Yanis Varoufakis, who dared to oppose the might of the EU, tells Ambrose Evans-Pritchard Britain must learn from Greece’s plight
Theresa May might balk at taking advice from a radical Greek Leftist and motorcycling heart-throb of the European protest movement, but nobody knows better than Yanis Varoufakis what it means to take on the EU power structure.
The former finance minister of Greece bears the scars of battle. For five hair-raising months he waged guerrilla warfare against the debt-collection policies of the EU-IMF Troika, learning to judge the reflexes of an imperial apparatus where the locus of real influence is disguised and where there are, in the words of the European Commission chief, instruments of torture in the basement.
The Greek Spring was short, snuffed out in July 2015 when the European Central Bank cut off liquidity and forced the closure of the banks.
Prof Varoufakis wanted to retaliate by issuing a “parallel liquidity” and defaulting on ECB bonds. But with ATMs in Athens limited to withdrawals of €40 a day and running out of cash, premier Alexis Tsipras and his Syriza party bowed to crushing pressure. They agreed to Carthaginian terms. Their spirit was broken.
There are lessons for Brexit in this sad saga. Prof Varoufakis, a specialist on economic “Game Theory”, says Britain must not let itself be captured by the EU’s negotiating net.
"My advice to Theresa May is to avoid negotiation at all costs"
If the UK succumbs to that fate, it will be beaten down by one humiliating defeat after another in a slow campaign of attrition. The EU will exploit Britain’s political divisions, playing off regions and parties against each other.
“My advice to Theresa May is to avoid negotiation at all costs. If she doesn’t do that she will fall into the trap of Alexis Tsipras, and it will end in capitulation,” he told The Telegraph.
He was speaking on the publication of his memoir, Adults in the Room, a riveting account of his brush with a back-stabbing and treacherous EU system.
It is a regime that knowingly persisted in imposing ruinous policies on his country against economic science and logic. A benign union it is not.
“The parallel with Brexit is the tactic of stalling negotiations. They will get you on the sequencing. First there is the price of divorce to sort out before they will talk about free trade in the future,” he said.
"They will give you the EU run-around. You won’t always know exactly who to talk to and that is deliberate"
On cue, Chancellor Angela Merkel said this week that alimony must be settled before any start, and called on the UK to be more “constructive”.
She warned that the British are deluding themselves if they think they can have their EU cake and eat it. Those who lived through the Greek drama find the words eerily familiar.
“They will give you the EU run-around. You won’t always know exactly who to talk to and that is deliberate,” said Prof Varoufakis.
“When you make a moderate proposal they will react with blank stares and look at you as if you were reciting the Swedish National Anthem. It is their way of stonewalling,” he said.
Prof Varoufakis, steeped in Hellenic mythology, says they will resort to the “Penelope Ruse”, the delaying tactic of weaving each day before unravelling it again secretly at night.
“They will suddenly suspend talks claiming the need for more fact-checking,” he said. The EU counter-attack has already begun, prompted by Mrs May’s decision to call a snap election.
Brussels had assumed that the Tories would be vulnerable when Brexit talks come to a head in 2018, struggling to deal with internal brush fires on all sides. EU officials now realise it will not be so simple. The vote has thrown Brussels off its stride, and raised hackles.
“What they are trying to do is to reduce any benefit that Theresa May will get out of the election and downplay her democratic mandate,” said Prof Varoufakis.
The only way to avoid being caught in the spider’s web is to seize the initiative and take away their ability to create mischief, he said. He advises filing an immediate request to join the European Economic Area for a seven-year transition.
“They could not refuse this. They wouldn’t have a leg to stand on,” he said. The EEA is the “Norwegian option” backed by Labour.
It safeguards trade and the City, and allows withdrawal from areas of EU activity. But it also breaches Mrs May’s red lines on free movement and the the European Court.
There lies the rub. What emerges from Adults in the Room is a eurozone regime where democratic accountability has broken down.
Real clout lies with a secretive “Eurogroup Working Group”, operating on the margins. It is under the iron control of Thomas Wieser, the most powerful man in Brussels. While this body ostensibly serves elected finance ministers, they might as well be wallpaper.
“For almost all the meetings at which I was present the ministers received no substantial briefing on any of the topics,” he said. Their role was to “approve and legitimise” pre-cooked decisions.
To the extent that this Praetorian Guard reports to anybody, it is to German finance minister Wolfgang Schauble, and he is brutally candid about the character of monetary union.
“Elections cannot be allowed to change economic policy,” he said during a meeting on Greece. The others meekly assented. Behind the scenes, Berlin holds sway.
While Germany let the French politician Pierre Moscovici become EU finance commissioner for the sake of appearances, it stripped him of power and put him under the supervision of a Berlin factotum.
Even those countries that suffered an economic 'lost decade' from austerity overkill submit quietly to the German writ.
"Social Democracy in Europe is finished, kaput, gone. It made a Faustian bargain with finance"
Party affiliation makes no difference. The centre-Left parties shed crocodile tears over austerity but are themselves arch-enforcers for creditor interests when push comes to shove.
“Social Democracy in Europe is finished, kaput, gone. It made a Faustian bargain with finance,” Prof Varoufakis told me bitterly.
“When the crisis came in 2008 they transferred the losses from the bankers to the most vulnerable people.”
Prof Varoufakis is Europe’s enfant terrible. He infuriated the EU and his own Syriza comrades. He broke diplomatic etiquette. He played the press.
The establishment called him a dangerous gambler. Yet on the economics of the Greek crisis and the eurozone slump, he was right.
A chorus of Nobel Prize winners agree with him. The “fiscal water-boarding” of Greece, with its medieval policies of blood-letting, was counter-productive even on its own cruel terms.
The 26pc contraction of the economy was so violent that it set off a downward spiral, causing the debt ratio to rocket. The Troika bail-outs forced a bankrupt Greek state to take on more loans in a squalid policy of “extend and pretend”.
Greece needed 50pc debt relief at the onset of the crisis but this was deemed too dangerous because the eurozone – due to its own negligence – had no defences against contagion.
The IMF confesses the errors in a devastating mea culpa. The IMF admits its own “superficial and mechanistic” analysis.
It was bewitched by the ideological allure of the euro, disregarding the technical warnings of its own staffers. In the end it immolated Greece in a “holding action” to save a dysfunctional monetary union.
This was then covered up. Despite all that has happened, Prof Varoufakis remains an ardent enthusiast for the European project. How does he keep the faith?
“I have been trained all my life to oppose the Greek government, because that is what you do as a Greek patriot. That does not mean I want to dissolve the Greek state.
“Would our countries be better off if we had “Brexits” everywhere and the EU disintegrated? I don’t think so,” he said.
Yet he also confided once that there is virtue in heroic failure.
Any Briton reading his damning account with an open mind might conclude that British democracy is best kept at a very safe distance from an EU that has so badly lost its way.