Yannis Varoufakis has shared with Sputnik his rather gloomy vision of Europe, noting that it’s “moving towards fascism.” As for Greece, Varoufakis believes that the country is now at the “fourth memorandum” stage, with “all the worst things” and the government is limited to distributing “pocket money”.
Speaking of the wage increases in France and Spain, Varoufakis notes that "we're locking the stable door after the horse has bolted." He also argues that the confrontation between Rome and Brussels makes no sense.
"By blackmailing Salvini with driving him out of the eurozone, they are actually threatening him with his own dreams," he told Sputnik.
Speaking of Greece, Varoufakis says that the country is now experiencing the "fourth memorandum" stage, which is going to be "the worst of them all" because instead of "borrowing and pretending that we pay the debt, we have postponed the payment till 2030, while the surplus is expected only by 2060." At the same time, he accuses the country's government of "promising benefits without actually providing them." Instead, it offers "handouts" and "humiliating pocket money" in order to convince us that we are in the "post-memorandum stage."
Sputnik: How would you assess the current situation in Europe with these Yellow Vests protests on the one hand and wage increases in Spain and France on the other?
Yannis Varoufakis: I would say this is a sign that any excuse for reforming the eurozone architecture has collapsed. In fact, Macron's retreat before the Yellow Vests is akin to announcing the completion of the project. This is the end of Macron.
He has been chosen thanks to a social contract between the French and the Germans. According to the contract, Macron had to "Germanize" France, its labor market and budget; having done that, he then had to go to Merkel and say: "Angela, I've Germanized France; it's now your turn to federalize Europe", which has a single Ministry of Economy, a common budget, real banking integration, common unemployment funds and a single investment plan.
During his first year in office, Macron has Germanized the French labour market by introducing more flexible forms of work, simplifying the dismissal process, as well as introducing austerity measures that resulted in appearing of a large number of small Greeces throughout France. This has all lead to the appearance of Yellow Vests. This was the first stage; the second stage failed. This is what this agreement with Merkel was about.
Having been panicking for quite a long time, Macron now realizes the collapse of his struggle for united Europe; and this contributed to his panic. Now we have Yellow Vests gaining up to 80% of popularity, and Macron is forced to follow the lead. This has put an end to any mutual understanding between Paris and Berlin. However, it was a great gift for Salvini, because Brussels and Moscovici no longer can blame Salvini for the 2.4% deficit, while Macron has it at 3.6%.
Sputnik: On the other hand, Brussels seems to have become more dialectical…
Yannis Varoufakis: The English have this saying ‘to lock up the stable door after the horse has bolted." I mean that, considering that the initial reduction in the minimum wage was about 40%, we can say that Spain's growth is rather small.
In other words, they have lost. The Weimar Republic, which is Brussels, barely keeps up with the situation. What is happening in France with the Yellow Vests movement is the result of the deep stagnation of French society and their following the Greece-like rhythm.
At a closer look, France's wage increase reminds the British "Yes, Minister" TV series, where first, the Prime Minister made an important statement, and then the bureaucracy announced it was impossible to implement.
This is not about raising the minimum wage; the salary will remain exactly the same. What has been done corresponds to the formula 0+0 = 14% introduced by the Mitsotakis government. Employees will receive €100 through the tax system, but this won't affect the taxes themselves.
The problem is actually different. Europe is falling apart, the political center is collapsing; we are now experiencing the most significant discrepancy in history between accumulated savings on the one hand, very small investments on the other. Never in the history of capitalism has there been so much money, with such a low level of investment.
Let's have a look at the numbers — there's about €3 trillion in the eurozone, which remain uninvested. This discrepancy guarantees the lack of high-quality jobs. Therefore, no matter what happens with salaries, the situation won't change. Secondly, Germany's interest rates are guaranteed to be negative. Pension funds are shrinking, especially the private ones that most Germans work with, people are starting to turn to the AfD and leave Merkel. This is not happening due to the migrants; this is happening because people can clearly see deflationary tendencies on their savings.
At the European level, this looks like the 1930-s. Discrepancy between money and investment gave rise to Hitler and Mussolini. Now this leads us to Salvini and the AfD; generally speaking, this leads us to the European political agenda turning towards fascism.
Sputnik: Still, do you think that Italy will be able to withstand the pressure of Brussels in this confrontation between Rome and the European Commission?
Yannis Varoufakis: Both Brussels and Salvini are mistaken. It's impossible to do what Brussels wants. At the same time, it's also impossible to do what Salvini wants. Just imagine me saying: "I will swing my arms and fly." No matter how ambitious I am, I will fail.
If you follow the policy of the Brussels financial pact and adhere to the formula that determines the deficit, then you will never have the required deficit. Even if Salvini does what he says — "we will increase the budget deficit, and we'll have the growth" — there will be no growth anyway.
Sputnik: Even if this is the case, will Brussels allow Salvini to do this?
Yannis Varoufakis: For many years — since Matteo Renzi went to Brussels and signed the so-called banking union, which basically guaranteed that Italian banks would become sort of zombies and ballast for the Italians — nothing has changed.
Over the past 18 months, Italy lost about €200 billion. Rich Italians are withdrawing their money to other countries. What we have is zombie banks, economy with a 3 percent trade surplus that should make you fly; the government and regular surplus since 2011; so there is no problem.
But still, this is an economy that is stifling Italians, because of the banking system and the weak, ill-conceived architecture of the eurozone. For the past 15-20 years Italy's per capita income has been declining.
Salvini is a symptom. Salvini and Moscovici seem opponents; but in fact they are not. They admire each other. Juncker, Moscovici and Macron couldn't do without Salvini. Their policies are so unsuccessful that if it were not for Salvini, they wouldn't have been able to justify their existence. When Salvini appears with his hatred and racist rhetoric, Macron and Juncker come out and say, "it's we or Salvini." So they're justifying their existence.
Macron would never have been chosen if it were not for the fascist Le Pen. He needs her; he can't do without her. On the other hand, Salvini needs Juncker and the others — they allegedly force him to abide by financial rules, which everyone knows to make no sense. Thus, Salvini can tell the Italians that he is "the leader who can save them from the nonsense that Brussels is saying."
Salvini and Juncker, the establishment that has brought us to crisis and fascism, is, in fact, a partnership where everyone needs each other.
Sputnik: In case Salvini wins, would this mean a return of power to the member states?
Yannis Varoufakis: This is a fictitious standoff; no one can win here. They are going to pretend to fight and reconcile until Salvini decides to take an important step. And I think he will take it.
Salvini is very dangerous, and he is not Renzi.
Sputnik: What is this important step about?
Yannis Varoufakis: Out of the euro!
Sputnik: Do you think he will do that?
Yannis Varoufakis: I think he is getting ready for that. However, let's not forget that Salvini ranks second due to the number of votes in the government. The Five Stars Movement and Di Mayo have about 30% of the votes, while he has 18%. The fact that we are talking about Salvini and not about Di Mayo is a great success for him. This shows how cunning he is.
His goal is to become number 1 in the government. He is doing his best before the Euro-elections — this alleged contradiction with Brussels, his hatred and racist rhetoric — to make the Lega Party number one, and the Five Stars number two. And then it will be possible either to restore the government with the current Prime Minister, or to completely expel Di Mayo and have the party of Berlusconi.
Some compare me to Salvini. The difference is that I advocate a European idea; and when he is threatened with being thrown out of the euro zone, he is, in fact, threatened with his own sweetest dream.
Sputnik: It looks like the EU is trying to strengthen the position of the euro against the dollar. Is there a chance that the dollar hegemony will fail?
Yannis Varoufakis: Actually, something like "donkeys will grow wings and to fly to Asia and Africa" seems more plausible. This is all a joke. There is a reason why the dollar is the main instrument of capitalism.
There is no doubt that Juncker and the European Commission would very much like this. But the German industry, Bundesbank and the country's political establishment don't want this. And here is the reason — the essence of the euro is that the "German mark" could keep low, so that it could remain exportable. When a currency becomes global, it immediately grows in demand.
Gasoline, which we use in Athens, may come from the Greek refinery, but the initial fuel is delivered from the UAE with no American company acting as an intermediary; oil is estimated in dollars, so the demand for the dollar is increasing.
Euros that we pay at the gas stations, are converted into dollars, so the demand for the dollar is growing, which means that the price of the dollar in international markets is much higher than in the case when this currency weren't a reserve one.
Bundesbank's main goal of is to guarantee a low exchange rate of the German national currency on the part of German exporters, when in the ECB they all say "nein" to that.
Suppose we convince the Germans to internationalize the euro. Even if the Saudis start accepting payments in euros, every time they sell a barrel of oil, they will have to add a certain commission. This amount must be invested. It's safest to buy US government bonds. Therefore, to get the euros, they must be turned into US government bonds.
Why should they not buy Eurobonds? Simply because they don't exist! It's simply because there is no EU, there is a joke called the EU. Getting rid of the dollar is highly unlikely as long as Europe continues to be so stupid.
Sputnik: Greece is outside the memorandum now. The government reports "relief measures" for those affected by the crisis, and says the crisis is over.
Yannis Varoufakis: They said the same thing in 2010 about 2011. Over the past 10 years, every government has done that — they said that the following year "we would enter the markets", or "the crisis is going away", or "there would be progress soon." This is incredible!
Sputnik: Will 2018 year end with a growth?
Yannis Varoufakis: No! There is no growth, there is ‘shrinkage'. There is this Orwell-style continuous, systematic shrinkage and demagogy. Today, Tsipras is doing the same thing that Samaras did in 2014 — there's this "success story" and "Greecovery". I can understand that. What is left to do? What should he tell people rather than that his tactics has failed?
Let's have a look. What does a memorandum mean? Would this change anything if Samaras-Venizelos called the second memorandum "after the memorandum"? No, this is just a matter of terms. A memorandum doesn't mean EU supervision; it means that the EU member state isn't able to pay its debts, and then the EU, together with the ECB and the IMF, provides it with certain "funds" that will help it pretend that it is paying those debts. This is the first part of the memorandum. Its second part is constant savings.
Today we know well that we won't be able to pay our debts. We can't issue the necessary bonds. This means that our construction today is different from the past; it is, in fact, much worse. There was €100 billion, which had to be returned in the period from 2020 to 2030; but they have postponed this debt and the growing interest for 30 years more! In fact, we are told: "Don't give us the money today; you ca do it in the future, but with higher interests."
The first three memorandums were about 1 and 3 years, the current one is about 30 years! You no longer need to go to Parliament for a postponement; they just told you that you don't have to pay until a certain moment. But there is also the second part of the memorandum — in order to pretend that we will have money, we must have such surpluses that no country in the world has by 2060!
Consequently, the fourth memorandum, which we are now in, is much worse than all the previous ones, because it's the longest-lasting, and it guarantees that not only our generation, but the next one, will live in conditions of debt servility; and this guarantees the country being devastated by migration.
Sputnik: However, so far no one is talking about new requirements to reduce costs, as was the case in previous years.
Yannis Varoufakis: When I hear it, it drives me crazy! Suppose you have a business. You have to give 75% of your profits to the state! Is it not a reduction when you tell small businessmen that they must give 75% of their profit to the state, despite the fact that in Bulgaria this is only 10%?
The government is trying to win the election, in reality trying to return the past vicious system — the promise of benefits without providing them. By providing this humiliating ‘pocket money', SYRIZA is trying to convince everyone that the country has withdrawn from the memorandums; on the other hand, we are waiting for the revanchist, right-wing New Democracy promising a powerful state and privatization.
Sputnik: However, at performance level, there is relative calm as compared to this period before 2015.
Yannis Varoufakis: What happened in 2011 with the Outraged had never happened before. People are disappointed. They took to the streets, they supported us; they got 62%, and then betrayed the people.
People have lost hope that the political system, whether through parliamentary processes or street protests, could change anything in their lives. The same thing happened in the 30-s during the Great Depression, when people were sat at home licking their wounds. This doesn't mean that people accept what has been done.
Sputnik: Do you think the period of "yes" and "no" for memorandums has ended? In ΜέΡΑ25 you're paying great attention to the economy…
Yannis Varoufakis: When you find yourself in captivity, the only thing you can think of is escaping. Unless we are done with debt servility, any serious talk about the future of the new generation is meaningless.
Sputnik: Do you think that the issue of the memorandum will be a priority during the next elections?
Yannis Varoufakis: The Greek political and economic oligarchic system will do everything possible to preserve and demonize the debates, which all the same lead to nothing. This misting is beneficial for an oligarchy that doesn't want to change anything.
And in ΜέΡΑ25 we don't follow a certain tactic; we are constantly saying that "we know very well that we all fear one thing — the fact that our children will either move abroad or stay here doomed to live in a miserable existence. If we want to change that we must do something. If you disagree with us, tell us about that."
Sputnik: What's ΜέΡΑ25's election program? Are you going to support the repetition of the first half of 2015?
Yannis Varoufakis: ΜeRΑ25 is the only party that has already formed a complete and consistent electoral program. You can visit the mera25.gr website and look it up. We believe that we should be judged according to the proposals we make.
We are not going to return 2015; we can't do that. What we offer is an urgent package of legislative measures, regardless of whether we stay in the eurozone or not, for example, reduction of the advance on taxes. If they want to throw us out of the eurozone, because we are doing some obvious things, let them do that.
If they want to throw us out of the eurozone, because we're going to solve the problems of red loans by creating special organizations, let them do that.
I believe that they won't do that, because it will cost them €1 trillion, considering the current situation with Brexit, Salvini, Macron and Yellow Vests. We don't offer or require a withdrawal from the euro zone.
Sputnik: Why have you decided to become a candidate from Germany? According to the media, this is due to the fact that in Germany there is no minimum rate for entering the European Parliament. What are you going to do if you get into both the European and the Greek parliaments?
Yannis Varoufakis: It's interesting that people read the first sentence and skip the second one. I said that my presence in the European Parliament from our fraternal party would be symbolic.
The reason for that is my desire to show that there is no conflict between Greece and Germany. For the same reason, our DiEM25 movement, which MePA25 is a part of, was born in Berlin. What we want to show is that nothing can change in Europe if it doesn't come from Germany, the center of Europe.
I will focus more on the ΜeRΑ25 election campaign in Greece; I think that Greek elections will coincide with the elections to the European Parliament and will take place in May.
Some people think that I will take part in both campaigns, because I won't get a seat in the European Parliament. If Greek elections take place in September, and by that time I become a representative of German voters, I will give up the position in order to focus on the ΜeRΑ25election campaign.
Sputnik: Could you tell us more about the Progressive International movement that you founded together with Bernie Sanders.
This is what Progressive International is about — we, the postmodern reincarnation of the generation of the 1930-s, want to unite now; we want to do what people couldn't have done back then.
Bernie Sanders and I have founded the DiEM25 movement to invite progressive forces around the world to a general meeting where, regardless of the country, we can find answers to various questions, such as what monetary system we should use all over the world, or how to save our planet from climate change.
The views expressed in this article are those of the speaker and do not necessarily reflect those of Sputnik.