YANIS VAROUFAKIS: Europe isn't working

It has become somewhat quiet surrounding the state of crisis in Greece. In light of the refugees crisis, media seem to have drawn the curtains on the daily strikes against planned pension reductions. But Greece is far from out of the woods and still lacking investments.

   Although the economy has not deteriorated as much as feared in the last year, the EU’s multi-billion-euro bailout packages seem to have helped only a little. Former Finance Minister Yanis Varoufakis (54) explained to Business Insider why this is the case and why the Eurozone is about to collapse.

   Mr. Varoufakis, we are meeting at the "Fonds professionell" congress in Mannheim after your speech in front of bankers. As a leftist, what do you have to say to this more conservative industry?

   Yanis Varoufakis: "A lot of course, we live in a democracy! Nothing is more boring than talking to people who share my opinion anyway. Besides, the crisis of the Greeks also concerns fund managers and bankers here: large pension managers can barely make a profit, which is causing older Germans and savers major problems. Additionally, every sensible banker understands that Greece should not have received any more money: a bankrupt state that can never be expected to repay loans is not a good debtor."

   And yet, after endless negotiations about reforms, Greece was approved the money last year. Couldn’t this make a difference after all?

   Varoufakis: "I don’t think so. If you want to know how things will go this year, you just have to look at the past five years: economic performance will continue to decline."

   So all that money was just a waste?

   Varoufakis: "No one believed that the compromise would be of any use, neither IMF chief Christine Lagarde, nor German Finance Minister Wolfgang Schäuble. Chancellor Angela Merkel didn’t believe it and neither did Greece’s Prime Minister Alexis Tsipras. It was just a show that revealed that Europe is not working. We are throwing money, which we are taking from the poorest, at the problem. And since this is frustrating the people in every country, right-wing parties such as the National Front in France are on the rise. So they are benefiting from this."

   But at least the rate of unemployment in Greece has fallen...

   Varoufakis: "...it’s just falling because young and educated people are emigrating to Germany. Although the unemployment rate is falling, employment is not significantly increasing. This is devastating for economic performance. Investments are virtually at zero."

   Why isn’t it going so well for Greece compared to the exemplary crisis management in Portugal or Ireland?

   Varoufakis: "Everything isn’t great there either. Portugal still has one of the highest debt ratios in the EU relative to the gross national product. The country is a bubble. And Ireland is only surviving because it is helping companies such as Google to save on taxes in Europe. But as a tax haven Ireland is weakening other EU countries. The fact that these countries are serving as positive examples only goes to show how urgently the EU needs good news."

   Many Germans can’t understand how Greeks already retire at the age of 60. As part of the last reform package, the Greek government has committed itself to reducing pension costs - by 15 percent according recent numbers. Now people are going on strike.

   Varoufakis: "Reducing pension costs is not a solution. In our country many families live on the pension of an older family member of 600 or 700 euros a month. The others don’t have a job. If we reduce this by 100 euro, people will no longer be spending this amount and demand will fall. This will cost more jobs."

   What’s the solution?

   Varoufakis: "All the money currently on the market due to central banks’ loose monetary policy needs to be turned into investments. Especially in the USA, companies prefer to buy their shares back. While this is good for rates, it’s not helpful for the economy. As part of the bond-buying program the ECB has to guide its selection by economic size. This means it buys more German than Spanish bonds. However, Germany does not need this program, and it’s of no help to Spain in this manner. We need a European investment program, for instance in green technologies."

   Currently, the refugee crisis is tearing the Eurozone apart. Greece is now supposed to close its borders. What’s your assessment of this?

   Varoufakis: "Chancellor Angela Merkel’s decision was fantastic. If someone is in need, we need to open the doors. In Greece, especially islanders are very committed. But if we seal the border to Macedonia, hundreds of thousands of refugees will be stuck. What are those in Greece supposed to do? The economic crisis has weakened the EU for years. Now countries are just trying to push the refugees into the next countries. We are destroying the rest of the EU. Fences and borders are a sign of weakness. And worst of all, they manifest themselves in our minds and we curl up with the idea of a return to a conservative national state."

   Germany Refugees Migrants SyriaREUTERS/Hannibal HanschkeMigrants receive food at a Christmas market in a refugee shelter run by German charity organisation Arbeiter Samariter Bund ASB in Berlin, Germany, December 12, 2015.

   The British are flirting with this idea. Later this year they are supposed to vote on a Brexit.

   Varoufakis: "If the British think they can simply detach from the continent and sail towards the USA or China, then they are mistaken. There are industry and working standards they cannot simply bow out of. I don’t believe a Brexit will hurt the City of London as one of the largest financial centers in the world. However, this would be a further step towards the disintegration of the EU. For the first time, the Union would not expand but shrink. A dangerous trend."

   How can disintegration be stopped?

   Varoufakis: "We have to sit down and think about rational solutions. Currently, countries’ individual interests are defining the debates. However, the many refugees are not a Greek or German problem. They are a European problem. We should therefore develop a common strategy. That’s why I am launching a cross-border movement for more democracy in Berlin on February 9."

   Why are you starting this movement in Berlin of all places?

   Varoufakis: "Germany is Europe’s heart. But bitterness is widespread. Currently the Germans hate the Greeks and the Greeks hate the Germans. The demonization of the country has to stop if we want a strong Europe. So I am setting a positive example."

Πηγή: Business Insider Deutschland