The following are selected answers from Yanis Varoufakis’s appearance on The Exchange with Oli Dugmore.
Oli Dugmore: Last year, reflecting on 2025, you identified three upsets in the foreign policy arena, in which Donald Trump could identify himself as the victor. You spoke about Russia’s victory in Ukraine, as you saw it, you spoke about the trade war as it relates to China, and you spoke about European submission in that same trade war. I would invite you to reflect on those remarks in the context of the attacks that are now taking place against Iran and how you contextualise what’s happening here as it relates to Trump.
Yanis Varoufakis: What I said in December 2025, a few months ago, was that the lessons of 2025 are that President Xi of China won the tariff war with Trump, Trump won the tariff war with the European Union, and Putin won the discursive war regarding Ukraine. Europeans are totally clueless about what to do with Ukraine, so the Putin narrative is winning over, at least in the global South and also in the United States under Trump.
Trump has allowed himself to become co-opted by Israel. The argument was that Israel is going to bomb Iran then Iran is going to retaliate against the United States. So, because Israel is going to violate international law, we have to do it.
The only success Trump had in his first term was he didn’t allow himself to become roped by Netanyahu into another war in the Middle East, especially with Iran. Now he’s going to lose everything. I think that now his political project is finished.
He has been betraying the blue-collar base of the Maga movement since day one. If you look at the “big beautiful bill”, for instance, it was a piece of class war against his own base. He in fact decimated them, but it wasn’t enough to derail his project because he had the tech oligarchs. He had Wall Street on his side and he could still do things like abduct Maduro and pacify part of the blue-collar base on the basis of patriotism.
The Trump supporter travels 100 miles to go to work and come back with the bullshit jobs that they have. And they simply can’t make ends meet. They just can’t put food on the table. He’s going to lose these people if he hasn’t lost them already.
He’s capable of putting on a show like a Roman emperor who receives the news from what is now Germany, that his legions have been completely decimated by the goths. He declares victory and holds a triumph in Rome. He can do that, but that is not going to, to work. He’ll go down the way George W Bush has: becoming synonymous with a major debacle.
Are European nations complicit in this war?
Oh absolutely. If you don’t agree with this war, would you let Iran use your soil to wage war against somebody else? You wouldn’t.
Why would you let the United States wage a war which you think is detrimental to the interest of your country and of the west and of humanity? Only because you simply don’t exist. You are a figment of our imagination. Keir Starmer is a prime minister that could simply not be there. There could be some chosen representative of Donald Trump in 10 Downing Street, and he wouldn’t be doing any different. I mean, Starmer maybe kicks and screams for what, five minutes?
To represent the government’s position on this, they would counter and say, we have only permitted the use of these bases for defensive operations.
So when bombers leave the British base and they kill children, that’s defensive. Okay.
Could you project the medium-term consequences, particularly for Keir Starmer and his unwillingness to confront Trump over this issue?
We don’t have an answer to the question, where is the investment going to come from in order to produce the things that will determine the future? Like green energy, like AI. The Chinese have the answer. In Europe and in the UK we talk about it and we do nothing about it. The only show in town is military.
They’re taking a few millions away from foreign aid, which is a crime against logic because even one pound can make a difference to somebody’s life.
And they’re throwing it at British Aerospace, they’re throwing it at Airbus, and so on. It’s a bottomless pit. Unless you do that which the Americans are doing, which is to borrow trillions and throw it at the military industrial complex, this is not going to be a growth machine in the United Kingdom or the European Union.
So essentially the way this debate is unfolding in Britain and in the European Union is doing no good and it is depleting our capacity to have a proper conversation about what needs to be done.
Do you connect that to Labour’s loss of left-wing support in the UK?
I’m still astonished that there are, you know, some colleagues of mine, friends of mine, like Clive Lewis, like John McDonnell, who are still in the Labour Party. I mean, this Labour Party is utterly toxic to anyone who has basic ethical standards, not just left-wing people.
Obviously the Green Party is surging in popularity. Talk to me about how you understand that growth in popularity. Is it only possible because of those stances that the Labour Party has taken?
Well, after the great financial collapse, which led to the Osborne/Cameron policy of socialism for the bankers and austerity for everybody else, you had in this country a massive wave of discontent. Now, whenever that happens, discontent needs to find some expression.
We saw this in 2015, 2016. It partly found expression through Jeremy Corbyn’s leadership of the Labour Party, Momentum, and so on. Where the left fails to inspire people with a positive agenda, the ultra right comes in with a destructive, toxic negative agenda. We saw this in the Brexit referendum.
After Corbyn, you had a leaderless movement that needed to move in the progressive direction. And that’s where Zack Polanski, by rebranding the Greens as an eco-socialist party, created a bridge of hope between those who want a radical transformation of society.
I think it was very smart on Zack’s part to move in, not just talk about the environment, but also the distribution of wealth and wealth taxes. Zack has been a breath of fresh air.
I think I’ve seen you use the term proto-fascism to talk about what’s happening now. Is Nigel Farage a fascist?
I’m not going to call Farage a fascist or Trump a fascist, but I’m going to say that that movement is a fascist movement.
Talk to me about how you understand the likely economic fallout of the war and how financial institutions might respond.
Many commentators are hoping that this war is going to prove insignificant in the medium term. But they’re very wrong. The Bank of England, the European Central Bank and the Fed are thinking of hiking interest rates to counter what they see as an inflationary tendency. That would be a catastrophic error because when inflation is generated, because of the rise in energy costs, there’s nothing that interest rates can do to stop the cost from rising. All they can do is crush the economy, create a huge unemployment surge, and therefore reduce inflation by means of this sledgehammer of a recession that is unnecessary.
So I do hope that the Bank of England doesn’t make the mistake of increasing interest rates. It’ll be gross negligence if they do. Unless we find ways of shrinking the profit rates of big multinationals that are increasingly enjoying market power as a result of developments over the last few decades, then there’s nothing we can do to contain inflation and prevent stagflation.
There’s also a pretty strong strain of argument here in the UK that one of the answers might be to open up licensing agreements for fossil fuel extraction in the North Sea.
It’s the people who always wanted to destroy the planet faster in order to line their pockets. Look, this is just pathetically stupid. It takes 15 years for new development to come online. So this is not a short-term fix for what is a short-term or medium-term problem.
You mentioned being banned from entering Germany. Does that ban still stand? Have you been back to Germany since that’s happened?
Yes, I have. And it’s very interesting how it happened. I was invited by the managing director of BMW to deliver a keynote speech at the BMW Foundation Berlin while that ban was valid. So I thanked them very much for that, but I reminded them that I’m not allowed to go into Germany. And they said, no, no, no, no. Don’t worry about that. It doesn’t apply to us. And I went, and they didn’t touch me.
Since then, I have taken them to court challenging their right not to tell me the rationale for banning me. Lo and behold, miraculously that court case gets postponed every second month for the next two months.
You are facing drug charges in Greece for talking on a podcast like this one about taking a pill nearly 40 years ago. Does the prosecution have a case? Is it politically motivated?
It’s not politically motivated, it’s pathetic. I have a court date on 16 December, for propagating drug use, because I said to a bunch of youngsters that, yes, I did take some ecstasy 37 years ago in Sydney at a party it was great fun. I danced like crazy. Then it gave me a huge migraine and I never took it again. And then I went on to say to them that I cannot tell you what to do. The last thing youngsters need is a 65-year-old to tell them what to do. They will probably do the opposite.
Then the propaganda department of the right-wing party, they called it the Truth Commission, they took out a bit where I say that it was fun and they blasted it all over the social media. Two hours later, the Minister of Health and the minister of the police were on a panel on television demanding my prosecution.
Speaking of dancing, did you know that you’re currently going viral in Russia?
I have seen the video. I have no idea. We live in a world that makes increasingly less sense. Life is not worthwhile if we simply follow the path of least resistance leading to the destruction of the soul. It’s really not fun. Life should be fun. So resisting is existing.
[Further reading: “I don’t think the United States would fight for Taiwan because I don’t think it can”]
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