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Yanis Varoufakis: Covid-19 has "turbocharged" the EU’s failures

The former Greek finance minister on Boris Johnson’s recklessness, Keir Starmer, and why he believes the UK should now pursue a no-deal Brexit.

For Yanis Varoufakis, lockdown has not been a time of contemplation. “I have more work now than I ever did. As you know, everything has shifted to Zoom meetings, which means zero separation between the private and the public,” he explained when we spoke recently, during one such video call.

The 59-year-old economist, former Greek finance minister, game theorist and “erratic Marxist” has divided his time since Greece's lockdown began in mid-March between his summer house on the island of Aegina and his country’s parliament in Athens. Varoufakis was returned as an MP last July as one of nine representatives of MeRA25, the Greek wing of the pan-continental Democracy in Europe Movement 2025 (DiEM25), which he co-founded in 2016.

“It is a humbling process, it’s quite frustrating at times,” he said of the challenge of “building up a parliamentary party from scratch” (Varoufakis resigned from Syriza in 2015, in protest at then prime minister Alexis Tsipras’s support for a third austerity programme).

“We’re the smallest party in parliament but in the past couple of weeks I don’t think it would be an exaggeration to say that we have been the official opposition, the only ones who really make the government feel fragile. Because when Tsipras gets up, my former comrade, there is a standard line from the government which steamrolls over him: ‘This is exactly what you were doing for four years.’”

Varoufakis, who excoriated the EU for the austerity imposed on Greece in his memoir Adults in the Room: My Battle With Europe’s Deep Establishment, believes the Covid-19 pandemic has exposed the same flaws as the eurozone crisis. “Even more so — it’s exactly the same category error. 2010 was a crisis of insolvency and the EU treated it like a crisis of liquidity, so they kept lending, and the only way could pass these huge bailout loans through their parliaments was by attaching austerity strings to the loans.

“Now we have, even more evidently, an issue of bankruptcy. The tide has gone out... capitalism has been suspended, both supply and demand. That leaves behind a trail of bankruptcies. And they [the EU] continue to treat the problem as if it is one that can be solved by the means of loans... Covid-19 has turbocharged the failures in the handling of the euro crisis.”

Does he agree with those commentators who predict that the pandemic could lead to the collapse of the EU or the eurozone? “John Maynard Keynes’s expression that the market can remain irrational longer than I can remain solvent is apt here because Europe is a very rich bloc, particularly the eurozone, there is so much wealth to fritter and waste and that’s exactly what they’re doing, they are imposing stagnation upon the eurozone in a way that magnifies the imbalances and the centrifugal forces that will eventually end this experiment. But I may not be around to see it because the wealthier an unsustainable system is, the longer it can be sustained.

“The more rigid the system becomes, the harder it is for it to break — but when it breaks, it will break with a gigantic bang,” he warns. “That’s my great fear.”

Varoufakis, who opposed Brexit during the 2016 EU referendum campaign (and helped persuade Jeremy Corbyn to endorse Remain), now believes that the UK should leave the current transition period without a new trade deal.

“After four years, you should just get out now, without a deal. I didn’t have that view two months ago but things change. So for instance, the Michel Barnier argument that you can’t pick and choose – if you want to have increased access to the single market, you have to take the single market as it is – well, that has collapsed. The single market no longer exists. You already see that under the weight of the coronavirus crisis, the rules have been suspended...  I hate to admit it, but if I was close to Boris I would say ‘get out’.”

The UK’s initial handling of the pandemic, however, has been viewed with concern in Greece, which has recorded only 150 deaths after imposing tough restrictions early in the crisis. “Most Greeks have taken the view that Boris Johnson got his comeuppance, both personally and as PM, from endorsing an outdated and callous social-Darwinist approach to Covid-19.”

Varoufakis singled out Germany – a country with which he clashed intensely as Greece's finance minister – for praise. “I think Germany has done reasonably well, at least on the pandemic front, combining the lockdown with a superbly executed plan for moving to phase two through massive testing – that’s typical German ingenuity when it comes to organisation.”

On a geopolitical level, Varoufakis is haunted by the spectre of military conflict between the US and China. “The United States is going to become increasingly aggressive and belligerent in the South China Sea, so I’m very worried about war erupting there. And I will say something that I’m sure is going to be used against me, but I’ll say because I believe it, this is especially the case if Donald Trump loses the White House. Whoever comes next, whether it’s Biden or some stooge decided at the Democratic National Convention in August, is going to be far more war-prone than Trump is. One good thing about Trump – there aren’t many – is that he seems to be shying away from armed confrontation.

“A Democratic president that does not command respect like Obama did will be on very fragile ground. What is the best way of uniting the US behind the president? You start a war.”

Varoufakis may consider capitalism to have been “suspended”, but he does not share the optimism of those commentators who have hailed this as a “social democratic” or “socialist” moment. “I listen to my friends and comrades, like Slavoj Žižek, who are struggling to conjure up optimism out of this mess,” he explains, “and they leave me cold. Because already it’s quite remarkable — the financial markets are doing quite well, thank you very much, so much liquidity has been pumped into them. Once we are out of lockdown, I believe that this liquidity is going to translate into two things: first, greater inequality; and second, greater nationalism.”

Varoufakis emigrated to the UK aged 17 and stayed for over a decade, studying mathematics at the University of Essex, where he also gained a PhD in economics, before teaching at Essex, East Anglia and Cambridge universities. The Thatcher years were for him a debilitating lesson. “I remember when unemployment shot up from 750,000 people in the UK to 3.5 million. I thought right, that’s ok, that’s it — now the working class will automatically begin to organise and the bourgeoisie are going to get their comeuppance. And look what happened: the only beneficiaries were the spivs and the money markets, and the big banks in the City of London. The left was decimated and remains so to this day. There are no iron laws of history favouring the left.”

Nor is Varoufakis, who remained a consistent supporter of Corbyn, enthused by Keir Starmer’s leadership of Labour. He describes Starmer as a “very sweet bloke, but totally harmless from the perspective of the establishment”.

“It’s undoubtedly the case,” he adds, “that a Starmer administration is going to be business as usual, with a kinder face and a few tweaks of policy here and there to give some of the suffering people a little bit more. But this will not constitute an alternative in the way that the Corbyn-McDonnell Labour Party was intending to put on the table.”

What of Varoufakis’s own plans for the future? He is currently completing what he describes as a work of political science fiction that has, he quips, been “written exclusively on aeroplanes before lockdown and toilets”.

“I needed to write a sequel to Talking to My Daughter About the Economy [2017],” he explains, “because there was a very apt criticism that I’m shitting on capitalism, and then of course the question is, ‘so what’s the alternative?’ And I can’t say the Soviet Union, I can’t say Sweden, so I always resisted for decades coming up with an answer to this question – but I don’t think I can continue to resist it.

“Then again, I could not sit down and write a book on utopia. So I ended up narrating it as a science fiction story... It’s called Another NowDispatches from an Alternative Present. The gist of it is that in 2008 the crisis was so large that the timeline bifurcated; we are on one trajectory but there is another, socialist, one.”

In the real world, Varoufakis is not short of what the Italian Marxist Antonio Gramsci called “pessimism of the intellect”. But does he retain optimism of the will? “I have no optimism at all, zero optimism,” he says, explaining that optimism requires evidence that things will change for the better.

“But I have hope,” he adds. “Hope is something you choose.”

George Eaton is senior online editor of the New Statesman.

This article appears in the 15 May 2020 issue of the New Statesman, Land of confusion