Roger Strassburg and Jens Berger, of NachDenkSeiten, interviewed me on the Modest Proposal to Resolve the Euro Crisis and the Eurozone Conference that James K. Galbraith and I organised in Austin in November 2013. Part A of the long interview was posted here. Here is Part B of the interview, which (as you will see) focuses more on Greece and the chances of kickstarting the debate that Europe is refusing to have, so far….Roger Strassburg: What do you see physically as the effects of austerity in Greece? How has it changed in the last five years?
Yanis Varoufakis: We are talking about the greatest diminution of human life prospects since the 1930’s during the Peacetime. It’s inescapable. Wherever you turn your eyes and ears towards, you see and hear signs of a country that has fallen into a hole. I can give you several rather sad examples.
You walk around Athens at night and you can’t fail to notice that there are several apartments that are not lit, but where people live in candlelight because they can’t afford to pay their electricity bill, especially after the government started introducing the deduced property taxes that are extracted from one’s power bill, electricity bill. Then there is the massive exodus of highly-educated young Greeks who are flooding the rest of the world, not just the rest of Europe. Perhaps the most toxic part of the equation is the banking sector around which a new kleptocracy is being created, funded by loans that the long suffering Greek taxpayer has taken from European taxpayers with which to retain in authority the very bankers on whose watch the banks went (and remain) bankrupt, thus guaranteeing that even healthy Greek firms will not have access to credit for decades to come.
And, of course, the worst part of it all is the rise of the Nazis. Now in Greece, the country that fought tooth and nail against the Nazis during the 1940’s, on a par with the Yugoslav resistance, we have a Nazi party, not a neo-Nazi party, but a fully-fledged old-fashioned Nazi party that commands more than ten percent of the vote. Even though its leadership has been apprehended and imprisoned, their strength is actively increasing, feeding on the desperation of very many people, and, of course, on the lost legitimacy of a political system that has imploded alongside the social economy.
Roger Strassburg: Do you see a danger that the Chrysi Avgi would actually become the largest party at some point?
Yanis Varoufakis: I don’t see that, but what I see is something worse. I see the Nazi party, Chrysi Avgi, already in power. They are already in power as we speak! They’re not in government, which is a form of irony. Let me give you an example which made me feel deeply ashamed to be Greek.
Before the May, 2012 elections, the police apprehended a very large number of women on the streets of Athens, women that looked disheveled, that were possibly prostitutes. They were apprehended without warrant, without cause, on the order of the Ministers of Public Order and Health. They were thrown into cells, then photographed and subjected by force to HIV tests. When the results came back, those whose HIV tests were negative were released but the rest were photographed, their photographs and their names were posted on the government website and the women themselves, without any counseling or genuine medical assistance, were thrown in jail. That runs in the face of every liberal and constitutional norm or piece of legislation that I can think of, and it violates public health guidelines; it violates constitutional rights. Now, why did they do that? Well they acted that way in order to placate Chrysi Avgi, Golden Dawn, potential voters, and to try to lure them into voting for them, away from Golden Dawn.
On to a second example: After this current government was elected, in June, 2012, one of the first things they did was to change the law regarding requirements for entering the military and the police academies. Suddenly, it no longer sufficed to get the right examination score if you’re a youngster and to be a Greek citizen. You now have to prove that have a Greek bloodline. It’s called ‘ithagenieia’. So you can be a fully-fledged Greek citizen, a person who was born in Greece, is a Greek citizen, went to Greek school, has never left Greece, has the grades to enter the police academy or military academy, and yet does not have the certificate of ‘ethnic cleanliness’. Now, personally I feel deeply ashamed to be Greek. My country has managed, in 2012, to bring back from the dead Nazi Germany’s 1930s legislation. This why I am saying that Golden Dawn is to a large extent in power. For if they have succeeded to force the Greek government and parliament to institute such abhorrent pieces of legislation and practices, why do they need to be in power themselves?
Roger Strassburg: That is news. Do you think that there’s a balance on the other side that may at some point – Syriza is actually not that extreme, but is on the left. Do you think that the other side of the political spectrum is gaining influence?
Yanis Varoufakis: Well, it’s my understanding that Syriza, the so-called coalition of the radical left, is edging ahead of New Democracy in the polls. New Democracy has suffered from false promises issued throughout this year, about the so-called recovery, which, of course, is just a piece of political propaganda that has no bearing on the truth. Alexis Tsipras is now leading a party that is probably going to be – if there is an election in the next six months or so – the largest party, more likely than not. One never knows. But that seems to be happening.
There are two questions here, the first one is, would a Syriza victory be followed by a capacity of the Syriza leaders to come to an agreement with smaller parties in order to forge a parliamentary majority. And the second and of course biggest question is what will they be able to do once they manage it?
Roger Strassburg: Well, the question is how much room they have to actually do anything. They’re in kind of a box.
Yanis Varoufakis: Yes, exactly. My view on this is, and this is what I have been putting forward in Greece and in conversations with Alexis Tsipras, that they have no degrees of freedom whatsoever within the context of Greece’s institutions. As you put it, they are in a box.
Syriza’s leaders have, over the last year or two, come to the conclusion, and I think correctly, that it will be a disaster to get Greece out of the Eurozone. At the same time, it would be a disaster to try and implement the current loan agreement, bailout deal with the Troika – the reason being that it simply cannot be implemented. It’s not a question of willpower. This is an agreement that is utterly irrational and which is self-defeating.
So the only thing that they can do given that within Greece there are no degrees of freedom, as I said, is to renegotiate the agreement. But the only way of renegotiating the agreement is if they are willing to adopt a tough bargaining stance. To go to the next European Union Council, once elected, and set out what the broad guidelines for a new agreement must be, adding that unless these broad guidelines are put on the table and discussed sensibly the Syriza government is not going to make any repayments to the European Central Bank in the context of bonds that the ECB owns and are maturing, and that none of the steps and measures agreed to by previous governments will be implemented. For instance, there won’t be any fresh public sector firings. Then, be prepared for two to three tense months before a proper bargaining process commences: a negotiation in Europe the purpose of which is a rational agreement on how the Greek state, the Greek public sector, can live within its means without any future outside assistance and without turning Greece into a deserted land sparsely peopled by walking ruins.
Jens Berger: Yanis, as you’ve probably already heard about, in Germany the new Grand Coalition of Angela Merkel’s conservatives and the social democrats finalized their coalition agreement, and if you read the coalition agreement for the euro crisis policies, you’ll see that there’s nothing new. It’s the Merkel course for the next four years. What message is that for Europe, and how would you as a Greek economist comment on this.
Yanis Varoufakis: Well it was not unexpected. I did read the CDU-SPD-CSU agreement, and it didn’t surprise me at all. And it didn’t surprise me at all because you only have to read what the SPD was saying prior to the election to realize that they never challenged the Merkel position, the Merkel blueprint on what to do with the Eurozone. And if anything they criticized her for having gone… too far. They criticized Merkel for the banking union, they criticized Merkel on the base that Merkel never came clean on how much these bail-outs would cost the German taxpayers. But they never criticized the Merkel’s basic logic on how to combat the Eurozone crisis.
It was natural that the government that would be formed in Berlin would at the outset, at the beginning, not make any proclamations of any change to current policies. That, however, doesn’t mean that there won’t be any change. But I’m not at all hopeful that the changes will come because the SPD is in the government. I personally don’t trust the SPD at all. I don’t trust that they are even interested in changing the Merkel strategy.
But I think that Merkel and Schäuble know deep in their bones that the current strategy cannot continue. And it cannot continue because it’s self-defeating. It’s not that the SPD or the current Greek government or the Spanish government or President Hollande or anyone else is going to force Mrs. Merkel to change course. Reality is going to change her mind, I hope. And I actually think that Mrs. Merkel and Mr. Schäuble have a whiff of that for some time now. It’s just that they were not prepared to make the changes before they feel they are running out of time. I have no idea what changes they will conjure up. But whatever those changes might be, it doesn’t surprise me that the present agreement between the SPD and the CDU and the CSU do not reflect those. Those will be changes that will come about as a result of long negotiations with the ECB, with other governments and in light of the evolution of the crisis.
Jens Berger: So you’re still an optimist.
Yanis Varoufakis: I’m trying. But it’s getting to be increasingly difficult to remain an optimist.
Roger Strassburg: Yeah, I was going to say that I’ll believe that Merkel’s going to change when I see it.
Yanis Varoufakis: Yes, me too.
Roger Strassburg: I don’t think she will. I don’t think Schäuble will, either.
Yanis Varoufakis: Well, you know what? In that case, the Eurozone is going to bid us farewell.
Roger Strassburg: It will, but I think this is what’s kind of behind Heiner Flassbeck’s position that the peripheral countries should get out of the euro. That really isn’t his preference, but I think he has reached the conclusion that there’s not going to be any other choice, that it’s not going to get better.
Yanis Varoufakis: He’s probably right. Where he’s wrong, and where I disagree with Heiner, is in his conclusion that we should simply get out of the Eurozone or, at the very least, threaten to do so. What we should do is veto the present policies. And bring things to a head. If I were the Greek prime minister I would declare that I would never going to get out of the Eurozone. “If you want to throw me out, go ahead and do it. Do your worst. Switch off ELA support to the banks and let everything go to hell. But I’m not getting out of the Eurozone. I’m also not going to fire 4,000 public sector workers in December. I’m not going to redeem the ECB for the bonds that it’s holding. And I’m not going to be talking to the Troika until and unless we have a European Union and Council in which we sit down and discuss reasonably and rationally what needs to be done. Now if you want to dismantle the Eurozone in the process by unilaterally discontinuing ELA support to my banks go ahead. If you want to get out of the euro yourselves, be my guest.”
Roger Strassburg: What do you think is keeping that from happening? The leaders in the peripheral countries have been extremely timid.
Yanis Varoufakis: Well, the fact is that the Periphery is ruled by clones of Mr. Quisling. The whole point of the political stance of the Periphery’s leaders is to demonstrate that they remain on a side with the powers that be. They don’t really care about anything else. Mr. Rajoy, Mr. Samaras, even Mr. Letta in Italy. If they have to assign priorities, their number one priority is to get a pat on the back from the powers that be in Frankfurt and Berlin and Brussels. And until and unless there are political leaders who put the national interest, and the interest of the people of Europe more broadly, above their great eagerness to be patted on the back by the powerful, we are not going to see anything change. Europe will continue to decline.
Roger Strassburg: Do you see anybody on the horizon that might actually have the backbone to stand up and do that?
Yanis Varoufakis: The reason why our conference was interesting here in Austin was we hosted the one political leader in Europe who can possibly become prime minister and who is likely (if he does become prime minister) to break with the Quisling tradition. Alexis Tsipras. But I think that his importance goes beyond Greece. I don’t really care who does it in Europe, whether it’s a Greek politician, an Irish politician, or a Portuguese politician. Somebody has to start the ball rolling. One government has to say no. And I believe that “no” by one government will be like the little chip on the dam that causes a small leak that will then bring the whole dam down. I think that there of lots of politicians even in today’s corridors of power who are eager to open their mouths and start speaking up, and that none of them is going to dare to be first unless somebody else does it. So what we need is one government that tries something we’ve never tried out in Europe so far, and that is speaking the truth. Then a chain reaction will be triggered. I have no doubt about it. The question is who is going to be the one that starts it. The reason why Jamie and I were keen to bring Alexis Tsipras over to our conference was because we think that he may be somebody that might do it.
Roger Strassburg: Is there a place for you in the government when he does?
Yanis Varoufakis: I hope not. I really hope not. But let me say why. I’m an academic. I find it very hard to operate along the lines of what the British call the ‘collective responsibility’ of cabinet. I like the opportunity of disagreeing with myself. And I’m not very good at toeing a line that is given to me. So I sincerely hope that the answer to your question is no. In fact, I have little doubt I would not be very good at that racket.
Roger Strassburg: It wasn’t entirely serious, either. Somewhat, because I know you have advised Tsipras, haven’t you?
Yanis Varoufakis: Yes, that’s right.
Roger Strassburg: Thank you very much.
Yanis Varoufakis: Thank you.