Yves here. The European press and most of the rest of the world averts its eyes from the continued punitive, economically counterproductive austerity being inflicted on Greece.
Be sure to read this interview in connection with Ambrose Evans-Pritchard’s story on the report by the IMF’s internal auditor. It lambasted the Fund for its conduct with European programs, most importantly, the one in Greece.
The International Monetary Fund’s top staff misled their own board, made a series of calamitous misjudgments in Greece, became euphoric cheerleaders for the euro project, ignored warning signs of impending crisis, and collectively failed to grasp an elemental concept of currency theory.
This is the lacerating verdict of the IMF’s top watchdog on the fund’s tangled political role in the eurozone debt crisis, the most damaging episode in the history of the Bretton Woods institutions.
It describes a “culture of complacency”, prone to “superficial and mechanistic” analysis, and traces a shocking breakdown in the governance of the IMF, leaving it unclear who is ultimately in charge of this extremely powerful organisation.
The report by the IMF’s Independent Evaluation Office (IEO) goes above the head of the managing director, Christine Lagarde. It answers solely to the board of executive directors, and those from Asia and Latin America are clearly incensed at the way European Union insiders used the fund to rescue their own rich currency union and banking system.
By Yanis Varoufakis. Originally published at
BILD meets Yanis Varoufakis – the man who was THE symbol of the Greek left-wing government’s resistance against the targets set by the bailout troika for the broke state of Greece. We met the professor of economics – who co-founded left-wing movement DiEM25 – in his summer house in the mountains of the sunny island of Aegina.
BILD: Mr. Varoufakis, Greece went broke ten years ago. Where does Greece stand now, after three rescue programmes, 270 billion euros in loans and two debt cuts?
Varoufakis: “At the same point, in the same black hole, and it keeps sinking deeper into it every day. One reason among others is that the creditors’ cutback demands obstruct investments and consumption.”
BILD: But allegedly, Greece can now stand on its own two feet and can be released from the hands of the troika after August 20th …
Varoufakis: “What has really changed? Greece’s state debts have not become lower, but higher. We just have more time now to pay back even more debts. Despite two debt cuts over several billion euros, the debts have grown: the state is still broke, private citizens have become poorer, companies still go bankrupt, and our gross national product has decreased by 25 percent. The cutback demands limit consumption and investments. Companies owe money to each other and to the state. The state owes enormous sums in refunds to companies. Everybody owes money to everybody – but nobody has money to pay back their debts. Since 2010 young people have been leaving the country, in recent years at the rate of 15000 every month. If this continues, we’ll soon only have old people here who either stayed or came back from abroad when they retired. Plus there are the people who work for them, or in tourism. I call this desertification. The Roman Tacitus used the expression ‘They made a desert and called it peace’. In Greece they call it ‘fixed’.”
BILD: But tourism is booming with more than 37 million visitors …
Varoufakis: “We have a dramatic over-taxation in Greece. Combined with social security contributions, small businesses, even the self-employed, pay 75 percent to the state – beginning with the first euro! This is killing young entrepreneurs, in particular. In Bulgaria, next to us, the business tax is ten percent. The companies are running away from us. And yes, tourism is booming, there has been an incredible push over the past years. However, the infrastructure in Greece does not suffice for this. New investments are required. But there is not enough money for that. Plus, the boom and increase in tourism do not suffice to lift the sunken ship from the bottom of the sea.”
BILD: Your former boss and former buddy, head of government Alexis Tsipras, the troika, the German government, the EU – they all point out the budget sur of XZ percent. Are they all lying?
Varoufakis: “The sur is very real, not at all a lie. However, it reflects the flesh and blood that the state extracts from a dying private sector. It is the evidence of the crime against logic, not of recovery or success. They portray the statistics of misery as evidence of success. They change the rules so they can say that the Greece bailout was a success. If it doesn’t fit, get a bigger hammer. That is not only against any logic, it is also a crime against the people in the EU states – from Portugal to Germany.”
BILD: Who has lied?
Varoufakis: “All of them! Greek governments, the IMF, the ECB, everyone. And you Germans have been heavily lied to by Ms. Merkel – twice. The first time was when she stepped into the Bundestag for the first rescue package and said that this would be an act of solidarity with the Greeks, when the money was intended only for German and French banks who had, against logic, loaned a lot of money to the Greek state and oligarchy.”
BILD: Well, the banks – mostly Greek banks – were saved so the Greek state wouldn’t collapse, would still have access to money, and could pay for wages and salaries … But what was the second lie?
Varoufakis: “It was not the Greek banks that were saved. It was Deutsche Bank and the rest of France’s and Germany’s banks. As for the Greek banks and state, they should not have been saved – we should have been allowed to go bankrupt, suffer the consequences but then be allowed to pick ourselves up and move on – something that these bailouts prohibited, forcing Ms. Merkel to her second lie: the promise to the Germans that the bailout loans would be paid back and with interest – something that was impossible given Greece’s bankruptcy. She has been trapped in this lie ever since. Once you start lying about such things, you can no longer escape. And so she continues to lie …”
BILD: Before 2002, Greece lied its way into the euro with faked statistics. Now, after all these years of rescuing the country, it should finally meet the euro criteria, right?
Varoufakis: “Ha! Of course not. First, do you really think that the EU and Berlin were fooled by Greek statistics? They always knew. They were conniving in the statistical manipulation of Italy because the politicians really needed Italy in. Greece entered on the basis of the same intentional manipulation of the ‘rules’. Rules that could not be met then and which are impossible to apply now. Turning a blind eye to this was a concession that Helmut Kohl made to France’s head of state, Mitterand, for his agreeing to the German reunification. Wolfgang Schäuble was present back then – he and the German Bundesbank knew this couldn’t work. He has basically stuck to his position.”
BILD: You and Wolfgang Schäuble were the two big brawlers in the decisive months of 2015 when your country was close to leaving the euro. Schäuble supported an exit with billions in help – so that Greece could either make itself fit for the euro and return at some point, or do its own thing. In hindsight, was he right?
Varoufakis: “At least he wasn’t completely wrong. But what he really meant was: go away, get out of the euro. He wanted us forever out, since this doesn’t work, after all, and because he saw that, with Italy, a far bigger catastrophe is approaching the euro zone. What sense does it make to kick someone out with a huge amount of money, for a short period of time? Then there would be no reason to return to the badly construed euro, which would be expensive for Greece.”
BILD: If you had the choice, which government would you rather enter: that of your former buddy Alexis Tsipras or Schäuble’s?
Varoufakis: “Neither of those. But if you’re asking who I trust more, then my answer is clear: Wolfgang Schäuble.”
Varoufakis: “In all this time, he was the only one who told at least part of the truth. I could trust the things he said to me privately – even though that was not always the same as what he said in public to the Germans. He always kept his word to me.”
BILD: And Ms. Merkel?
Varoufakis: “Never! She seems terribly uninspired and devoid of vision to me. She will go down in history as the politician who had almost all of the power and possibilities to unite Europe and to lead it into the future and to implement reforms – but then she failed to make use of a historical opportunity. And I don’t trust her in general.”
BILD: How did Merkel manage to make Alexis Tsipras side with her in 2015 and agree to the third rescue package – against his conviction and the vote of the majority of Greeks?
Varoufakis: “To be honest, I don’t know. But she has also destroyed many others with her very peculiar charm: various leading SPD men, the men in her own party, France’s former president Hollande – and she will also do it with Macron. Tsipras was one of her easiest exercises. She promised him a lot and gave him nothing. For instance, she promised him debt relief – and then obstructed them. She had an aim: we were supposed to get more money and then shut up. Even Schäuble said then that this wouldn’t work.”
BILD: But why don’t you trust her?
Varoufakis: “Very early on, she asked Tsipras – according to his narrative – to kick me out. He refused to. Later, when there were serious struggles between me and Wolfgang Schäuble, Merkel apparently told Tsipras something like: ‘it’s great that you didn’t fire him, we can let Schäuble and Varoufakis fight, and then the two of us will calmly find a solution’. So she didn’t only go behind my back, but also that of her own minister of finance, who fought for the third rescue package in the Bundestag, against his own conviction.”
BILD: Did Schäuble ever tell you what he thought of the third rescue package that was under discussion in 2015?
Varoufakis: “He told me that he was against it, that it wouldn’t work like this. That’s why he supported the idea of us leaving the euro. He thinks the same about Italy. But he believed – and here he was wrong, I think – that he could keep France in the euro, even though it is also in a bad position.”
BILD: You caused a stir, when you rehired hundreds of cleaning ladies for the ministry of finance, despite the bankruptcy. At the same time, there was a lack of financial investigators for checking the dirty money lists that came from abroad – such as the Legarde list …
Varoufakis: “I’m really fed up with having to justify myself for the 300 poor cleaning ladies who received the minimum wage and whose dismissal was cruel and unnecessary. Especially if you see what the troika and Alexis Tsipras’ government did FOR tax evaders immediately after I resigned.”
BILD: What was that?
Varoufakis: “Tsipras fired me exactly at the point of time when we wanted to bring charges against huge numbers of tax evaders. A special group, that I had assembled, had identified 485,000 tax evaders with the help of a particular computer programme and bank data. These people had evaded at least 100,000 euros in taxes each between 2000 and 2014. We had everything ready, we had even linked the banks’ live data with account numbers and tax numbers. Following the German model, we wanted to offer something like an act of grace: whoever pays back their taxes voluntarily and on their own initiative will only pay a minimum fine of 15 percent. We would have caught anyone who then didn’t pay. Among the people we found were many Greek oligarchs and their families.”
BILD: Are you saying that Tsipras fired you because you were going after the rich?
Varoufakis: “No. I was pushed out because I would not sign the 3rd bailout loan. However, the moment I resigned in early July 2015 the troika, with the acquiescence of the Tsipras government, killed the programme that would have caught the tax evaders. As far as it was reported to me, the senior representatives of the troika – not the ministers of finance – wanted to protect the oligarchs. The oligarchs were the troika’s allies in Greece, running the banks and controlling public opinion. They had to be protected.”
BILD: Final question, Mr. Varoufakis: Can you understand the regular German taxpayers’ view that Greece should be grateful for their help and the huge amount of money? You don’t really sound as if you do …
Varoufakis: “I understand that this is how they feel because the facts have been kept from them. I am sure that if your readers knew the truth, they would be very angry with their own government for giving so much money to the German bankers and the Greek oligarchs while pretending they were helping the normal Greek – who only saw pain and misery in the past decade, thus finding it impossible to be grateful. Germans and Greeks must be united in our anger against our governments!”