{"id":61089,"date":"2015-07-20T12:00:24","date_gmt":"2015-07-20T11:00:24","guid":{"rendered":"https:\/\/www.transcend.org\/tms\/?p=61089"},"modified":"2015-07-17T14:41:50","modified_gmt":"2015-07-17T13:41:50","slug":"yanis-varoufakis-full-transcript-our-battle-to-save-greece","status":"publish","type":"post","link":"https:\/\/www.transcend.org\/tms\/2015\/07\/yanis-varoufakis-full-transcript-our-battle-to-save-greece\/","title":{"rendered":"Yanis Varoufakis Full Transcript: Our Battle to Save Greece"},"content":{"rendered":"

13 Jul 2015 – The full transcript of the former Greek Finance Minister’s first interview since resigning.<\/em><\/p>\n

\"Yanis<\/a>

Yanis Varoufakis feels “on top of the world” now his part in the crisis talks is over. Photo: Getty<\/p><\/div>\n

Read the report from Greece of our interview with Varoufakis here.<\/strong><\/a><\/p>\n

This conversation took place before the deal.<\/em><\/p>\n

Harry Lambert:\u00a0So how are you feeling?<\/strong><\/p>\n

Yanis Varoufakis:\u00a0<\/strong>I\u2019m feeling on top of the world \u2013\u00a0I\u00a0no longer\u00a0have to live through this hectic timetable, which was absolutely inhuman, just unbelievable. I was on 2 hours sleep every day for five months. \u2026 I\u2019m also relieved I don\u2019t have to sustain any longer this incredible pressure to negotiate for a position I find difficult to defend, even if I managed to force the other side to acquiesce, if you know what I mean.<\/p>\n

 <\/p>\n

HL:<\/strong>\u00a0<\/em>What was it like? Did you like any aspect of it?<\/strong><\/p>\n

YV:<\/strong>\u00a0Oh well a lot of it. But the inside information one gets\u2026\u00a0to have your worst fears confirmed \u2026 To have \u201cthe powers that be\u201d speak to you directly, and it be as you feared \u2013\u00a0the situation was worse than you imagined! So that was fun, to have the front row seat.<\/p>\n

 <\/p>\n

HL:<\/strong>\u00a0<\/em>What are you referring to?<\/strong><\/p>\n

YV:<\/strong>\u00a0The complete lack of any democratic scruples, on behalf of the supposed defenders of Europe\u2019s democracy. The quite clear understanding on the other side that we are on the same page analytically \u2013 of course it will never come out at present. [And yet] To have very powerful figures look at you in the eye and say \u201cYou\u2019re right in what you\u2019re saying, but we\u2019re going to crunch you anyway.\u201d<\/p>\n

 <\/p>\n

HL:\u00a0You\u2019ve said creditors objected to you because \u201cI try and talk economics in the Eurogroup, which nobody does.\u201d What happened when you did?<\/strong><\/p>\n

YV:<\/strong>\u00a0It\u2019s not that it didn\u2019t go down well \u2013 it\u2019s that there was point blank refusal to engage in economic arguments. Point blank. \u2026 You put forward an argument that you\u2019ve really worked on \u2013 to make sure it\u2019s logically coherent \u2013 and you\u2019re just faced with blank stares. It is as if you haven\u2019t spoken. What you say is independent of what they say. You might as well have sung the Swedish national anthem \u2013 you\u2019d have got the same reply. And that\u2019s startling, for somebody who\u2019s used to academic debate. \u2026 The other side always engages. Well there was no engagement at all. It was not even annoyance, it was as if one had not spoken.<\/p>\n

 <\/p>\n

HL:\u00a0When you first arrived, in early February, this can\u2019t have been a unified position?<\/strong><\/p>\n

YV:<\/strong>\u00a0Well there were people who were sympathetic at a personal level \u2013 so, you know, behind closed doors, on an informal basis, especially from the IMF. [HL<\/em>: \u201cFrom the highest levels?\u201d\u00a0YV<\/em>: \u201cFrom the highest levels, from the highest levels.\u201d] But then inside the Eurogroup, a few kind words and that\u2019s it, back behind the parapet of the official version.<\/p>\n

[But] Sch\u00e4uble was consistent throughout. His view was \u201cI\u2019m not discussing the programme \u2013 this was accepted by the previous government and we can\u2019t possibly allow an election to change anything. Because we have elections all the time, there are 19 of us, if every time there was an election and something changed, the contracts between us wouldn\u2019t mean anything.\u201d<\/p>\n

So at that point I had to get up and say \u201cWell perhaps we should simply not hold elections anymore for indebted countries\u201d, and there was no answer. The only interpretation I can give [of their view] is \u201cYes, that would be a good idea, but it would be difficult to do. So you either sign on the dotted line or you are out.\u201d<\/p>\n

 <\/p>\n

HL:\u00a0And Merkel?<\/strong><\/p>\n

YV:\u00a0<\/strong>You have to understand I never had anything to do with Merkel, finance ministers talk to finance ministers, prime ministers talk to Chancellors. From my understanding, she was very different.\u00a0 She tried to placate the Prime Minister [Tsipras] \u2013\u00a0she said \u201cWe\u2019ll find a solution, don\u2019t worry about it, I won\u2019t let anything awful happen, just do your homework and work with the institutions, work with the Troika; there can be no dead end here.\u201d<\/p>\n

This is not what I heard from my counterpart \u2013 both from the head of the Eurogroup and Dr Sch\u00e4uble, they were very clear. At some point it was put to me very unequivocally: \u201cThis is a horse and either you get on it or it is dead.\u201d<\/p>\n

 <\/p>\n

HL:\u00a0Right so when was that?<\/strong><\/p>\n

YV:<\/strong>\u00a0From the beginning, from the very beginning. [They first met in early February.]<\/p>\n

 <\/p>\n

HL:\u00a0So why hang around until the summer?<\/strong><\/p>\n

YV:<\/strong>\u00a0Well one doesn\u2019t have an alternative. Our government was elected with a mandate to negotiate. So our first mandate was to create the space and time to have a negotiation and reach another agreement. That was our mandate \u2013 our mandate was to negotiate, it was not to come to blows with our creditors. \u2026<\/p>\n

The negotiations took ages, because the other side was refusing to negotiate. They insisted on a \u201ccomprehensive agreement\u201d, which meant they wanted to talk about everything. My interpretation is that when you want to talk about everything, you don\u2019t want to talk about anything. But we went along with that.<\/p>\n

And look there were absolutely no positions put forward on anything by them. So they would\u2026 let me give you an example. They would say we need all your data on the fiscal path on which Greek finds itself, we need all the data on state-owned enterprises. So we spent a lot of time trying to provide them with all the data and answering questionnaires and having countless meetings providing the data.<\/p>\n

So that would be the first phase. The second phase was where they\u2019d ask us what we intended to do on VAT. They would then reject our proposal but wouldn\u2019t come up with a proposal of their own. And then, before we would get a chance to agree on VAT with them, they would shift to another issue, like privatisation. They would ask what we want to do about privatisation, we put something forward, they would reject it. Then they\u2019d move onto another topic, like pensions, from there to product markets, from there to labour relations, from labour relations to all sorts of things right? So it was like a cat chasing its own tail.<\/p>\n

We felt, the government felt, that we couldn\u2019t discontinue the process. Look, my suggestion from the beginning was this: This is a country that has run aground, that ran aground a long time ago. \u2026 Surely we need to reform this country \u2013 we are in agreement on this. Because time is of the essence, and because during negotiations the central bank was squeezing liquidity [on Greek banks] in order pressurise us, in order to succumb, my constant proposal to the Troika was very simple: let us agree on three or four important reforms that we agree upon, like the tax system, like VAT, and let\u2019s implement them immediately. And you relax the restrictions on liqiuidity from the ECB. You want a comprehensive agreement \u2013 let\u2019s carry on negotiating \u2013 and\u00a0in the meantime\u00a0<\/em>let us introduce these reforms in parliament by agreement between us and you.<\/p>\n

And they said \u201cNo, no, no, this has to be a comprehensive review. Nothing will be implemented if you dare introduce any legislation. It will be considered unilateral action inimical to the process of reaching an agreement.\u201d And then of course a few months later they would leak to the media that we had not reformed the country and that we were wasting time! And so\u2026 [chuckles] we were set up, in a sense, in an important sense.<\/p>\n

So by the time the liquidity almost ran out completely, and we were in default, or quasi-default, to the IMF, they introduced their proposals, which were absolutely impossible\u2026 totally non-viable and toxic. So they delayed and then came up with the kind of proposal you present to another side when you don\u2019t want an agreement.<\/p>\n

 <\/p>\n

HL:\u00a0Did you try working together with the governments of other indebted countries?<\/strong><\/p>\n

YV:\u00a0<\/strong>The answer is no, and the reason is very simple: from the very beginning those particular countries made it abundantly clear that they were the most energetic enemies of our government, from the very beginning. And the reason of course was their greatest nightmare was our success: were we to succeed in negotiating a better deal for Greece, that would of course obliterate them politically, they would have to answer to their own people why they didn\u2019t negotiate like we were doing.<\/p>\n

 <\/p>\n

HL:\u00a0And partnering with sympathetic parties, like Podemos?<\/strong><\/p>\n

YV:\u00a0<\/strong>Not really. I mean we always had a good relationship with them, but there was nothing they could do \u2013 their voice could never penetrate the Eurogroup. And indeed the more they spoke out in our favour, which they did, the more inimical the Finance Minister representing that country became towards us.<\/p>\n

 <\/p>\n

HL:\u00a0And George Osborne? What were your dealings like with him?<\/strong><\/p>\n

YV:<\/strong>\u00a0Oh very good, very pleasant, excellent. But he is out of the loop, he is not part of the Eurogroup. When I spoke to him on a number of occasions you could see that was very sympathetic. And indeed if you look at the\u00a0Telegraph<\/em>, the greatest supporters of our cause have been the Tories! Because of their Eurosceptism, eh\u2026 it\u2019s not just Euroscepticsm; it\u2019s a Burkean view of the sovereignty of parliament \u2013 in our case it was very clear that our parliament was being treated like rubbish.<\/p>\n

 <\/p>\n

HL:\u00a0What is the greatest problem with the general way the Eurogroup functions?<\/strong><\/p>\n

YV:\u00a0<\/strong>[To exemplify\u2026] There was a moment when the President of the Eurogroup decided to move against us and effectively shut us out, and made it known that Greece was essentially on its way out of the Eurozone. \u2026 There is a convention that communiqu\u00e9s must be unanimous, and the President can\u2019t just convene a meeting of the Eurozone and exclude a member state. And he said, \u201cOh I\u2019m sure I can do that.\u201d So I asked for a legal opinion. It created a bit of a kerfuffle. For about 5-10 minutes the meeting stopped, clerks, officials were talking to one another, on their phone, and eventually some official, some legal expert addressed me, and said the following words, that \u201cWell, the Eurogroup does not exist in law, there is no treaty which has convened this group.\u201d<\/p>\n

So what we have is a non-existent group that has the greatest power to determine the lives of Europeans. It\u2019s not answerable to anyone, given it doesn\u2019t exist in law; no minutes are kept; and it\u2019s confidential. So no citizen ever knows what is said within. \u2026 These are decisions of almost life and death, and no member has to answer to anybody.<\/p>\n

 <\/p>\n

HL:\u00a0And is that group controlled by German attitudes?<\/strong><\/p>\n

YV:<\/strong>\u00a0Oh completely and utterly. Not attitudes \u2013 by the finance minister of Germany. It is all like a very well-tuned orchestra and he is the director. Everything happens in tune. There will be times when the orchestra is out of tune, but he convenes and puts it back in line.<\/p>\n

 <\/p>\n

HL:\u00a0Is there no alternative power within the group, can the French counter that power?<\/strong><\/p>\n

YV:<\/strong>\u00a0Only the French finance minister has made noises that were different from the German line, and those noises were\u00a0very\u00a0<\/em>subtle. You could sense he had to use very judicious language, to be seen not to oppose. And in the final analysis, when Doc Sch\u00e4uble responded and effectively determined the official line, the French FM in the end would always fold and accept.<\/p>\n

 <\/p>\n

HL:\u00a0Let\u2019s talk about your theoretical background, and your piece on Marx in 2013, when you said:<\/strong><\/p>\n

\u201cA Greek or a Portuguese or an Italian exit from the Eurozone would soon lead to a fragmentation of European capitalism, yielding a seriously recessionary surplus region east of the Rhine and north of the Alps, while the rest of Europe is would be in the grip of vicious stagflation. Who do you think would benefit from this development? A progressive left, that will rise Phoenix-like from the ashes of Europe\u2019s public institutions? Or the Golden Dawn Nazis, the assorted neofascists, the xenophobes and the spivs? I have absolutely no doubt as to which of the two will do best from a disintegration of the eurozone.\u201d<\/em><\/p>\n

\u2026so would a Grexit inevitably help Golden Dawn, do you still think that?<\/strong><\/p>\n

YV:<\/strong>\u00a0Well, look, I don\u2019t believe in deterministic versions of history. Syriza now is a very dominant force.\u00a0If\u00a0<\/em>we manage to get out of this mess united, and handle properly a Grexit \u2026 it would be possible to have an alternative. But I\u2019m not sure we would manage it, because managing the collapse of a monetary union takes a great deal of expertise, and I\u2019m not sure we have it here in Greece without the help of outsiders.<\/p>\n

 <\/p>\n

HL:\u00a0You must have been thinking about a Grexit from day one…<\/strong><\/p>\n

YV:\u00a0<\/strong>Yes, absolutely.<\/p>\n

 <\/p>\n

HL: …have preparations been made?<\/strong><\/p>\n

YV:<\/strong>\u00a0The answer is yes and no. We had a small group, a \u2018war cabinet\u2019 within the ministry, of about five people that were doing this: so we worked out in theory, on paper, everything that had to be done [to prepare for\/in the event of a Grexit]. But it\u2019s one thing to do that at the level of 4-5 people, it\u2019s quite another to prepare the country for it. To prepare the country an executive decision had to be taken, and that decision was never taken.<\/p>\n

 <\/p>\n

HL:\u00a0And in the past week, was that a decision you felt you were leaning towards\u00a0[preparing for Grexit]?<\/strong><\/p>\n

YV:<\/strong>\u00a0My view was, we should be very careful not to activate it. I didn\u2019t want this to become a self-fulfilling prophecy. I didn\u2019t want this to be like Nietzsche\u2019s famous dictum that if you stare into the abyss long enough, the abyss will stare back at you. But I also believed that at the moment the Eurogroup shut out banks down, we should energise this process.<\/p>\n

 <\/p>\n

HL:\u00a0Right. So there were two options as far as I can see \u2013 an immediate Grexit, or printing IOUs and taking bank control of the Bank of Greece\u00a0[potentially but not necessarily precipitating a Grexit]?<\/strong><\/p>\n

YV:\u00a0<\/strong>Sure, sure. I never believed we should go straight to a new currency. My view was \u2013 and I put this to the government \u2013\u00a0that if they dared shut our banks down, which I considered to be an aggressive move of incredible potency, we should respond aggressively but without crossing the point of no return.<\/p>\n

We should issue our own IOUs, or even at least announce that we\u2019re going to issue our own euro-denominated liquidity; we should haircut the Greek 2012 bonds that the ECB held, or announce we were going to do it; and we should take control of the Bank of Greece. This was the triptych, the three things, which I thought we should respond with if the ECB shut down our banks.<\/p>\n

\u2026 I was warning the Cabinet this was going to happen [the ECB shut our banks] for a month, in order to drag us into a humiliating agreement. When it happened \u2013 and many of my colleagues couldn\u2019t believe it happened \u2013 my recommendation for responding \u201cenergetically\u201d, let\u2019s say, was voted down.<\/p>\n

 <\/p>\n

HL:\u00a0And how close was it to happening?<\/strong><\/p>\n

YV:<\/strong>\u00a0Well let me say that out of six people we were in a minority of two. \u2026 Once it didn\u2019t happen I got my orders to close down the banks consensually with the ECB and the Bank of Greece, which I was against, but I did because I\u2019m a team player, I believe in collective responsibility.<\/p>\n

And then the referendum happened, and the referendum gave us an amazing boost, one that would have justified this type of energetic response [his plan] against the ECB, but then that very night the government decided that the will of the people, this resounding \u2018No\u2019, should not be what energised the energetic approach [his plan].<\/p>\n

Instead it should lead to major concessions to the other side: the meeting of the council of political leaders, with our Prime Minister accepting the premise that whatever happens, whatever the other side does, we will never respond in any way that challenges them. And essentially that means folding. \u2026 You cease to negotiate.<\/p>\n

 <\/p>\n

HL:\u00a0So you can\u2019t hold out much hope now, that this deal will be much better than last week\u2019s \u2013 if anything it will be worse?<\/strong><\/p>\n

YV:\u00a0<\/strong>If anything it will be worse. I trust and hope that our government will insist on debt restructuring, but I can\u2019t see how the German finance minister is ever going to sign up to this in the forthcoming Eurogroup meeting. If he does, it will be a miracle.<\/p>\n

 <\/p>\n

HL:\u00a0Exactly \u2013 because, as you\u2019ve explained, your leverage is gone at this point?<\/strong><\/p>\n

YV:<\/strong>\u00a0I think so, I think so. Unless he [Sch\u00e4uble] gets his marching orders from the Chancellor. That remains to be seen, whether she will step in to do that.<\/p>\n

 <\/p>\n

HL:\u00a0To come back out again, could you possibly explain, in layman\u2019s terms for our readers, your objections to Piketty\u2019s “Capital”?<\/strong><\/p>\n

YV:\u00a0<\/strong>Well let me say firstly, I feel embarrassed because Piketty has been extremely supportive of me and the government, and I have been horrible to him in my review of his book! I really appreciate his position over the last few months, and I\u2019m going to say this to him when I meet him in September.<\/p>\n

But my criticism of his book stands. His sentiment is correct. His abhorrence of inequality\u2026 [inaudible]. His analysis, however, undermines the argument, as far as I am concerned. Because in his book the neoclassical model of capitalism gives very little room for building the case he wants to build up, except by building upon the model a very specific set of parameters, which undermines his own case. In other words, if I was an opponent of his thesis that inequality is built into capitalism, I would be able to take apart his case by attacking his analysis.<\/p>\n

 <\/p>\n

HL:\u00a0I don\u2019t want to get too detailed, because this isn\u2019t going to make the final cut…<\/strong><\/p>\n

YV:\u00a0<\/strong>Yes\u2026<\/p>\n

 <\/p>\n

HL: …but it\u2019s about his metric of wealth?<\/strong><\/p>\n

YV:\u00a0<\/strong>Yes, he uses a definition of capital which makes capital impossible to understand \u2013 so it\u2019s a contradiction of terms. [Click here\u2014link to add:\u00a0http:\/\/yanisvaroufakis.eu\/2014\/10\/08\/6006\/<\/a>\u2014for Varoufakis\u2019 critical review of Piketty\u2019s\u00a0Capital<\/em>.]<\/p>\n

 <\/p>\n

HL:\u00a0Let\u2019s come back to the crisis. I really understand very little of your relationship with Tsipras\u2026<\/strong><\/p>\n

YV:<\/strong>\u00a0I\u2019ve known him since late 2010, because I was a prominent critic of the government at the time, even though I was close to it once upon a time. I was close to the Papandreou family \u2013 I still am in a way \u2013 but I became prominent \u2026 back then it was big news that a former adviser was saying \u201cWe\u2019re pretending bankruptcy didn\u2019t happen, we\u2019re trying to cover it up with new unsustainable loans,\u201d that kind of thing.<\/p>\n

I made some waves back then, and Tsipras was a very young leader trying to understand what was going on, what the crisis was about, and how he should position himself.<\/p>\n

 <\/p>\n

HL:\u00a0Was there a first meeting you remember?<\/strong><\/p>\n

YV:\u00a0<\/strong>Oh yes. It was late 2010, we went to a cafeteria, there were three of us, and my recollection is that he wasn\u2019t clear back then what his views were, on the drachma versus the euro, on the causes of the crises, and I had very, well shall I say, \u201cset views\u201d on what was going on. And a dialogue begun which unfolded over the years and one that\u2026\u00a0I believe that I helped shape his view of what should be done.<\/p>\n

 <\/p>\n

HL:\u00a0So how does it feel now, after four-and-a-half years, to no longer be working by his side?<\/strong><\/p>\n

YV:\u00a0<\/strong>Well I don\u2019t feel that way, I feel that we\u2019re very close. Our parting was extremely amicable. We\u2019ve never had a bad problem between us, never, not to this day. And I\u2019m extremely close to Euclid Tsakalotos [the new finance minister].<\/p>\n

 <\/p>\n

HL:\u00a0And presumably you\u2019re still speaking with them both this week?<\/strong><\/p>\n

YV:<\/strong>\u00a0I haven\u2019t spoken to the Prime Minister this week, in the past couple of days, but I speak to Euclid, yes, and I consider Euclid to be very close to be, and vice-versa, and I don\u2019t envy him at all. [Chuckling.]<\/p>\n

 <\/p>\n

HL:\u00a0Would you be shocked if Tsipras resigned?<\/strong><\/p>\n

YV:\u00a0<\/strong>Nothing shocks me these days \u2013 our Eurozone is a very inhospitable place for decent people. It wouldn\u2019t shock me either to stay on and accepts a very bad deal. Because I can understand he feels he has an obligation to the people that support him, support us, not to let this country become a failed state.<\/p>\n

But I\u2019m not going to betray my own view, that I honed back in 2010, that this country must stop extending and pretending, we must stop taking on new loans pretending that we\u2019ve solved the problem, when we haven\u2019t; when we have made our debt even less sustainable on condition of further austerity that even further shrinks the economy; and shifts the burden further onto the have nots, creating a humanitarian crisis. It\u2019s something I\u2019m not going to accept. I\u2019m not going to be party to.<\/p>\n

 <\/p>\n

HL:\u00a0Final question \u2013\u00a0will you stay close with anyone who you had to negotiate with?<\/strong><\/p>\n

YV:<\/strong>\u00a0Um, I\u2019m not sure. I\u2019m not going to mention any names now just in case I destroy their careers! [Laughing.]<\/p>\n