When French president Francois Hollande recently attacked the decision of former European Commission chief Jose Manuel Barroso to accept a position at Goldman Sachs, he cited the US bank’s role helping Greece fiddle its Maastricht ratios.
Fifteen years after it was signed, and thirteen years after I first wrote about it in 2003, the notorious Goldman-Greece swap retains a larger than life symbolism in the debate about the European Union. A year ago I spoke about this to the New York Times, in a column written by Bill Cohan. As that article shows, there is a continued appetite for information about this deal.
The deal has attained an importance out of proportion to its initial impact on Greece’s balance sheet. As Goldman never tires of pointing out, Greece’s debt-GDP ratio declined by ‘only’ 1.8 per cent as a result of the swap. And Goldman says it can’t be blamed for the subsequent explosion of this ratio by over 70 percentage points and the collapse of Greece’s economy.
This misses the point. As the uproar over Barroso’s move to Goldman shows, the US bank is loathed in continental European capitals for having done the deal. With its prestigious name, Goldman gave Greece vindication that Maastricht rules could, and should, be flouted at will. The Brexit vote merely heightens the feeling that Goldman undermined the EU project right at the beginning, and the bank is not being forgiven for it.