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Varoufakis Speaks Out Against Greek Bailout Agreement Reached by EU Leaders

Op-ed - Drachmae: a Bitcoin-like Solution for Greece’s Troubled Economy

Former Greek finance minister Yanis Varoufakis, who resigned after the Greek referendum on July 5 in a surprising move interpreted as a conciliatory move toward Greece’s creditors, gave his first interview after his resignation, and before the announcement of the deal between Greece and European Union (EU) leaders. Speaking to The New Statesman, Varoufakis expressed his disappointment with “the complete lack of any democratic scruples, on behalf of the supposed defenders of Europe’s democracy.” (Read the full transcript of Varoufakis interview.)

Of course, Varoufakis is referring to the EU leaders. In the interview, he gives a long account of the months of negotiations since he became Greece’s finance minister and internal disagreements in the Greek government. He also speaks up in very blunt terms, saying the Eurogroup is “completely and utterly” controlled by Germany, Greece was “set up,” and last week’s referendum was wasted.

“[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 … totally non-viable and toxic,” said Varoufakis. “So they delayed and then came up with the kind of proposal you present to another side when you don’t want an agreement.”

Varoufakis, who accused Athens’ creditors of “terrorism” the day before the referendum, is especially critical of the Eurogroup, an informal body where the ministers of the Eurozone discuss matters relating to their shared responsibilities on the euro.

The Eurogroup is, in Varoufakis’ words, “a non-existent group that has the greatest power to determine the lives of Europeans. It’s not answerable to anyone, given it doesn’t exist in law; no minutes are kept; and it’s confidential. So no citizen ever knows what is said within. … These are decisions of almost life and death, and no member has to answer to anybody.”

Varoufakis added that the Eurogroup is totally controlled by the finance minister of Germany.

The terms of the agreement that will, for the time being, keep Greece in the Eurozone aren’t significantly better than the proposals rejected by the Greek citizens on July 5. The referendum could then be seen as a farce staged to appease the citizens, which is likely to cause Greek Prime Minister Alexis Tsipras considerable opposition at home, from politicians – even within his own party Syriza – and citizens angered at his capitulation to humiliating terms. The opposition could be strong enough to precipitate new elections.

The New Statesman article notes that the Eurozone can dictate terms to Greece because it is persuaded that its banks are now protected if Greek banks default, and, therefore, are no longer afraid of a Grexit. But that ignores another aspect of the crisis, more difficult to quantify: If the citizens in Greece and other countries become convinced that the EU is their enemy, they will vote en-masse for anti-EU parties, including parties of very questionable reputation, which would have catastrophic consequence for the Union. This scenario doesn’t even need a formal Grexit to materialize.

Varoufakis said that he never believed Greece should go straight to a new currency. Rather, his plan was that, in case of unsuccessful negotiations, Greece should issue its own Euro-denominated IOUs as a parallel currency-like means of exchange for the citizens.

That could still happen unofficially, by initiative of Greek banks, businesses or grassroots groups, which could establish a parallel economy with scrip or Local Exchange Trade Systems (LETS) based on bitcoin, with or without the backing of the government and the status of legal tender.