What a Radical Greek Economist Hopes to Gain in the EU Election

What a Radical Greek Economist Hopes to

Gain in the EU Election

Yanis Varoufakis, former Greek finance minister and now

candidate for DiEM25, poses for a picture at a campaign
stop ahead of European parliamentary elections on May
10, 2019 in Hanover, Germany. Carsten Koall—Getty Images

By VIVIENNE WALT May 23, 2019

Nothing has ever been subtle with Yanis Varoufakis, the leather-
jacketed, motorbike-riding economist who was finance minister of
Greece for six of the most tumultuous months in that country’s
history. Plain-spoken (to say the least) and a self-professed
radical, he is, at 58, not nearly done waging war on Europe’s major
power players.

This week, he gets his chance to prove whether his ideas have
traction among regular Europeans. The European Union’s 500
million citizens go to the polls over the next four days, beginning
on Thursday, to elect 751 delegates to the EU Parliament in
Brussels, and Varoufakis’s political party is one of the more
colorful contenders. Varoufakis’s new group, DiEM25 (short for
“Democracy in Europe Movement 2025”), is almost unique among
the hundreds of parties across the E.U.’s 28 members in that it’s an
international party–running in a total of 11 countries.

The group is likely to gain only a tiny fraction of votes. But that is
not the point. To hear Varoufakis describe it, in his typical blunt,
mile-a-minute delivery, his new party aims to prove that Europe’s
deep problems of stagnation, inequality and high unemployment,
can be solved only with Europe-wide solutions, including by
stopping Europe’s major corporations from sitting on mountains
of cash, and by having central banks boost investment with higher
interest rates.

“Europe created in 2008 a postmodern version of the 1930s,”

Varoufakis told me during a break in his blizzard of stops around
Greece, during the final days of the EU election campaign. “The
kneejerk reaction of the establishment was to shift all the
financial pain, all the losses from the financial sector, on to the
weakest tax payers, beginning with Greece.”

Rewind to the depths of the Greek financial crisis, in 2015:

Varoufakis, as the Finance Minister in the far-left Syriza
government of Prime Minister Alexis Tsipras, was trying to rescue
his country from total economic collapse. Banks were close to
running out of cash. Bonds were rated junk.The country barely was
able to pay its civil servants and pensioners from month to month.

That July, the so-called troika of creditors, the European Central

Bank, the IMF and the European Commission, demanded that
Greece drastically cut public spending, prompting countless
thousands of Greeks to pour into the streets in protest, and reject
the deal—at Varoufakis’s urging—in a referendum. Tsipras, with
his country on its knees, signed a troika deal anyway, prompting
Varoufakis to quit in fury. “I will wear the creditors’ loathing with
pride,” he told Greeks. In the end, the troika’s bailouts for Greece
totaled a whopping €289 billion ($322 billion).
Varoufakis has since told his side of this Greek tragedy in a
bestselling book, “Adults in the Room,” which has been translated
into multiple languages. Greece’s GDP shrank by nearly a quarter
over a decade, although it exited the bailout program last summer,
and is slowly recovering from the dark years.

Varoufakis, however, has hardly mellowed since his tumultuous

days in office, as was clear when talking to Fortune. Here is an
edited version of our interview:

How should the EU overhaul its economy?

The financial crisis revealed the flimsiness of the European Union,

and the fact that we have a common market without a fiscal union.
We don’t have a political union, a federation.

Forget Greece for a moment. Greece is in a state of almost

permanent, deep insolvency and bankruptcy. But look at Germany.
That is far more revealing. Germany is swimming in liquidity. You
have the greatest surplus in the history of capitalism: 8.4% of a
very large GDP. You have a federal government in surplus, that is
being paid by investors who borrow from them in negative interest
rates.

You have corporations with hundreds of billions of euros.

Corporations should not be saving. They should be borrowing to
invest. When they are saving, you know that something is wrong.

So how do you force corporations to stop sitting on their

mountain of cash?

They want to invest. But they are caught up in a vortex of fear.

Half the population of Germany now has a lower standard of living
than they did 15 years ago. Companies think, if we invest money
and produce gadgets and services, and then people don’t buy them,
we’ll lose our money.

So instead of investing they buy property and push up property

prices in Berlin, making inequality worse. And they buy back their
own shares. Volkswagen is using its money to buy back its shares,
not to invest in electric cars, unlike the Chinese, who are
overtaking us. They are still producing the same awful diesel cars,
and buying back their own shares because that pushes the share
prices up, and the bonuses of executives are linked to the share
price.

We have the highest level of savings in the history of Europe, and

the lowest level of investment in relation to liquidity in the
history of Europe.

So, hence the growing wealth inequality that many see as the
root cause for Europe’s populism?

Of course. Negative interest rates destroy the pensions of the

middle class. Low levels of investment destroys good jobs. The
middle class see that their children will have precarious jobs, they
will drive Uber cars, instead of having good quality jobs. They
cannot see how they will start a family, how they will invest.

That is the greatest gift to the fascists. I don’t call them populists.
I call them fascists, just so we know what we’re talking about.

You’re talking about [French far-right politician] Marine Le Pen,

[Italian Interior Minister] Matteo Salvini, et cetera?

Of course. And [German nationalists] Alternative fur Deutschland,

[Austrian Chancellor Sebastian] Kurz, [Hungary’s Prime Minister]
Viktor Orban, and so on.

So what can you offer Europeans?

It is our view that this is a systemic European crisis with different
manifestations around Europe. We need a systematic European
answer to this. We need to have one political party. We are the first
one. We are trying to run in 11 countries with one program. This
has never happened before. All the other parties are competing in
the European elections as if they are a dress rehearsal for the
national level. So they are ignoring the systemic problems. We are
the only ones not ignoring them.

We are saying, we would like a federal Europe. We would like

things to be different. But things are not different. And if we go
now to voters and say, “Let’s create a federal Europe,” they will
say, “Yeah right, I’ll be dead before that happens.” So they will stay
at home and not vote.

So we do something much more pragmatic. We say: Here’s what we

can do under the existing rules and treaties and use the
institutions we already have.

Such as?

Take the European Investment Bank [the E.U.’s lending arm] which
is a splendid institution based in Luxembourg. It’s five times the
size of the World Bank. This is not some little institution.

We are saying the European Investment Bank should issue €500

billion worth of bonds every year for five years, and sell it to these
people who have all this money that is doing nothing or doing
damage in the financial sector. With the European Central Bank
making one announcement, and that is: If need be, we will buy
those bonds on the secondary market to prop up their value. By
making this announcement they will not need to. Those who have
all this money would love to buy those investment bonds because
they are a safe asset.
So suddenly we would have the capacity as Europe to invest in the
green transition that is necessary, to electrify transport of cars and
railways – which are still not electrified in Eastern and Southern
Europe—and of course a green Common Agricultural Policy. We
can start tomorrow morning.

We have a policy for how to fight poverty across Europe, with a

similar program to the American food stamp program, only much
more upgraded, using plastic and debit cards, which the European
central banks should issue and fund, with the profits of the ECB,
which were €91 Billion last year.

Clearly you aren’t about to win the E.U. elections, by your own
admission. But do you think you’re opening the path to a new
way of doing things?

Absolutely. We have to learn our lesson from the fascists. Marine

Le Pen did not need to become French president [she lost the 2017
French elections to Emmanuel Macron] to influence the policies of
the French government. The previous French government under
President François Hollande introduced a policy giving it the right
to remove French citizenship of people with Arab descent. [The law
threatened to strip convicted terrorists of their citizenship.] That
would never have happened had it not been for the fascists in
parliament doing reasonably well.

Let’s get back to the Greek debt crisis. You’ve said in the past
that China wanted to lend Greece money but that this was
blocked by Europe.

I have written down exactly as it happened in my book “Adults in

the Room” which is in every language in the world. The gist is that
when we were elected, the party was against the privatization of
Piraeus port and the sale to Cosco. [China’s Ocean Shipping
Company, also known as Cosco, now owns Athens port, as part of the
Belt & Road Initiative.] I was the one who said, hang on a second
guys. Let’s think about this. I met the Chinese ambassador and the
representatives of Cosco.

I said, Why do you just want the port? You should want more. Let’s
get into joint ventures, start producing mobile phones and new
technology in Greece. We’d like you to consider building a super-
fast railway between Greece and Germany because we really need
that.

Instead the troika forced the Greek government after I resigned to

sell the railways to the Italians for €43 million which is ridiculous.
Let me put it this way: If we had ripped up all the rails and sold
them for scrap we would have got more money.

So you blame Europe?

I never blame Europe. I’m a European. I blame [German

Chancellor] Angela Merkel, [former Eurogroup President] Jeroen
Dijsselbloem… Those people who did so much harm to Europe all
those years, including my former Syriza colleagues in the Greek
government. This alliance of oligarchs, Eurocrats, Greek
government ministers, have really done a great deal of damage to
Europe. And even to China, because China is not benefiting from
this state of disrepair in which Europe and Greece find themselves.

And yet China is trying to invest more, and is being blocked here
and there, also in Greece.

This anti-Chinese wave in Europe is pathetic. The Chinese are

minding their own business. They are looking after their self-
interest. They are patient investors. That is a good thing. They
don’t come in to make a quick buck and leave. If they are making
inroads into Eastern Europe, parts of the Eurozone like Slovenia,
Slovakia, Italy, Greece, it is because Europe does not have any
investment. That is why we’re proposing an investment bond.
There is a vacuum. Money does not like a vacuum. So the Chinese
are bringing their money. It is the fault of the official European
decision-makers who are making one mistake after another,
keeping investment at the slowest level in history, and leaving the
Chinese to come in as the only investors.

It seems that in AI and 5G, Europe is so far behind.

That is why we need €500 billion investment every year for five
years. And we have a plan to do this without one euro in new
taxes.

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