 Hello and welcome to NewsClick. Today we are very pleased to have with us Yannis Varoufakis. Yannis is a former professor of economics who is the finance minister of the Syriza government in Greece in 2015 from which he resigned over disagreements with the Troika. He remains a member of parliament of the Hellenic parliament and is the leader of MERA 25 since 2018. In 2016, Varoufakis founded DM25, Democracy in Europe. He is now the leading force of the recently launched Progressive International. Yannis Varoufakis, welcome to NewsClick. It's wonderful to be here, Vijay, especially with you. Okay, great. Well, let's get right down to the European response to COVID-19. You know, as we speak, the Germans and the French have agreed to have a $500 billion corpus of money to provide. Well, it's debated whether it will be grants and loans, but in general, the rest of the world looking at Europe is a bit stunned by how poor the reaction has been to the human cost, particularly in Italy. Could you reflect a little bit on Europe's reaction to the global pandemic? Well, the European Union's response to the latest crisis is nothing short of an obscene dereliction of duty. It's the same category error that they did in 2010. We had a sequence of bankruptcies following the 2008 global financial crisis, or at least not Atlantic financial crisis, and they treated it as if it was a problem of lack of liquidity. So they dumped huge quantities of loans onto the weakest of shoulders, and the result was a depression. A lost decade in Europe. And now they're making exactly the same problem. They're treating it as if this is something that can be overcome through tightening a bit here, a few loans over there. As for the agreement between Merkel and Macron that you mentioned, which was announced yesterday with great fanfare. Well, let's withhold judgment, because I remember in June 2018, the same pair met in a beautiful castle in the statelet of Brandenburg in Germany, and they announced the fiscal union of the European monetary area. They announced a common budget for the eurozone, and there was all this hope back then that Europe at last is doing the right thing. Now, what happened to it? It was completely forgotten. It ended up a tiny little pathetic line in the European Union budget of sometimes 0.01% of the euro area GDP. So let's see what's going to happen with that. But look, even if this goes through exactly as they stated it, the announced it, it's about 1% of GDP over three years. So it's macro economically insignificant, and all of it is going to be given to large companies. So, you know, same old socialism for the very few, for the corporations and the banks, and very stringent austerity for everyone else. But you know, Vijay, this is not, even though this is bringing about enormous hardship for business as well, maybe not Siemens and Volkswagen, but for business as well. I would even say Siemens and Volkswagen. This is not a capital accumulation maximizing strategy. So the question is why? They're not silly people. Why are they failing so spectacularly? The answer I'm going to give you is based on the class analysis, if I may. The European Monetary Union, the Eurozone, is a remarkable example of capital is gone, absolutely berserk. Because come to think of it, take India, take Britain, the United States, sovereign countries. There is a degree to which the government, if they want to, if they want to, they have the instruments to shift wealth and income, substantial wealth and income, from the rich to the poor. I'm not saying they are doing it. I'm saying that they have the instruments to do it if they show wish. But from the moment Germany, France, Greece, Italy, Spain, Portugal, Ireland, so on created the common currency area, you know, we gave away monetary policy to a bank which is nominally independent, in a sense it's in a straight jacket, so there's nothing it can do beyond supporting the banks. This is the European Central Bank. The European Central Bank in Frankfurt. And simultaneously, by denying 19 governments a central bank that has their back, because the European Central Bank has been banned from financing government. They cannot do that which the Bank of England is doing now with Boris Johnson's treasury. The moment they did that, their capacity, you know, they hit the fiscal buffers. They have no fiscal space, no room to maneuver. So now, even Germany, even Chancellor Merkel of Germany, one of the most powerful positions in the world, does not really have the instruments to shift considerable amounts of wealth and income from the rich to the poor. Now, looking at it from the oligarchies point of view, this is a majestic time. Imagine, you have an oligarchy across Europe, and Europe, the European Union, is a large player. It's a huge economy. It's the largest economic bloc in the world, bigger than China, bigger than the United States. You know, they've banned the possibility of a transfer of wealth and income to the poor. Now, you can understand why the oligarchies are clinging onto this triumph for dear life. You know, they will much rather blow up Europe than let go of that. So this is why we are watching this comedy of errors coming from Brussels and Frankfurt, all these attempts supposedly to help the European economy. But they can't because they don't have the instruments. And the oligarchy, who successfully ensure that these instruments are not there for them, are not going to let them have them back? You know, one of your most powerful phrases, which I quote all the time, is that you don't have to have for a coup, you don't have to have tanks, you can do it with banks. I think it's a very powerful phrase. Could you explain to people, because it's not intuitive, could you explain to people why this very powerful, you know, common area does not have a robust central bank? Why the ECB or the European Central Bank doesn't have the instruments that, you know, let's say the Federal Reserve has and so on in the United States? If you look at it, there are two ways of answering the question. One is historically and the other is politically. Historically speaking, the European Union was an American creation. Europeans don't like to hear that. But it was an American project because a project of the New Deal is empowering Washington in the 1940s and to some extent beyond because even under Eisenhower, they continued to be writing the policy. The Marshall Plan was part of it. You know, there was the Schumann Declaration that supposedly 1950 was the beginning of the European Union, but even that was written by the Americans. They forced the French and the Germans to do it. It was part of a global plan for the dollar zone at the time, also known as the Bretton Woods system. So in a sense, the Americans, the New Dealers, created a common currency for capitalism. The Bretton Woods system had fixed exchange rates, fixed to the US dollar. So effectively it was the dollar zone. So the model of Germany's recovery and that was at the heart of the project of the European Union. The model consisted effectively of saying to them, look, you mind the shop, you look after the factories, okay, we will create demand for your products. That's what the Americans were saying to them. We will make sure that France and Italy and so on buy German products. You become the factory of Europe. And what they offered the French was you will become the diplomatic center of Europe. You will have the nuclear weapons and the government. So all major institutions were French dominated and Germany was going to become the factory of Europe under the monetary system that the Americans had created. So the Buddhist Bank, which was the central bank of Germany that was created by the Americans. And the Americans were very keen to have a central bank in Germany that had no connection with the government because of fears of the return to the Reich. The Buddhist Bank had always had complete independence and in its gardens had very clearly you cannot fund the government, which 1950 made some sense given that the Reich's Bank, the central bank under Hitler, funded the Wehrmacht. So there was some logic to it. So in a sense, the whole of the German economic miracle was the result of having a central bank that didn't play the role of a central bank. Effectively, it was the guardian of price stability and nothing more. Since it was the American central bank, the Federal Reserve, that was effectively managing monetary supply across the dollar zone, which included Europe, the United States, and of course Japan back then. So when we moved from that first phase of post-war European capitalism to the second one, and that happened when in 1971 Richard Nixon effectively ejected Europe from the dollar zone with the end of Bretton Woods. The Buddhist Bank that had a great deal of credibility within Germany was the model for the European Central Bank. So the European Central Bank ended up playing the role for the Eurozone that the Buddhist Bank played before 1971 with one important exception. There was no one minding the shop. There was no one looking after monetary policy. The Americans stopped doing it. They didn't give a damn about Europe anymore. They simply moved on to empowering Wall Street. So it's a structural problem. This is the historical explanation. Answer to your question. The political explanation is the one I gave you. By having a central bank that cannot monetize debts, that cannot play a significant role in the economy, the oligarchy in Germany, in Greece, in Italy, it's not the north versus the south, it's the oligarchy versus the Europeans, and the oligarchy contains Greeks as well as Germans. The oligarchy loves it because they don't have to worry about elections. Elections can't change anything. So we have a situation where when I was growing up in 1967, one day, the tanks rolled down the street and over through a government that was doing some things that the bars had been in like. So that was a coup d'etat using the tanks. But when I was the finance minister, first time I went to Frankfurt, first time I visited the European Central Bank, I had just been to London where I smooth docked the financiers only to say to them that, look, I'm not in the business of hair cutting you because most of my debt, my government's debt, is with the Troika. And I'm interested in hair cutting that. They liked that. Our stock exchange went up by 13% in a few minutes. Two hours later, I'm in Frankfurt and the European Central Bank switches off access of our Greek banks to the central bank, which was their central bank. There's no easier way than destroying a banking system and switching off access to its central bank. And the only reason they did that was because they used our banks in order to affect a coup d'etat against our government that was demanding a debt structure. I mean, I have to say that, of course, that precipitates the next move in your own personal life, which is for many of us, I think an important moment because one doesn't see that often in politics. When we've talked about ethics and politics before and the fact that good people put in positions of some authority, feel the weight of remaining there in order to, even if the space for maneuver is limited, but you took a different position, can you just very briefly tell us a little bit about the reason why you decided I can't continue? It's the same reason that made me throw my hat in the proverbial electoral ring. I was never planning to contest an election. One reason why I contested an election was because there was a young man, Alexis Tsipras, who was going to be, according to opinion polls, the next Prime Minister of Greece, and who came to me and he said, look what you've been saying about the importance of cutting the debt, which what we were saying about Africa and Asia in the 1970s against the IMF and so on, we had to do it in Greece now because what started in the developing world, but we used to be the third world, shifted to Europe. This is what happens. Excuse my French, but shit spreads. It starts from the weakest links and moves on to relatively stronger ones. For me, Greece is a country in debt bondage and unless we cut the debt, nothing can happen. We will simply lose our people to migration, which is what we have been experiencing the last few years. I had a particular idea on how to create a debt restructure that would be mildly palatable to the lenders while at the same time doing the job. Also, I said, look, what we have to do is we have to combine a moderate debt swap program for reducing the net present value of the debt and at the same time, be totally disobedient. Say, if you don't give us that, then you can do your worst, throw us out of the euro, send the military in. We are not going to back and we agreed we were going to do that. On the basis of that agreement, I decided very reluctantly to run in the election, become elected an MP and accept the position of Minister of Finance. So when I realized that my colleague friend and Prime Minister, a few months later, buckled under the pressure and he was going to sign on a dotted line of the surrender document, well, it was very easy to design. It was a no brainer, as they say, a complete no brainer because who really wants to be finance minister? So I want to come to the progressive international. One of the interesting things in your political life, Yanis, is in very short order, you move from throwing your hat in the ring for the Hellenic parliament and then the government in Greece, then expanding the horizon to Europe with DM 25 and now the progressive international which has a much more global ambition. Can you talk a little bit about what this new initiative is driving toward and what you hope is going to happen? Well, once an internationalist, always an internationalist. I spent my life all over the world. For me, I'm extremely proud to be Greek, but for me, the world is my realm. I'm speaking with an Indian, my supervisor when I was doing my PhD, was an Indian. My first supervisor doing a PhD was an Indian. For me, we are just one civilization and the power of internationalism is the only power we have against the oligarchy because the oligarchy are internationalists. They are practicing internationalism in action. Think of how after 2008 when all the banks collapsed, they go together, they acted with incredible solidarity towards one another. The same thing with the fascists. Look at Le Pen, Trump, Bolsonaro, Modi. They are best of mates. They hug and they kiss each other. They never undermine one another. It's only the progressives that we are fantastic at turning. We have three people in one room and we have five factions. When I was doing what I was doing as a finance minister of Greece, I was never doing it for the people of Greece only. For me, that was a rebellion that was hopefully going to start a chain reaction. It would move to Spain, it would move to Portugal, but then it would move outside of the European Union because the structural adjustment programs in Africa were the beginning of what we were experiencing in Greece. I wanted to see the end of the austerity imposed by the IMF, by the World Bank, the browning of the planet. It was always somebody may call it a version of megalomania. But I don't think so. As I said, the bankers and the fascists unite. It's about time we do. So then instead of creating just a Greek party, we created the Pan-European party. And of course, I mean, where does Europe end? Turkey, Lebanon. Does it extend to Iraq? I think it does. And then in the end, we have to move beyond the the democracy in Europe movement. If we're going to defend the good people of Europe, because in the same way that we need to defend, we need to forge a coalition with progressive Indians, with progressive Indonesians, progressive people in China, in Japan, to protect Europe. That is the Europe's majority and vice versa to protect, you know, those who are driven absolutely mad now with this huge recession in India, which is much worse than what we're experiencing in Europe. Well, there has to be a progressive international binding together Indians and Europeans and Latin Americans and so on. That's great. Yanis Varoufakis, thank you for joining us. Well, it's a great pleasure, Vijay. Thanks.