocratic

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and it is killing Europe.

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I just wonder how you believe you're going to persuade the European

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public as a whole of this argument?

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Firstly, the movement is not me.

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But since you are focusing on my past, and my record, it is

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important that we set it straight.

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In my six months in the finance ministry I put

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forward certain proposal.

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I consider them to be the only chance, even today,

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of Greece's recovery and of healing within the eurozone.

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I may be wrong or I may be right.

0:20:000:20:03

When did that happen exactly?

0:20:030:20:10

Well...

0:20:100:20:12

You just slipped in a major way.

0:20:120:20:14

When I was the most severe supporter of this

0:20:140:20:16

process, with 62% of the votes.

0:20:160:20:34

And the next day the Prime Minister said we're going to back

0:20:340:20:37

the deal anyway.

0:20:370:20:37

Do not say it was the Greek people who rejected the proposals.

0:20:370:20:40

They are not even in first place any more.

0:20:400:20:43

In that case, I need to get your ideas on the future of Europe

0:20:430:20:46

because such a big debate, not least in Europe, and there is an argument

0:20:460:20:50

about whether Europe can be changed from within or actually Europe is go

0:20:500:20:53

to have to collapse before anything else can be rebuilt

0:20:530:20:55

and something better.

0:20:550:20:56

What is your view?

0:20:560:21:15

There is no doubt that what we have created is a monster.

0:21:150:21:18

We have created a European Union which is deeply contemptuous

0:21:180:21:20

of the democratic process.

0:21:200:21:21

This is the reason why I had to resign and not to pursue what I

0:21:210:21:25

consider to be modern policy.

0:21:250:21:39

But you wanted to stay in the eurozone and you now advise Britain

0:21:390:21:42

to stay in the European Union.

0:21:420:21:44

But you call it a monster.

0:21:440:21:45

It seems entirely contrary.

0:21:450:21:46

Well I got in a country with a monstrous regime and we either

0:21:460:21:49

had to get out of it or to abandon it or to see it be dismembered.

0:21:490:21:53

I wanted to be democratised after our dictatorship in the 1960s.

0:21:530:21:56

The same thing applies to the European Union.

0:21:560:21:58

If we had not created the European Union and the eurozone,

0:21:580:22:01

we should not have had consent to the creation.

0:22:010:22:03

Is that OK?

0:22:030:22:13

As they currently exist...

0:22:130:22:18

But now that they exist, dismembering it, fragmenting it,

0:22:180:22:20

is going to take us where we want to be had we not created at.

0:22:200:22:24

It is going to throw us into a terrible abyss.

0:22:240:22:26

What is going to happen?

0:22:260:22:27

My prediction, and tell me if you agree with me or not, is that

0:22:270:22:31

there is going to be a huge fault line with Germany, Austria, the

0:22:310:22:34

Netherlands, Poland all forming a zone which will immediately go to a

0:22:340:22:37

big recession as its currency appreciates through the roof.

0:22:370:22:39

The rest of Europe, Latin Europe with Greece,

0:22:390:22:41

maybe Ireland, is going to go in a stagflation situation because their

0:22:410:22:44

currencies are going to depreciate.

0:22:440:22:46

This will create a vortex, and Britain as well

0:22:460:22:48

as other nations that are inappropriate for all of this vortex

0:22:480:22:51

are going to fall into it.

0:22:510:22:52

There is no way that we as Europeans are going to escape if this monster

0:22:520:22:56

of the European Union disintegrates under the weight of its hubris

0:22:560:22:59

and discontent for democracy.

0:22:590:23:00

It is our monster and we better civilise it.

0:23:000:23:44

We have to end there.

0:23:440:23:45

Thank you for being on HARDtalk.

0:23:450:23:59

It was a great pleasure.

0:23:590:24:04

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