Reality & Nightmare: A brief assessment of the Eurozone’s ‘reforms’ – in Der Freitag, Issue 26, 2018

19/07/2018 by

The official version reads as follows: Europe is on the road to recovery, the consequences of Brexit are under control, Chancellor Angela Merkel and President Emmanuel Macron would now create the new foundations on which Europe will establish a stronger alliance. Even the Greek debt crisis, it is said, was over after the decision of the Eurogroup last week! Unfortunately, a closer look reveals a deep gap between propaganda and reality.

In 2010, the Greek debt crisis was dismissed as a Greek problem – which it undoubtedly was – to hide the fact that our bankruptcy was an ugly symptom of Eurozone design flaws, which is why Greece also caused a domino effect across the continent. The fact that the Greek state bankruptcy is still unresolved ten years after it occurred reflects the profound disagreements between the Franco-German axis on how the Eurozone should be reshaped. While three Presidents of the French Republic and one German Chancellor could not agree on the institutional changes that would make the Eurozone sustainable,

Macron’s election as French president created new hope. His proposals included: a common budget for the eurozone with a secure debt instrument and the possibility of quasi-federal tax collection. A common unemployment and mutual bank deposit insurance and a common fund to provide new funds to stunted banks, thus creating the basis of a true banking union. An investment fund that would mobilize untapped savings throughout Europe without continuing to burden the Member States with fiscal resources. At the same time, the French Government seemed in principle to accept the proposal that I had made as Greek Minister of Finance:

Can we at least say that Germany benefits from Merkel’s stalling tactics? Not in the least. While gigantic surpluses are accumulated in German banks thanks to a huge trade surplus and capital flight from countries such as Italy, this flood of liquidity keeps interest rates at zero, thus destroying the old-age pension of the legendary Swabian housewife and thus causing them to turn their backs on Merkel and herself to turn to the AfD or Horst Seehofer.

At this stage, when Merkel denies the reality, Europe faces its worst nightmare: an external threat from a US president who is determined to divide Europe to dominate us. And with an internal threat in the form of the nationalist International, headed by Italy’s Vice-Premier Matteo Salvini: a 1930s politician who purposely sows the seeds of xenophobia to appeal to the lowest instincts of a majority of Italians. Salvini takes advantage of the fact that the average income of Italians has been falling steadily for two decades due to the construction flaws of the Eurozone and points to the EU’s failure to spread the burden of incoming migrants across Europe.

It is a sign of the collapse of a system when its authorities celebrate their dubious successes as the foundations collapse. The EU is falling apart as our beleaguered leaders congratulate themselves on their good work. That is why our Movement Democracy in Europe Movement, DiEM25, calls on all progressive Europeans to unite, regardless of nationality or party affiliation, with the nationalist International and the establishment.

Yanis Varoufakis is an economist, politician and co-founder of DiEM25

Translation: Holger Hutt

This article is part of the current issue of Der Freitag. 
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