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Varoufakis interviewed by Edward Geelhoed
Posted on Wednesday, 4
December 2013, at 9:40am | Source: YianisVaroufakis.eu | Features
Some positive sounds
are audible from Greece these days. Mostly produced by the government itself,
of course, but also by Merkel, by the OECD (along with some negative sounds),
by some European officials (while others say they’re ‘impatient’ with Greece).
Is Greece slowly recovering?
It takes a passionate
disregard for the truth to suggest that Greece is recovering. Investment has
fallen by 18% since the dismal levels of 2011/12, credit to non-financial institutions
is 20% down from the asphyxiating depths of 2012, poverty has reached record
heights, and is still growing, employment is at levels that are best narrated
in the style of Steinbeck’s Grapes of Wrath,
public debt is exceeding the worst expectations of the greatest pessimists,
private debt is reaching for the sky at a time when the collateral posted (e.g.
house prices) are sinking fast, the government’s tax take is trailing the worst
forecasts. The list of woes is endless and the so-called ‘Greek Success Story’,
or ‘Greek-covery’, reflects nothing except the determination to reverse the
truth, Goebbels-like, by those who insisted on the policies which resulted in
this debacle.
The positive sounds
refer to the budget surplus, to a small growth (says the gov’t) or just a small
recession (says the others) of the economy.
Europeans have a duty to
themselves to see through this toxic propaganda. There is no such thing as a
Greek budget surplus – not even a primary surplus (i.e. a surplus if
we not count loan and interest repayments). If you look at the
government’s own accounts, the January to October 2013 balance reveals a
primary budget deficit of nearly €6 billion. As for the rumoured primary
‘surplus’ that is ‘around the corner’ this is a projection, a piece of wishful
thinking that may, or may not eventuate, next year. As for growth, the Greek
economy is still, by the government’s own accounts, shrinking at -4%. The
projection of growth of… 0.4% is for 2014. Europeans need to look at this
projection in the context of similar projections which, for example, had (at
the time of ‘bailout Mk1’) Greece growing by 2012 at a dizzying rate of 2.3%!
In truth, 2014 and 2015 will again see the Greek social economy shrink further.
Is some ‘positivity’
justified, or is Samaras’s so-called success story about ‘justifying austerity
in the eurozone’, as The Guardian puts it?
Austerity is being,
falsely, justified by the so-called Irish ‘escape’ from the clutches of the
ESM. I have
argued elsewhere that the justification for austerity in the
Irish experience is fraudulent. Nevertheless, the Greece case is not even used
by Brussels, Frankfurt or Berlin as a justification for austerity. The reason
is simple: it takes only a perusal of the facts to recognise that Greece is in
a sad, never-ending mess.
In an op-ed in the
Financial Times, Mr. Spiegel recently stated that ‘Athens is gradually shedding
the incentives for reforms’. Is that what we’re seeing with the Troika talks,
now the gov’t is satisfied with the budget surplus?
What your readers must
come to understand is that, the moment the ‘bailouts’ were forced upon Greece
in 2010 and then again in 2012, all chance of meaningful, effective reform
disappeared. Think about it for a moment: In 2010 the Greek private and public
sectors became insolvent. So, what did Europe and the Greek government do? They
piled on the weak shoulders of the bankrupt Greek social economy the largest
loan in human history on condition that Greece’s GDP (from which old and new
loans would have to be repaid) shrinks substantially (for this is what the
stringent austerity meant)! Naturally, no one with any sense invested in this
country and the insolvency both of the state and of the private sector
deepened. Now, turning to reforms, ask any CEO of any decent company: “If you
want to reform, to modernise, to re-structure your company, can you do it on
the cheap? Without any investment?” The answer is negative. Similarly with
Greece. The country was pushed into a never-ending negative spiral that
rendered it un-reformable and un-governable all at once. For it is not ‘reform’
to cut wages, pensions and to push taxes through the roof at a time when GDP is
collapsing and the banks have no capacity whatsoever to lend even to potentially
successful enterprises. These so-called ‘reforms’ are nothing but acts of
brutality. The homage propaganda pays to irrationality.
Is PASOK’s concern for
overburdening society genuine and sincere, or does it fear for its weakened
position only, for political reasons?
PASOK effectively ceased
to exist in November 2011, with George Papandreou’s resignation. The party paid
the price of being in government, though not in power, at the moment the nation
hit the rocks. Papandreou had a golden opportunity in early 2010 to tell the
truth (i.e. that Greece was bankrupt) and thus save his government, his party
and what was left of the nation’s dignity. He failed spectacularly. After his
resignation PASOK became a rump whose raison d’ etre is to provide a life raft
for political wreckages like Venizelos. Sadly, a significant party of the
Centre Left has now degenerated into a small gang of corrupt politicians
struggling to stay out of prison.
Stournaras (Greece’s
finance minister) and Samaras (Greece’s PM) say they don’t need a third loan.
Is Greece ready to return to the markets, can it stand on its feet? Or do they
try to gain confidence with psychological statements like these?
None of the deficit
Eurozone member-states can refinance their debts autonomously. Not even Italy
and Spain. Without Mr Mario Draghi’s OMT proclamation, in September 2012, which
was a clear threat to bond dealers not to bet against the deficit nations’
government bonds, Italy and Spain would have joined Greece, Ireland and
Portugal in the group of failed states. While the OMT threat is still managing
to keep spreads down, some of the deficit countries can refinance their public
debt. Even Greece might be able to do so if the ECB were to signal to markets
that Athens would be placed under the OMT umbrella. But to say that they can
stand on their own feet in the money markets is to mis-read totally the
situation. In this sense, Stournaras and Samaras are not hoping to fool the
markets – they cannot be that foolish. No, they are hoping against hope that
Berlin will consent to Greece being let out of the ESM and placed under the OMT
umbrella. Of course, none of this matters. Whether under the ESM or the OMT,
the deficit Eurozone countries (Ireland just as Greece, Spain just as Portugal)
are still in chains, caught up in a negative feedback dynamic between
un-payable debts, insolvent banks, recessionary forces and mindless universal
austerity.
Merkel speaks of
‘impressive facts’, but these numbers are there due to heavy burdening the
society. Increased competitiveness, an erased budget deficit, but it caused
enormous despair. Samaras calls it ‘the sacrifices of the people’. Is it worth
it? Isn’t there a huge difference in realities on paper and in the outside
world, on the streets? Didn’t it not only cause despair, but also ruined the
economy in the long run?
You are making a
significant error: The situation is not just awful on the ground. The situation
is unbearable also on paper; in terms of official statistics. Our leaders are
disgracing themselves with ‘happy go lucky’ pronouncements that clash with
their own statisticians’ numbers. Never before has such energy be expended by
political leaders to mislead Parliaments and electorates regarding the economic
situation on paper and on the
ground. Worse still, our leaders are doing this cynically and knowingly, the
result being the greatest democratic deficit in Europe’s post-war history.
Martin Schulz said that
the Troika has done ‘more bad than good’. Do you expect a different policy to
be executed?
No. I just expect that Mr
Schultz is expecting to gather a few more Peripheral votes in his sad quest for
the top position in Brussels.
Should bond investors
share the costs of bailouts with taxpayers, as the IMF suggests? Should
European governments write down the Greek loans? A former IMF economist said
recently: ‘There’s no trade-off between austerity and debt restructuring – you
have to do both.’
You are asking someone
who warned, in January 2010, that any bailout for Greece would be a terrible
blow against the Eurozone if it were not preceded by massive debt
restructuring. The IMF, behind the scene, agreed with me. But in public they
lent their voices to the Berlin-Frankfurt-Brussels cacophonous choir that
proclaimed a debt haircut as both unnecessary and undesirable. To have these
same officials lecture us on the importance of debt restructuring is a little
like listening to the Titanic’s captain lecture us on iceberg avoidance.
What is the path to
growth? Or is growth overrated?
It depends on what is
growing. At the moment we have growing debts, non-performing loans, poverty,
suicides, and… Nazi parties. These are our ‘growth’ areas. What we need, before
we can talk about growth credibly, is stabilisation. To stabilise the Eurozone
we need to Europeanise, without any federal moves, four realms: public debt
management, banking sectors, aggregate investment policies and attempts to
quell the humanitarian crisis.
George Pagoulatos says
that structural reforms are clearly happening, for example; at the pension
system, all possible structural changes have been made, he says, not so much
horizontal measures. Others disagree. The Troika agreed not to execute
horizontal measures anymore. Are true reforms happing, in your eyes? Where is
it needed most?
To compress pensions to
unlivable levels is not to carry out structural reforms. As I already argued
(see above), genuine reforms cost money and cannot be effected in an
environment of fear, collapse and political illegitimacy.
Is there a real,
radical alternative to all of this? Are proposals by Syriza possibilities? (If
so, which ones mostly?) You seem to have sympathy for the party’s ideas, isn’t
it?
No solution can be
effected at the national level. It is as if in the 1930s the state of Kansas
could have reversed, on its own, the effects of the Great Depression through
Kansas-centred policies. The Eurozone is experiencing a systemic crisis that
needs to be dealt with systematically. How? What we need is to escape the false
dilemma between the current, dead end, policies and the (false) alternative of
moving in a federal direction (that Europe is not ready for). This false
dilemma must be escaped through a rational redeployment of existing
institutions in a manner that does not ask of the surplus nations (like Germany
and the Netherlands) to pay the bills of the deficit nations while, at the same
time, not pushing the burdens of adjustment onto the weakened shoulders of the
deficit countries. Together with my colleagues J.K. Galbraith and S. Holland,
we have presented what we call a Modest Proposal for Resolving the Euro Crisis.
Michel Rocard, the former French PM, as well as a number of former EU heads of
state, have endorsed its basic tenets.
As for Syriza, my reasons
for supporting Alexis Tsipras, both in his bid to win government in Athens and
also in the context of European politics, is simple: Europe needs a major jolt
from a government that is at once committed to the European-Eurozonal project
and to the truth. I do not really care where it comes from as long as someone in the EU Council, in the Eurogroup, in
Ecofin breaks the code of silence about basic truths that no one dares speak.
At long last, Europe must have a debate on basic prerequisites for stabilising
the Eurozone. To do so, someone must refuse to continue the lie of the past
five years that, supposedly, Europe is on the right track. Tsipras is prepared
to veto this lie while doing his utmost to keep Greece in the Eurozone. For
this reason he has my support.
How can (youth)
unemployment be conquered best?
It is absurd and, indeed,
indecent, to imagine that youth unemployment can be tackled when adult
unemployment is skyrocketing. Youth unemployment will fall when unemployment
falls. Of course, there are clever and innovative methods of combining
education with vocation training, as it is done with some success in Germany.
But none of this is possible in a crashing economy.
Can you call Greece
still a welfare state? To what sort of society will these policies lead to,
eventually?
Greece is being used as
if it were an experimental laboratory in which the welfare state is dismantled
and the experimenters keenly observe the effects of its dismantling. If so, it
is time to end this misanthropic experiment. For we can now see that the result
is untold pain, economic collapse (even of potentially profitable enterprises),
and the rise and rise of a Nazi party in the one country of the European Union
that fought most heroically against the original Nazis.
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