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Yanis Varoufakis: “The European Union Is Determined to Continue Making the Same Errors It Made After 2008”

Yanis Varoufakis

The lack of EU help for the states hardest hit by COVID-19 is the latest sign of the hollowness of “European solidarity.” As Yanis Varoufakis tells Jacobin, the European Union’s institutions are hardwired to ignore the needs of the social majority — preferring to allow mass suffering than to change their own rules.

Yanis Varoufakis speaks at a Diem25 event on May 28, 2016 in London, England. Jack Taylor / Getty Images

Interview by
Loren Balhorn

Yanis Varoufakis is used to controversy. Since stepping down as Greece’s finance minister in 2015, the self-described “erratic Marxist” has become the leading spokesperson for DiEM25, a European-wide party that seeks to restructure the European Union’s institutions in the interests of the majority.

In March, Varoufakis made news for dropping what he dubs the “EuroLeaks” — his secret recordings of the closed meetings where eurozone finance ministers decided Greece’s fate back in 2015. The recordings confirm many of our worst suspicions about such opaque bodies — and provide fascinating insights into how neoliberal technocrats really work.

Europe’s institutions are again in the spotlight today, due to their weak reaction to the coronavirus pandemic and the resulting economic shutdown. As another round of rescue packages loom, Varoufakis spoke to Jacobin’s Loren Balhorn about the European Union’s response, what lessons elites have learned from the last crisis, and what different paths are today open to the Left.


LB

You released the “EuroLeaks” a few weeks ago. Are you satisfied with the reaction so far?

YV

Absolutely. We wanted to empower anyone who cares to understand how power abuses not itself, but those who have created it — that is, voters and the demos more generally. We’ve been overwhelmed by the positive response, even by those who disagree with us. They say, “At last, somebody has let us in, given us a front-row seat into what is happening behind closed doors, on our behalf without our knowledge.”

LB

What has the response been like in Greece?

YV

The same. On the one hand, there are those who make a living serving the interests of the oligarchy. They consider the EuroLeaks to be a major enemy and an affront and do everything in their power to discredit it. But even they cannot help but listen to the leaks and hopefully feel a bit embarrassed.

LB

It seems like one of the reasons you released the recordings now is that you are being blamed by both the current Greek government as well as the Syriza leadership for the very tough conditions Brussels imposed on the country. How much of this is about settling scores against your political enemies, who are trying to discredit you?

YV

Let me tell you where I’m coming from. Greece is a country whose population was on the floor even before the coronavirus hit. We have watched a new neoliberal/ultra-rightist, nationalist, and xenophobic government introduce legislation that will, with mathematical precision, seriously increase discontent and misery.

In December they passed a bill selling most nonperforming loans and mortgages to vulture funds, mainly from the United States and some from Europe. A sequence of evictions is also about to begin. When you hear the finance minister introduce that bill, trying to defend it on the basis of distortions of what was going on in those Eurogroup meetings — in which I was representing Greece — at that point I think, if you were in my place, you would also do it. Not to settle scores, but exactly the opposite: to reveal the lies and fake news that were coming out of those meetings. To prevent new policies from being legislated against the interests of weak, innocent people who are still being targeted for liquidation.

LB

Turning to the European Union, the pan-European party you helped to found, DiEM25, arguably puts forward the clearest critiques of how the European Union functions and what kinds of policy measures could be taken to make it less institutionally neoliberal and technocratic. Nevertheless, you have made little progress electorally, and failed to enter the European Parliament last year. How do you evaluate your performance so far? Why do you think it is so difficult to gain a hearing for your argument and win over large numbers of people to a platform like yours?

YV

We came together in February 2016 in Berlin to restart the process of thinking about progressive transnational politics. In the middle of a defeat — because 2015 was a defeat, not only for us here in Greece but for the whole Left across Europe. At a time of rising xenophobia, we made the assessment that our collective defeat was going to be the first step towards the strengthening of what you’d call the “nationalist International,” which finds itself in a loop of positive reinforcement with the liberal establishment. Because let’s face it, the Merkels and Macrons of Europe need people like [Marine] Le Pen and the Alternative für Deutschland (AfD) in order to convince the rest to vote for them. At the same time, the Le Pens and the AfDs need the austerity policies of Macron and Merkel in order to create the discontent that feeds them.

We always knew that we would be caught up between these forces, which antagonized one another and fed off each other. We had no organization and we had no money, and we always knew it was going to be tough. In the end, every single progressive force in Europe, including DiEM25, lost out in the May 2019 European Parliament elections. We all suffered from the success of the liberal establishment, who continue to do business as usual when business cannot be continued as usual. They are feeding the nationalist international, which then feeds back and reinforces the liberal establishment.

We have 120,000 members, but that’s not that many across Europe. We managed to secure 1.5 million votes on a total budget of €60,000. Not great, I was expecting us to do better, but it’s not catastrophic either. This was only a small first step. Are we going to succeed? I have no idea. What I do know is that what DiEM25 tried to do is the way to go.

LB

Eleven years since the global economic crisis and five years since the Troika imposed austerity on Greece, Europe is facing what looks to be a twin crisis of both a pandemic and, caused by it, a massive economic downturn. Do you have any hope that European technocrats learned from the last crisis and will adopt a different approach this time?

YV

There is a spectacular coincidence of errors by the European Union today and in 2010. They’re making the same category error: in 2010 they decided to paint the crisis as a crisis of public debt and lack of liquidity, meaning the solution must certainly be loans. So, the Greek state was loaned the largest amount in history, on condition of austerity. Mistaking a bankruptcy for a liquidity problem is what effectively incarcerated a very large section of Europe — a vast majority of Europeans — into permanent stagnation.

When the coronavirus hit, the eurozone economy was already very significantly damaged by the inane handling of the Euro-crisis due to that category error of purposefully mistaking a bankruptcy for a liquidity crisis. And they are doing exactly the same thing now. If you look at the communiqué of the Eurogroup, if you look at [German finance minister] Olaf Scholz’s pronouncements, his policies, they sound rather large — with huge sums like €500 billion in Germany alone. But if you look at the detail of what they are proposing, both in Germany and in the Euro-group for the European Union as a whole, you will find exactly the same category error — they are proposing large sums in the form of credit lines, loans, or tax deferments. Again, they’re treating what is crucially a sequence of bankruptcies as a lack of liquidity, as something that can be dealt with by means of loans. They’re doing exactly the same thing

So, no, they haven’t learned. They are determined to continue with the same error. But let’s not be naive. This is not a failure of the faculties, it is not a failure of rationality. The Euro-group and the European Union have been hardwired never to be able to make any decisions that utilize public finance in favor of the majority. The whole point about creating the eurozone was to eradicate the possibility of fiscal policy. And why was that? Because a particular configuration of European capital decided that the best way to maximize capital accumulation in Europe was to fix monetary policy and never give parliaments the opportunity to compensate for capitalist crises by means of fiscal stimuli.

They are absolutely determined. They would much rather see half of the continent sink then do away with that principle, which is a class-war principle from their perspective. We saw that in 2010, and we can see it with the coronavirus today.

LB

So, the bankers and the institutions will not change anything, but does it open a window for our side?

YV

Yes. Every crisis is an opportunity for the peoples of Europe to unite. But until and unless we form a genuinely transnational progressive movement — not a confederacy of nation state–based left-wing parties, but a genuinely pan-European transnational movement against the transnational bankers and oligarchs — we will not be able to utilize that window of opportunity. That is the lesson of 2015 — at least the lesson I drew here in Greece.