Charles Dallara provides a comprehensive account that offers a unique perspective worth reading both for those with ample knowledge of the euro crisis and for those who do not in Euroshock. It is a highly readable book and one which I would highly recommend.

Dallara was the Managing Director of the Institute of International Finance (IIF), a forum for the global financial services industry during the euro crisis, and he ultimately became one of the main architects of the private sector haircut on Greek sovereign debt. The book crucially differentiates itself from others on this topic by coming from the relatively under-reported perspective of the private sector during this crisis. Euroshock provides a front-row seat to the beginning of the Greek sovereign debt crisis until the resolution of the private sector involvement in Greek government bonds.

It documents the improvisational character of the European Union’s response mechanisms at the time. Dallara reveals a process that was reactive, fragmented, driven by parochial interests, and one in desperate need of leadership and a systematic approach and solution. This was particularly noteworthy if not necessarily new.

The absence of clearly delineated authority empowered to implement decisive action—particularly with an eye on the stability of the wider Eurozone, not to mention Greece—generated detrimental delays and inconsistent communications. This intensified market volatility and clearly frustrated the author and the investors he represented. It does make one wonder how much social and economic pain could have been avoided if European leaders at the time had taken more decisive and sympathetic actions. Indeed, this is a question that Dallara seems to be asking throughout the book.

Dallara adds, in my opinion, two essential components of information to the history of the European sovereign debt crisis. One is the perspective of an international banker who has been charged by his organisation to act on behalf of private sector creditors in a sovereign debt restructuring. This is a role not often discussed in the public, and one which clearly took on a lot of meaning in the case of Greece particularly as Dallara is an American who could look at Europe somewhat dispassionately giving readers a relatively unbiased view. He also adds newer perspectives, such as what Chinese officials thought at the time, a dimension I had not previously read about.

The second component which Dallara contributes is an understanding of the politics that come with the targeting of certain economic numbers. For example, a key IMF request in the negotiations with Greece as a condition of disbursing more support was for a ‘credible’ plan to get Greek debt-to-GDP down to 120% by 2020. This number became a ‘lodestar’ according to Dallara which prevented clearer thinking on the Greek situation, and the policies that would be appropriate for alleviating it (i.e., potentially less austerity particularly when the Greek economy was contracting rapidly, making the denominator shrink faster than the numerator causing the IMF and the European Commission to call for even more fiscal constraint). It raises an interesting point, especially in modern-day Britain and Europe, about the strictness of economic and fiscal rules when the times seem to call for a relaxing of those rules (such as when needing to decide how to re-arm, or how to stop market volatility from potentially destroying a currency union). 

For those looking for a political memoir or pop history of the Euro crisis, there are other and arguably better books out there (Game Over by George Papaconstantinou, Adults in the Room by Yanis Varoufakis, Crashed by Adam Tooze). Euroshock, by contrast, is a memoir, but that of a practitioner rather than a politician, and one that provides a unique insight on the processes and aspirations of the private sector in a very politically-charged situation. Dallara exposes the complex realities behind official communications and press statements and has drawn back the curtain on a different aspect of the European crisis.