Interview: Yanis Varoufakis on Scottish independence and being a Eurosceptic remainer

If anyone has a reason to hate the EU, it is Yanis Varoufakis.

The former Greek finance minister faced off the troika of the European Commission, European Central Bank, and the IMF in 2015 while leading negotiations on behalf of Greece’s newly-elected Syriza socialist government. 

Backed by a majority of Greeks voting in a referendum on the matter, Varoufakis refused the bailout conditions imposed by the troika to address the country’s debt crisis, but when his Syriza comrades decided to accept the bailout package anyway, his position became untenable.

He called the bailout a “toxic construct”, predicting it would deepen inequality in Greece. And it has.

Clearly feeling betrayed, the economist did not stand for re-election, but he has remained a high-profile figure in European politics, authoring a number of books on left-wing economic theory.

In 2016 he launched a new pan-European party called Democracy in Europe Movement 2025, or DiEM25, which aims to reform the constructs of the European Union from within. From this platform, he campaigned alongside Jeremy Corbyn for a Remain vote in the UK Brexit referendum, arguing that the EU was flawed but could only be improved as a member. 

Holyrood sits down with Varoufakis at the Book Festival in Edinburgh. Earlier that day, the Greek bailout programme so fiercely opposed by him had reached a formal end. 

Donald Tusk, the president of the European Union, had just tweeted congratulations to Greece, something Varoufakis describes as “adding insult to injury”.

“Nothing has ended,” he tells Holyrood. 

“We went from the third bailout to the fourth bailout, but they are not calling it that. It’s only packaging and repackaging of unsustainable debt.”

Tusk’s tweet told Greeks: “With huge efforts and European solidarity, you seized the day.”

Varoufakis is not impressed when Holyrood reads it to him.

“It’s a bit like, you remember, when the Americans invaded Iraq, they said it was to bring democracy to Iraq. They destroyed the image of democracy among Iraqis. 

“Similarly, the word ‘solidarity’ now means nothing in Greece. Everybody hates it. ‘No more solidarity’ they say, ‘please, no more’. ‘Could you not love us so much anymore?’”

He compares Greece with a Victorian workhouse, a debtors’ prison where the prospect of repaying your debts remains elusive.

“The economic reality is this: they are refusing to restructure our debt. There is a mountain of debt which will never get repaid but we have to repay it, a bit like the workhouse. 

“In order to pretend that we’re going to repay it, they have to have microeconomic targets for the government’s budget surplus that are wholly unrealistic. Then those targets are imposed, so every three months, the troika go there with a gun, puts it on the head of the finance minister and says, cut pensions, stop repairing roads, close schools and at the same time, hike taxes up. 

“Now we have ridiculous tax rates in Greece. We used to be a country where paying your tax was almost voluntary. Now we’re in a situation where people who live there are being taxed through the nose. Companies, small businesses with two or three people, 75 per cent of their net income goes to the state. This is what you do to a country if you want to destroy it.”

This shrinking of incomes becomes a downward spiral for the economy, he adds.

“It’s like a cat chasing its own tail until it dies. That’s a debtors’ prison.”

The UK and the USA, meanwhile, benefitted from having a central bank with some degree of autonomy, according to Varoufakis. 

While RBS and other banks were saved by the UK taxpayer, $16tr of Federal Reserve cash was used to bail out corporations and banks during and after the 2008 fiscal crisis, including the Troubled Assets Relief Program (TARP) to bail out Wall Street.

But in Europe, Greece and other countries have the European Central Bank, an institution with no state to correspond to, which is unable to perform the same functions like providing bailouts to governments or other banks.

“Imagine if the Fed had not bailed out Wall Street, or imagine if all that toxic waste … had to be paid for by raiding the taxpayers in Oregon and Mississippi? The United States would have ceased to exist. It would have split up.”

Raiding the taxpayers to pay for austerity is exactly what has happened in Greece, however, and the future of the European project faces an uncertain future.

A razor-like focus on governments balancing the books through austerity was practised across Europe, but was most keenly felt in Greece where the bailout conditions led to cuts and privatisation.

But in 2015 over 60 per cent of Greeks rejected the bailout, backing Varoufakis in the negotiations. He describes what followed as a “coup d’etat” where the government overthrew the people. 

“The government who called them to vote no, turned that no into a yes the very same night. That’s why I was out. And I’m still out,” he says.

But now it is the UK where some are looking to overthrow the decision of a referendum, with growing calls for Brexit to be put to the people again, or even to be overturned. 

Varoufakis says talk of a second referendum “smacks of being a bad loser” and warns it would likely result in another loss.

While the first referendum was a binary choice between the status quo and a chance on something different, another one would not have the “default” position of remaining where we are.

Such a referendum would need four options, according to Varoufakis: a no-deal Brexit, Theresa May’s “silly deal”, remaining in the EU, or what he calls “Norway Plus” with freedom of movement.
This latter model is clearly what he advocates.

“You respect the referendum but at the same time have continuity. And you fire Mr Barnier. You then give the House of Commons – and the people of Scotland – five years or ten years to decide what on earth they want to do,” he says.

“There are four options, but with four options, you might as well have a general election.”

Varoufakis describes himself as a “Europeanist”, saying there is no inconsistency in saying “vote to remain in an EU we hate”.

Holyrood is reminded of the criticism that Labour leader Jeremy Corbyn garnered for suggesting his enthusiasm for the EU was “about seven out of ten” ahead of the vote. 

Some still cite it as evidence he is a secret Brexiteer who wanted to leave all along, but fellow Remain campaigner Varoufakis thinks Corbyn was too generous.

“I would have said one. Not zero, but one. No more than one,” he says.

He and Corbyn had discussed the position before the remarks were made.

“When Tony Blair and Nick Clegg were saying the EU is fantastic, it’s the best thing since sliced bread, people were saying: ‘No it’s not. Look at what they’re doing to Greece, look at how they are making decisions, look at how they are feathering their nests.’”

Given the treatment of both Greece and himself at the hands of the European institutions, it should not be a surprise that Varoufakis is no fan. But hasn’t it also shown that the orthodoxy of a brand of capitalism he rails against is well established and embedded in the European Union itself?

“It’s a massive conflict with the powers that be, yes. But that is independent of the EU,” he says. 

“Think of the City of London. The City of London is still a major impediment to progress and civilisation in this country. It is a curse. 

“People present it as this great job creator. No. It is holding the rest of the country back. It is destroying value, withholding talent and pushing paper around while being remunerated remarkably. It is creating conditions in Britain for money laundering, to turn it into a sort of tax haven from which the British people do not benefit at all. You would have all these problems if you were not in the EU.”

A UK outwith the EU looks the most likely prospect now, and like Corbyn and Shadow Chancellor John McDonnell, Varoufakis acknowledges the result of the referendum. He does question some of the tactics of the Labour leadership since, though.

“I am a staunch supporter of ‘Norway Plus’, but Jeremy has not espoused my enthusiasm for maintaining freedom of movement, so we have a disagreement about this. 

“I think it’s very important to maintain the freedom of movement because socialists should never support borders. 

“We should never succumb to the toxic narrative that we need to ‘reclaim our borders’ or ‘lock our borders’. This is a narrative of zealots, of racists and xenophobes and you cannot compete with them.

“If you start going down that slope, it is very slippery and you fall right into the clasps of toxic nationalism.”

Despite his strong words on borders and nationalism, Varoufakis softens when asked about Scottish nationalism. He talks fondly of a short period working at the University of Glasgow, from which he made Scottish friends he still keeps in contact with. 

“Scottish nationalism has nothing to do with English nationalism, German nationalism or Greek nationalism. It’s very cuddly. It’s cuddly. 

“I would call it patriotism, I wouldn’t even call it nationalism. I make this distinction, and my definition might be wrong but I stick to it. A patriot loves his country, a nationalist thinks his country is superior to the others. I don’t think the Scots think that. That’s why this place is so open, welcoming to refugees, to migrants, to foreigners like me. Whereas English nationalism is not. You can see that with the Scots voting in favour of staying in the EU.”

When it comes to the question of independence, though, Varoufakis says progressives on both sides have “fantastic arguments”. 

“On the progressive side, you have people saying, ‘the last thing we need is another division, another border, another split. We need to stick together to fight for what is good and proper on both sides of Hadrian’s Wall.’ It’s a very good argument. I loathe borders. 

“Then there is the other argument which is that England, as a political economy, has drifted away from the social contract of the post-war era. So much so … that it is very, very difficult to bring back. And the two countries, England and Scotland, have really been torn apart by this neoliberal time and the City of London. Also, ‘for hundreds of years we have been oppressed by the City of London, and we need to breathe more easily and freely’.”

But which one is more convincing for Varoufakis?

“If I were living here, I would vote for Scottish independence, on one condition. A separate currency. Alex Salmond’s great error, which I very much fear Nicola Sturgeon is going to repeat, was to propose independence while keeping the pound. That is nonsense. It is ludicrous. Don’t do it again.”

“I remember talking to my friends in Scotland, those in the SNP, back then and said to them: ‘If you say you are going to keep the pound, you are giving London a fantastic opportunity to rubbish you by saying no, you can’t have it. Bugger off.’ Which is what they did.”

Isn’t there a contradiction between wanting to keep Greece in the euro and Scotland to break from using the pound, though? The difference, according to Varoufakis, is that Scotland already prints its own banknotes. 

But for some supporters of Scottish independence, what happened to Greece informed their decision to vote for Brexit.

Varoufakis says he understands the position. “They are crushing us. They are crushing the will of the Greek people. And doing it in a way which is financially nonsensical, and it’s damaging the image of the European Union.”