Yanis Varoufakis’s new film series explains how elites used the financial crisis to terrorize Europe’s populations into submission. In an interview, he tells Jacobin why the anti-austerity movement failed and why the center is converging with the far right.

Yanis Varoufakis speaking during a news conference in Luxembourg, June 18, 2015. (Jasper Juinen / Bloomberg via Getty Images)

“Debt is to capitalism what hell is to Christianity: unpleasant, and essential.” Speaking in his new documentary series In the Eye of the Storm, Yanis Varoufakis explains how elites have used capitalism’s own structural conditions to terrorize populations into submission and advance their counterrevolution. For the former Greek finance minister, austerity was not a necessary response to crisis but an instrument of “class war,” used to redesign economies in Europe and beyond.

Varoufakis’s new series recounts the resistance against this process — and the ways in which the European institutions’ dogmas set the EU on its current right-wing course. In an interview for the new print issue of Jacobin’s German-language magazine, David Broder spoke to Varoufakis about his time as finance minister, the reasons why recent crises have mostly benefited the far right, and the decline of Western hegemony globally.

David Broder

At the end of 2023, the Economist named Greece “economy of the year.” In June’s elections, New Democracy had won a majority, a result widely attributed to signs of economic growth. The main opposition party, Syriza, continues to decline. So, aren’t things going well in Greece?

Yanis Varoufakis

The Economist has every reason to celebrate an economic miracle. If you’re a money man, or a vulture fund purchasing distressed loans, Greece is an El Dorado.

Today there are 1.2 million homes being repossessed, in a land of ten million. Let’s say a house was bought for $250,000 before the crisis. Now it’s worth €200,000. It had a loan on it of €150,000, of which €50,000 was repaid. The mortgagee can’t repay the other €100,000 because of the crisis, loss of income, etc. Then a vulture fund registered in Delaware, with a bank account in the Cayman Islands, buys up the loan for €5,000. Even if they sell it for only €100,000, they’ve gained €95,000 on €5,000. I doubt there’s anywhere you can get higher rates of return. This is happening on an industrial scale.

The Greek state is more bankrupt now than in 2010, when it became bankrupt. Today the national debt is higher while national income is down. But now that a series of governments have been good girls and boys for the troika, the international creditors’ community has decided to proclaim Greece no longer insolvent. How come? Everybody knows that the Greek state is bankrupt. But there’s also the European Central Bank [ECB] winking at everyone who has bought Greek debt: don’t worry, we’ll stand behind it. So, why buy German debt when you can buy Greek debt that gives you higher yields?

The Economist has every reason to celebrate Greece as an economic miracle. If you’re a money man, or a vulture fund purchasing distressed loans, Greece is an El Dorado.

If you have capital to use in order to extract other people’s wealth, then Greece is the place to come to. But if you’re Greek and you don’t belong to the oligarchy, you’re in serious trouble. For thirteen years your real income has been falling. The social safety net is dismantled, as are any collective bargaining agreements. Then came the cost-of-living crisis, which has hit the Greek working class and underprivileged harder than anywhere else in Europe. Inflation is class-conscious: if you’re on lower incomes, your inflation rate is far higher. So, put all that together and you have this remarkable bifurcation: Greece, the best place in the world to be a vulture fund and the worst if you’re not.

David Broder

OK, but even a decade ago you predicted the likely effects of austerity. And this insight, and these consequences, don’t seem to have had a positive reflection in reviving the anti-austerity movement or building forces to the left of Syriza. Your MeRA25 was in parliament for four years, but didn’t get reelected in last year’s elections. Is this just because of lasting demoralization after defeat in 2015? Or is there something you’re not doing to mobilize support?

Yanis Varoufakis

Full disclosure: we were among the big losers of last year’s elections. Why was that? Why did we all lose, both those of us in the then Syriza government who did not surrender to the troika and those who did?

The best explanation was given to me by a taxi driver. He was taking me home from the airport and told me, “You know what? I agree with all that you’re saying. And I like you, but I didn’t vote for you, or for Syriza. I won’t forgive you for giving me hope. I didn’t use to vote. I only went to the polling stations twice. Once in January 2015 to vote for you. And then again in July 2015, in the referendum to say “no” to the creditors. And what happened? You all folded, and we’re back in the same quagmire as before. I don’t care whether you were one of the good guys. Then you came to me in the election last year with a whole program that you can never implement because you’re struggling at 5 percent. So, I’m not voting again.”

On the Left, if we’re lucky, we can get majority support once every fifty years, during the acute phase of a capitalist crisis. If we blow the opportunity, we have to wait another fifty years.

On the Left, if we’re lucky, we can get majority support once every fifty years, during the acute phase of a capitalist crisis. If we blow the opportunity, we have to wait another fifty years. That doesn’t mean we stop fighting. MeRA25 keeps doing all that we think needs doing, because in the end, we’re a bit like surfers: you can’t control when the wave comes, but you’d better be ready to catch it when it does.

David Broder

But was the taxi driver right to think that the initial hope was misplaced? Your series tells us that a small country saying “no” inspired many internationally. But the troika also wanted to demonstrate that you couldn’t say “no,” and then crushed you to prove the point. If this could have been a “David and Goliath” tale, what “catapult” did you have?

Yanis Varoufakis

We knew they’d try to crush us. In April 2013, while living in Texas, I warned Syriza’s leaders that the Cypriot government and the ECB was a dress rehearsal for what they were going to do to a future Syriza or Podemos government. They were flexing their muscles with little Cyprus to rehearse shutting down the banks to force a capitulation. [Alexis] Tsipras understood and asked me: “OK, so what do we do?”

I sat down for six months and devised an action plan. I presented it to the team and they approved it. Then, just before the January 2015 election, Tsipras offered me the finance ministry to implement it. Alas, that action plan can’t be judged, because they didn’t let me implement it. I’m convinced that had we followed it the troika wouldn’t have been able to crush us.

In the ministry which I inherited, I had €50 billion worth of bonds in Greek law, which I could restructure with one signature. I didn’t even need to go through Parliament. And it was in Greek law. They couldn’t take me to New York like they used to take Argentina and so on. That was our nuclear weapon — because had I proceeded to haircut those bonds, the ECB would not be allowed (by Germany’s constitutional court) to save the Italian state by buying its bonds. Mario Draghi was very worried about this weapon of ours, as he told me during our first meeting. But right after that, my own government signaled to him behind my back: “Don’t worry. We won’t let Varoufakis do it.” It was like sending David against Goliath without the catapult.

David Broder

But why did Tsipras refuse to let you use it?

Yanis Varoufakis

It’s clear that he had already reached an agreement with Angela Merkel to sign the memorandum to surrender. What’s not clear is when he decided to surrender: before we were elected or after? I don’t think I’ll ever know.

Greece was the linchpin, and when Alexis Tsipras sold us down the line, he was also selling the whole European left down the line.

What I do know is that those who, after the event, claimed that we were always going to be crushed are profoundly wrong. I am not saying that we would have definitely won. But we did have a good chance — assuming we used our weaponry. In my estimation, it would have cost them more than €1 trillion if they did crush us. That’s serious money for a monetary union that doesn’t have a fiscal union to back its expenditure. I don’t think Merkel would have dared. I think we’d have had a chance, and then Podemos would have had a chance, and then our Italian comrades . . . . So, Greece was the linchpin, and when Tsipras sold us down the line, he was also selling the whole European left down the line.

David Broder

In the past, you made intelligent arguments about why Grexit was not just unnecessary but a bad idea. You said that you’d end up with an autarkic economy, and that — unlike, say, Argentina unpegging the peso from the dollar — it’d take months to prepare the return to the drachma, effectively offering advance warning of a huge devaluation. Ahead of last year’s elections you proposed a state-backed electronic payments system. But wouldn’t the creditors also have been sure to ensure Grexit failed?

Yanis Varoufakis

Hypotheticals and counterfactuals are always hard to work out. My point was simple: capitulating would render Greece unviable — as it now is. Fighting back gave us a chance to break out of our doom loop. The digital payments system would help in any case. By how much, no one knows. But it would help whether we are in the eurozone or after going back to the drachma. Even if there was even a 5 percent possibility that we could have averted extra austerity and privatization within the euro, why not try it? I’m still convinced we could have done it — and that, thus, resistance was the optimal strategy.

Today, we have fewer options. One reason is the nonperforming loans (NPLs), mortgages, repossessions, and so on that I mentioned before. In 2015, we had nonperforming loans, but since then, with the Syriza government creating the foundation for it, they created a secondary market for NPLs. This is a gigantic source of rents for the vulture funds. The restructuring of the Greek banks is based on new derivatives that contain these NPLs as a form of capital.

If we ever came anywhere near government again, I’ve no doubt they’d try to crush us with double the energy of 2015. We would need a new nuclear option: an alternative to the euro.

So, now we don’t have the nuclear option we did in 2015, and the troika has a greater incentive not to allow us to stop home repossessions. If we ever came anywhere near government again, I’ve no doubt they’d try to crush us with double the energy of 2015. We would need a new nuclear option: an alternative to the euro. The electronic payment mechanism you mention has a dual use: to help create liquidity within the euro and to be the first move — if need be — toward the drachma.

This is, of course, a major reason for proposing it — if they shut down our banks, payments can be transferred to this system — which can, fairly easily, evolve into the new national currency. In 2019 and then in 2023, MeRA25 communicated this plan A, B, C to the public in a transparent way, so that they’d know what they were voting for. Alas, unlike in 2019 when voters gave us nine seats, in 2023, they kept us out of Parliament and voted new fascist parties in.

David Broder

Ahead of the EU elections, it seems far-right parties are mobilizing people against the establishment — but also, increasingly, joining the establishment. In the film you say that liberals need these far-right bogeymen just to be able to rally people against something. But if their opposition is so fake, then why such success?

Yanis Varoufakis

All we need to do is look at the 1920s and 1930s. After their 2008, which of course took place in 1929, the fascists and Nazis managed to harness discontent — even borrowing or stealing from the Left’s criticism of the bankers and so on while directing the people’s anger to the “other,” toward the Jew. And when they got into power, the fascists became the agents of industrial and financial power, of capital.

That’s always the case. Think of [Donald] Trump: he told blue-collar workers in the Midwest that he was going to get rid of Goldman Sachs and Wall Street from Washington. Then what’s the first thing he did? He took the CEO of Goldman Sachs and made him head of the US Treasury.

It is a mistake to think that the nationalist, or fascist, international are clashing with a radical center. We should think of them as different sides of the same coin. They are symbiotic. [Emmanuel] Macron would never have become president if [Marine] Le Pen did not threaten the system. And Le Pen would never rise to challenge for the presidency if you didn’t have people like Macron introducing the austerity that causes the discontent that feeds her rise.

It is a mistake to think that the nationalist, or fascist, international are clashing with a radical center. We should think of them as different sides of the same coin.

The top 0.1 percent, the upper echelons of the ruling class, demand of governments that they pass tax cuts for them and transfer huge quantities of rents to them. But they know that such legislation is extremely unpopular. So, the EU’s right-wing populists incite hatred toward “the system,” the Jew, the Muslim, the other, the foreigner, the migrant, the refugee to gain power. Once in power, they enact this legislation on behalf of the top 0.1 percent.

David Broder

Bernie Sanders often says that the Biden administration needs to do more for working-class America to answer the despair that Trump feeds off. What do you think it can do to stop Trump winning?

Yanis Varoufakis

There’s nothing the Biden administration can do. Firstly, it doesn’t have the numbers. Secondly, it doesn’t have the time before the next election in November. Thirdly, it doesn’t have the will. The Biden administration was sold to Wall Street and to Big Tech and the powers-that-be even before it was formed.

Bernie Sanders and I started the Progressive International together in Vermont. However, I’ve been in disagreement with him — a comrade and friend — since 2016. After the then primaries, when the nomination was stolen from him and handed over to Hillary Clinton, Bernie had nine hundred thousand wonderful volunteers all over the country, ready to become the third force in US politics. I thought he should have started a new party. Instead, he let those young activists go to ground — and then disappointed them entirely, four years later, when he sided with [Joe] Biden.

I’m not one to turn on comrades. We can have legitimate disagreements. I understand that, especially given his age, Bernie wanted to make a difference. Not just demonstrating in the streets but from within the corridors of power. He had something of a positive impact on some of the Biden administration’s initial policies during the pandemic. Some people got to eat because Bernie Sanders fought for their corner within the Biden administration. But that doesn’t last.

I’m afraid that the new wave that Bernie energized is not going to survive in a Democratic Party, which like Labour in Britain, is extremely good at destroying all progressive energy within itself.

Now, the whole progressive movement and the DSA [Democratic Socialists of America] have been sidelined, especially with what’s happening in Israel/Palestine and Ukraine. The dynamism of the political revolution that Bernie had started in 2016 dissipated. I’m afraid that the new wave that Bernie energized is not going to survive in a Democratic Party, which like Labour in Britain, is extremely good at destroying all progressive energy within itself.

David Broder

On the international front: South Africa’s case to the International Court of Justice offered a damning indictment of Israel’s actions but may end up exposing the hollowness of international law. I’m interested in your thoughts on how European countries have reacted to the war, and what effect this has on how people outside Europe see the EU and the “international community.”

Yanis Varoufakis

They’ve reacted disgracefully. The EU and almost every government will go down in history as aiding and abetting the genocide of the Palestinians. It’s not just complicity but a mode of behavior that is turning our prime ministers and presidents into prospective defendants in the International Criminal Court [ICC]. When Ursula von der Leyen — as it happens, without any authority — went to Israel to cheerlead the IDF [Israel Defense Forces], she deserves not only to be condemned by future historians, but also to be prosecuted by the ICC.

Ursula von der Leyen deserves not only to be condemned by future historians, but also to be prosecuted by the International Criminal Court.

This last couple of decades, instead of becoming less reactionary, Europe has become criminal. Once, French president Jacques Chirac, during a visit to the occupied Palestinian territory, confronted the Israeli gendarmes and the IDF. I can’t imagine Macron doing that. Willy Brandt waxed lyrical about Palestinians’ right to their own state. Today, Olaf Scholz is presiding over a regime that is arresting Jewish comrades of ours in Berlin for the crime of carrying a placard saying “As an Israeli and a Jew, stop the genocide in Gaza.” You couldn’t make it up!

David Broder

The current wars, and the expansion of BRICS, seem to point to a breakdown of the Western-led order. Do you think this is a changing power balance in a re-formed international order or something more like a hardening of regional trade blocs?

Yanis Varoufakis

We never had an “international order” and there was never an “international rule of law.” Where do we start: Iraq, Afghanistan, Vietnam before that?

My concern is that we’re putting too much — but also too little — emphasis on BRICS. It’d be a huge mistake for progressives to do what they used to do with the USSR, to imagine that, whatever its authoritarian aspects, at least it’s the counterweight to the United States. Let’s not think of the BRICS that way.

India’s Narendra Modi is a fascist. Saudi Arabia and the United Arab Emirates, who are edging closer to BRICS, have a currency that is pegged to the US dollar. With BRICS, they are creating a plan B for themselves, not for the world’s dispossessed. The most interesting part of the BRICS is China. It contains the most progressive and the most authoritarian forces on this planet. A huge class struggle is going on there as we speak.

In my recent book Technofeudalism, I offer an analysis of the new Cold War between the US and China. The essence of the new developments lies in what I call “cloud capital.” This is a kind of capital which is algorithmic, based on the internet, on Big Tech. It’s not like a robot that makes cars or a steam engine: for the capital that lives in your laptop or your phone is a produced means of behavioral modification, that grants its owners tremendous power to extract rents from workers, capitalists, and users alike.

The combination of Chinese cloud capital and Chinese finance, which is separate from US finance, can become an international digital payment system, alternative to the dollar.

That same cloud capital is the foundation for a new kind of payment system. And there are only two bundles of cloud capital. One is to be found in the US, the other is China. Nobody else has cloud capital worth talking about. If my hypothesis holds water, we are seeing a huge rivalry between these two mega cloud fiefdoms. And what really concerns the United States is this: the only reason why the United States has been hegemonic since the late 1960s and early ’70s, after they lost their trade surplus to the rest of the world, is because of the exorbitant privilege of the dollar. The payment system is in dollars, which means that the US faces no trade or budget constraint. Even though it has a huge current account deficit, it continues to buy stuff from the rest of the world because it pays in dollars that it prints — dollars that are recycled back to Wall Street and to American government debt as capitalists from all over the world send their dollars back to the US to buy US government debt, shares, and property.

The dollar payment system hasn’t been challenged so far. But the combination of Chinese cloud capital and Chinese finance, which is separate from US finance, can become an international digital payment system, alternative to the dollar. That’s why Saudi Arabia is interested in China and the BRICS: they want access to that alternative payment system because they saw what happens if you fall foul of Washington. You can have $300 billion confiscated, which is what happened to Russia after they invaded Ukraine. This is the reason why we have a new Cold War: because they are trying to quash the capacity of Chinese cloud capital to antagonize the dollar payment system.

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