Mr Varoufakis, the current unemployment rate in the Eurozone is at 9,8%, the lowest since July 2009. One could get the impression things are getting better…
It is, I grant you, still perfectly possible for those who wish to remain in denial to read the data in a manner that allows them to remain in denial – to their own detriment and to the detriment of Europe. But for those who want the unembellished truth, the Eurozone’s state can only be characterised in two words: stagnation and disintegration.
Let us begin by looking at the Eurozone as a single economy. There are 6 million fewer people in full employment today than when the euro crisis began and around 3.5 million more people claiming unemployment benefit. Total income (GDP) is today at the level it was in 2007, to be shared amongst more citizens (thus pushing GDP per capita well below the 2007 level). Investment in the real economy is running 11.7% lower than it was at the beginning of the crisis.
Far worse is the picture that emerges when you look at the Eurozone’s constituent parts: A savage depression in countries like Greece and Portugal, an unsustainable Italy, a Spain that is boosted only by new private debt, a French national budget out of control, banking systems that are effectively insolvent, and capital flows that continue to create a desert in the periphery as they rush into the banks of surplus countries like Germany and the Netherlands.
Mario Draghi has lately extended the ECB’s quantitative easing and announced to slow it down a tiny bit. How do you read that?
Mr Draghi is in dire straits. His recent decision demonstrates that he is caught between a rock and a hard place. The reason is that his quantitative easing program has reached its limits, and is facing considerable opposition from Germany, well before it has achieved its aims. So, on the one hand, he began ‘tapering’ his quantitative easing program while, on the other hand, he is stretching it into the future. This is an act of desperation due to the competing demands upon him: Germany demands that its pension funds be protected through ending quantitative easing. And the rest of the Eurozone demands that quantitative easing is continued in order to keep Italy, Spain etc. in the Eurozone.
In more detail, three are Mr Draghi’s great problems: First, to buy more Italian, Spanish and Portuguese bonds (in order to fight deflation there and keep these countries in the euro) he is forced (by political and legal constraints) to buy a lot more German bunds, thus crushing German pension funds and Germany’s smaller banks. Secondly, he is not allowed to channel the money the ECB prints every month into sufficient quantities of bonds that feed directly into productive investments (e.g. that European Investment Bank bond issues to fund large scale green energy or infrastructural projects). Thirdly, he is facing rising interest rates from the United States, due to the Trump-effect, at a time when investment in Europe is at its lowest level when compared to the level of savings.
When it comes to the European governments actually being responsible for doing the job the ECB is somehow doing: Mr Schaeuble and some media in Germany consider the country’s temporary policy as shaped by growing public investment.
Europe’s political class has created a trap, the austerity trap, and fallen in it, subsequently blaming it on the ECB. The level of public investment, especially in Germany, is the lowest since 1950. For years now German infrastructure was abandoned by a government that could borrow at zero cost. The fact that a few more billions are now being spent is too little too late. This is a scandal that the German people have a duty to hold their government accountable for. Dr Schäuble should be censured for dereliction of his duty to Germany’s future.
How much of your time you spend in Greece these days?
Greece has been home to us ever since we moved from the United States to contest the January 2015 General Election. Danae and I do not plan to leave again. However, as our Democracy in Europe Movement, DiEM25, places great demands on all those who have committed to make it grow, I do spend a lot of time in airplanes.
What can you say about the current situation in Greece which is out of the European spotlight nowadays – compared to your time as Minister of Finance?
Tragically, Greece is today worse off than it was in early 2015. It could not be otherwise given what the 3rd ‘bailout’ agreement imposed: higher sales and corporate tax rates, new cuts in the lowest pensions, 50% non-performing loans in the banking sector (that are now sold to vulture funds) and next to no investment, as investors are deterred by the imposed primary surplus targets which mean one thing: even higher taxes and lower demand in the following years.
I am often asked why, given that things are now worse, Greece is not in the news today as it was in 2015. The answer is clear: In 2015 we staged a rebellion in the debtors’ prison called Greece. Prison rebellions, as you know, are newsworthy. But once the rebellion was crushed by the Eurogroup-troika coup d’ etat in June-July 2015, and the Greek people returned to quiet suffering, we lost our newsworthiness.
You’ve, e.g. in the interview with the New Statesman, described the setting at Eurozone meetings in detail. How have you perceived other members of the group describing the six-months-showdown when it was over?
They had participated in a violation of basic rules of economics and basic principles of European democracy, to their own detriment also as subsequent events show (e.g. Brexit, the Italian referendum). After that they indulged fully in ex-post rationalisation, which involved my demonisation. It was not without cause that, in my resignation letter, I stated that I shall wear the creditors’ loathing with pride.
There is a quantitative study, done by researchers of the University of Wuerzburg, about German media coverage of the “Greek crisis”: For example, they looked at TV news clips with political valuations in the two main German news programs (Tagesschau/ARD and heute/ZDF – page 67). According to that, at least at Tagesschau you had less negative valuations then Mr Schaeuble (3,9% – 4,8% of all clips in 2015). Does that fit your memory of the experience with German media?
The question is whether it fits your memory of how the German media behaved toward their own audience during my ministry. Being harshly critical of what I was saying would be not only fine but also the German media’s duty. But distorting massively what I said, or not reporting my proposals while claiming I had none, was a sign of a degenerate media wounding German democracy.
How do you remember the “treatment” you experienced by Guenther Jauchas the moderator of the talk show you were party of as a guest?
At the time I agreed to participate in that program I was literally run off my feet and had initially turned the invitation down. But then Mr Jauch’s producer reached me on the telephone with a plea: Minister, because much animosity is being cultivated between the German and the Greek people, I beg you to come to the program. For we know that you are a friend of Germany and that you have been warning for years that the Greek bailout would turn the Greeks against the Germans and vice versa. Will you please come to the program? We want it to work as a friendship bridge between the two peoples.
It was on that basis that I accepted. Anyone who watches the recording of that program can see that I had been set up: The promise of a bridge building exercise was just a cynical ploy to cultivate more hatred between the Greeks and the Germans, while boosting ratings. It was utterly disgraceful.
Coming back to “within” the Eurogroup: You described the attitude towards you there as one of silence and ignorance. So, did wrong figures, false theses etc. not even play a role?
They could not have played a role because all my figures were entirely accurate, the macroeconomic analysis was correct and, most importantly, the other Eurogroup members never even read or considered any of my proposals, facts, figures or analyses. I challenge them, or anyone else, to present one figure or piece of analysis which I presented that the Eurogroup considered factually or analytically wrong. And this is what you and your readers should be very concerned about: Whether you agreed with my analysis, politics or policy proposals or not, you should be angered that, first, the proposals of the finance minister of a desperately bankrupt nation were never read and, secondly, that you were told naked lies (e.g. that I had presented false figures or poor analysis). Even more worrying should be the cause of their lack of interest: they were only interested in dismissing our proposals so as to demonstrate to the people of Spain, Portugal, Italy, France etc. that if they dare elect people that Berlin and Brussels do not want to see elected, they will get crushed. When Europe resorts to this type of postmodern gunboat diplomacy, it loses its integrity and begins to collapse.
Mr Schaeuble described you as a professor trying to teach the other ministers as if they were your students. Was it naive to think you could have macroeconomic debates in such a body?
I confess. Yes, I used the language of macroeconomics to address macroeconomic questions on whose correct answer my people’s lives hinged. It happened when Wolfgang asked me: “If you think that 4.5% primary surplus is too much, what number do you counter-propose?” Tow which I answered: “To come up with a credible primary surplus target, we need to, first, agree on the investment policy in export oriented firms since the primary budget balance by definition equals the sum of the country’s excess savings (savings minus investment) and excess exports (exports minus savings). So, I think I can deliver a higher surplus as long as we have a sound policy for investment in our exporters.”
At this point, allow me to ask you a question: Are you not worried that your economic circumstances are determined in a Eurogroup in which macroeconomic decisions are made by ministers who are considered rude if they use sound macroeconomic analysis? Might this not be the explanation of the Eurozone’s never ending crisis?
How do you see your own role within the development towards the media treatment of your person as a marketable character more than a content-related and political coverage? (Our edition with you on the cover for example was the best-sold of that year, whereby we also focused on the content and the politics very much…)
I dislike it and never had anything to do with it. Every time I became the centre of the ‘story’ I knew the result was that the issues that mattered to Europeans were shoved under the carpet.
When it comes to the Brexit vote or Trump, many blame the power of social networks and fake news for the outcomes. True? Overrated?
First the establishment practised denial. Then when its inept handling of the crisis bred monsters (e.g. Brexit, Trump, the AfD) it blamed technology. Anything to avoid taking a good look at the mirror. Of course this is not to deny that the social media amplify the toxicity of today’s nationalist revival. But to think of them as the cause would be laughable if it were not so dangerous.
Why seem nationalist, racist, sexist outsiders to gain so much more ground these days compared to critics of the status quo coming from the left?
Go back to 1930. Now you have your answer!
Whenever a financial crisis leads to the fragmentation of capitalism’s monetary circuits and then the establishment forces the economic costs on the weakest of citizens, two things happen: xenophobia and the rise of authoritarianism. This translates into quasi-fascism, patriarchy and, ultimately, the celebration of misanthropy.
In Germany, a gap of ideas, the missing of a promising narrative were considered as constitutive for the “loss” of the fight over the interpretation of Euro crisis, debt, fiscal policy. True? How to fill it?
There was never a gap of ideas. What there was, just as in the 1930s, was a social democratic party too keen to ingratiate itself with the establishment and a deep division between good, decent people – between liberals, Marxists, feminists, greens etc. Whereas the bigots unite behind toxically simplistic stories, progressives tend to fight against one another and thus fall prey to the Nationalist International.
Can a movement like DiEM25 really fill it? How are you trying to fill it?
If it cannot Europe is finished. For what we are trying to do is both modest and essential: to reach out across national borders, political party division lines and even ideological boundaries to put together a coalition of democrats (of the left, the centre, liberals, greens, independent thinkers, progressive conservatives even) who agree on basic humanist principles and forge a common internationalist, progressive agenda for Europe. Our first major challenge is the compilation of our European Green New Deal Policy Paper, which DiEM25 will be presenting in Paris on 23rd, 24th and 25th February 2017. This is meant as a first step toward a comprehensive progressive agenda for Europe that acts as the magnet for Europeans fed up with the incompetent establishment but also determined to end the rise of the Nationalist International that is today undermining European civilisation and unity everywhere.
So far, I perceive DiEM25 as having some affinity and reception with places like Berlin – urban, progressive, international. But so far totally out of reach of the majority of places and people, on the country-side, in the periphery etc. Do I only have that impression because there’s going on so much, sorry, shit out there in the world now, so that I lack the time so far to focus on what I’d been planning for long as a journalist: taking a cole look at the movement you people are trying to create?
All progressive movements begin in cities. Politics was born in the… polis – the city. But, you are right, it is also true that unless DiEM25 can get its message out of the polis and into the countryside we shall not succeed. It is early days yet. We have much to do.
Sorry to ask with reference to your book Time for Change, but tell me: what does your daughter say today about Europe, politics, economics and the defeat-for-the-moment in July 2015?
My daughter is determined to deny me the pleasure of thinking that my writings are important enough for her to care! It is the price I must pay for having a daughter with a personality mightier than mine…
— source yanisvaroufakis.eu