Why have you decided to engage in politics with Syriza?
For a long time I was not close to Syriza. I advised, before he became Prime Minister in 2009, George Papandreou. But when, in June 2010, I started writing that, contrary to what was asserted Greek political, Greece was bankrupt and had to accept this fact, several politicians from all backgrounds have contacted me including Alexis Tsipras. Gradually, our positions have become closer over the years. I never had the intention to enter politics, but when you have established, as an economist, a set of recommendations for your country and a political leader offers to implement them, it is difficult to refuse.
If Syriza wins, do you actually implement these recommendations?
No, the only certainty we have in Greece, it is uncertainty. But if you have a chance to do so, you must enter.
How do you understand the Troika pressure on your country at this time of election?
The Troika is trying to suffocate us and to put pressure on the democratic choice by telling us: either you follow our requirements, or you will be cast into hell. They actually have their own threats as exogenous circumstances of the situation, as they are simply part. They are trying to terrorize the Greek voters.
How to respond?
For my part, I like to think that the best weapon that can oppose the Troika is to have an elected government with a good majority. Once the elected government, it seems to me that one should be able to sit at a table to finally discuss the final resolution of the Greek crisis and develop a new approach from the rest of Europe. Because this crisis is not a “Greek” crisis is also a crisis in Europe. If Greece had not been in the euro area, it would not be there. No doubt she would also be in trouble, but not to this extent. If France itself deadlocked, because of its debt and its political and social situation, it owes also to the current organization of the euro area.
The 2008 crisis is a crisis comparable to that of 1929 and we remember that the latest crisis has unleashed forces that destroyed Europe. However, we have never been allowed to deal with this crisis as a systemic crisis. Europe has always insisted that the crisis in Greece was a Greek crisis. It is not one. We must finally understand that if we want a monetary union, we need to create a network of internal solidarity. A victory for Syriza would be an opportunity to finally deal with the crisis in its true dimension.
But when he was elected in 2012, Francois Hollande also wanted to change the euro and it also had the democratic legitimacy area. It was not enough.
In fact, he never tried. He was content to focus on the ‘growth’ of the Stability and Growth Pact, but outside of this semantic change, it does not happen. But the position of France in 2012 is not that of Greece today. France is not bankrupt, we are there and we have nothing to lose. If Europe and Berlin believe they have the moral right to asphyxiate us, to kill us, I think we must be willing to let them.
How do you explain the European policy of François Hollande?
The French Socialist Party has a heavy responsibility in the way the eurozone is structured. There has, since the early 1990s, the will of the PS to capture the Bundesbank to enable France to be rich beyond his own limits. This will – which has its roots in the first proposal for monetary union, which dates from 1964 – led to a “dance of death” between Paris and Frankfurt and has made PS accomplice of all developments in the euro area . In fact, France is at war with Germany, and this leads to a true subjugation of France, to create what I call a “post-modern Vichy. “And the only advantage of this situation, the National Front … I believe that a Syriza victory in Greece represent the last chance for Francois Hollande to change this situation.
What are your proposals to the troika?
We first ask within 10 to 15 days to finalize our plan we want both very detailed and comprehensive. This plan will be organized around four pillars.
The first pillar will concern the Greek debt. We want to make proposals that even Wolfgang Schäuble [the German Federal Minister of Finance, Editor’s note] can not refuse. There will be no lack of clean cuts in debt. We will propose a formula where the repayment of the debt depends on the evolution of nominal GDP. The idea is that Europe will be our partner in growth, and should not count on our misery. The second pillar, it will reform.
But Europe and the Troika claim the government of Antonis Samaras is the best guarantee of “reforms” …
This is obviously false. Antonis Samaras made the surgery with a butcher knife. We want to use the laser, not to kill the patient. But of course we want reforms, we want to end the kleptocracy that ruins this country. And it does not mean destroying jobs and working conditions, or sell cheaply domestic firms.
And the third pillar?
It concerns the investment. The investment problem in Greece can not concern only Greece. Syriza is committed to maintaining a balanced budget, we can not therefore expect the Greek government to solve this problem. We therefore need an ambitious plan at European level.
But Jean-Claude Juncker has he not already running such a plan?
I do not cease to be amazed at the stupidity of this plan. It’s like giving aspirin to a dead man. Moreover, quantitative easing (QE) by Mario Draghi is also not a good idea. It will probably only fuel bubbles in financial markets. Yet Europe has an instrument to invest, the European Investment Bank (EIB), which is now too timid in his actions, not only because it fears for its rating, but because his investments must be financed.
Therefore release the EIB’s capacity to act to initiate a real “new deal” for Europe and inject 6-7% of GDP in the euro area in the economy. And if Mario Draghi wants to buy public debt, it would be more useful than it buys on the secondary bond market of the EIB. It will be much more useful than buying German debt. The rates of the latter would thus be kept low and we can finance a new wave of investment that Europe – not just Greece – needs.
And the last pillar of Syriza program?
This will finally address the humanitarian crisis in Greece. But again, I think we should reflect on the European level. In the US, food stamps helped out of poverty hundreds of thousands of households. Why not use the benefits of the Eurosystem, the network of central banks of the euro area, to finance such good in Europe? This would create the political strength in Europe, people could actually see the benefits of membership in the euro area.
However, it was felt that such proposals inevitably likely to face a refusal, particularly German, since, in Berlin, we do not want a union of transfers …
I beg to differ. Whatever Germany does or says, it pays anyway. And in 2010, I felt that we had not, we Greeks, the moral right to accept money from German taxpayers, to pay our creditors. In reality, this money goes into a black hole, and we ask them is that they spend their money more wisely. Why ask Greece to borrow money from German taxpayers to repay the ECB? Because Jean-Claude Trichet, the worst central banker in history, has decided once? Let us be able that the EIB do the work for which it was created.
Specifically, Greece will have to pay € 6 billion to the ECB in June. Did she do?
If we have money, of course. Otherwise, it will be discussed. Nevertheless, I would emphasize the idea of having to repay the central bank is stupid. This is a first in the history and it never happened. The question must be asked Europe is: why, with such decisions continue feeding movements like Golden Dawn or the FN?
But the ECB is pressuring Greece by demanding an agreement with the Troika. Do you think that it can, in case of victory of SYRIZA, block access of Greek banks to liquidity or at least threaten to do so as in the Irish case?
You can see the attitude of the ECB in two respects. The first: the ECB is pressuring Greece. The second: it pressured the troika. What she wants is a deal. We. So, let us ensure that there is one. As for the Irish, I would like to stress that the situation is very different. If Ireland has accepted the Troika, it is because the Irish government of the day did not attempt to resist. He will be judged negatively for it by history. But in this case, Jean-Claude Trichet has completely exceeded its mandate forcing Ireland to transform the private debt into public debt. He will burn in hell for this, or at least it should be tried before a European court … A Syriza government will not behave like the Irish government of the day.
But if no agreement is possible, or found?
So I say this clearly: “Death is preferable. “The real deficit in Greece, it is a dignity deficit. It is because of this lack of dignity that we have accepted stupid measures and this has fueled a vicious cycle of indignity which itself maintains discontent, fear and resentment. All this is not good. We must regain our dignity, spirit, October 28, 1940 made us say “no” to the ultimatum of Mussolini’s Italy. At this time, we do not have the means to say “no” and yet we did. (Note: 28 October 1940, the Greek dictator Metaxas refused by a “no” legendary submit to the Italian ultimatum In the war that followed, the Greeks pushed the Italian army. ). We must recapture the spirit of 28 October.
What do you mean “death”? The output of the euro area?
The term “death” was allegorical. And like any allegory, the less said the better, and this is understandable. As for the output of the euro zone, I want to emphasize that we have the right to remain in the euro area. No one can we challenge it.
In your book The Minotaur Planetary *, you indicate that the 2008 crisis signals the end of an era for the global economy, one in which the twin US deficits fueled the German-Chinese surpluses and financial growth. What news is it then being born and what role the victory of SYRIZA can play in this new era?
I do not know what the world economy will look like in the future. But it is certain that what I have called the “Minotaur” is dying. The current US growth can not hide two realities: the jobs created are often precarious and recycling of surpluses created by the US deficits on Wall Street is no longer possible. For me, the decisive factor will be the birth of new Enlightenment. Greece may be a glimmer of opportunity. We are not large enough to change the world, but we can force Europe to change.
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(*) The Global Minotaur – US ogre, European disunity and global chaos by Yanis Varoufakis, Editions Surveys and Perspectives (2014), 384 pages.
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FURTHER
Benchmarks
Aged 54, Yanis Varoufakis was formed in the UK. Professor at the University of Sydney (it has dual Greek and Australian nationality) until 2000, he then returned to Greece where, from 2006 to 2008, he advised George Papandreou, the then Leader of the Opposition.
From 2010, he opposed the dominant discourse in Greece and has argued that it was necessary to assume the country’s bankruptcy. Author of a “modest proposal to resolve the euro crisis,” particularly welcomed by Michel Rocard, he approached SYRIZA. In case of victory of party Alexis Tsipras, is mentioned his name to direct negotiations with the troika.
The “Global Minotaur”, published in 2013 in English was translated into several languages. He comments on a blog economic news.
Reading Selection
The book Yanis Varoufakis resumes his intuitions, formulated at the beginning of 2000, the global economy has turned until 2008 around the “recycling” of the US twin deficits.
After the collapse of the Bretton Woods system in 1971, the United States has indeed preferred to organize the world economy around their deficits as they had previously done around their surpluses. Thus, surplus economies advantage of these deficits to the benefits they then recycled to Wall Street, thus ensuring US growth. For Yanis Varoufakis, the euro area has become a sub-area of this logic, centered on the ability of Germany to surpluses.
This situation reminds the author the myth of the Minotaur, a monster half-man, half-bull trapped in the labyrinth of Minos and his father who fed hostages sent annually by Athens as the American Minotaur feasted surpluses of the rest the world. Until Theseus put to death the metaphor of the old Minoan world fell under the blows of the “new world” Mycenaean …
The 2008 crisis is precisely the killing of the old world. For Yanis Varoufakis is the lack of awareness of this change of era, the will of the “old world” to resist making the crisis so painful and so long as the world economy is not yet updated the “new world.”
Yanis Varoufakis, Global Minotaur – US ogre, European disunity and world chaos , Surveys & Publishing Perspectives (2014), 384 pages, 23 €.
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