Greek Finance Minister Yanis Varoufakis Head to Head with German Counterpart Wolfgang Schauble

Varoufakis evokes German Nazi history to describe, what he is up against, Leo Panitch and Dimitri Lascaris discuss the standoff and the future of the European community

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SHARMINI PERIES, EXEC. PRODUCER, TRNN: Welcome to The Real News Network. I’m Sharmini Peries, coming to you from Baltimore.

The Greek finance minister, Yanis Varoufakis, met his counterpart, Wolfgang Schäuble, on Thursday. Following the meeting, they held a press conference. Here’s some of what they had to say.

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WOLFGANG SCHÄUBLE, GERMAN FEDERAL MINISTER OF FINANCE (VOICEOVER TRANSL.): And the question is: how can Greece gain access to the markets without continuation of program? And we didn’t come up with an answer to the question today. But I think–or I understood that we agree that the haircut is not on the agenda, it’s off the table, because the program is designed in such a way that market access to capital markets, that’s the crucial issue. And it is also important to ensure sustainable economic development in Greece. So we didn’t have to talk about this particular issue.

YANIS VAROUFAKIS, FINANCE MINISTER OF GREECE: As Dr. Schäuble said, we didn’t reach an agreement. It was never on the cards that we would. We didn’t even agree to disagree, from where I’m standing. From where I’m standing, we agreed to enter into deliberations as partners with a joint orientation towards a European solution for European problems, a solution that is going to put first and foremost the interests of Europe at the helm. We didn’t discuss Greece’s debt schedule for payments. We didn’t discuss a haircut. We set the scene for deliberations that will lead to an approach that will put an end to this never-ending, seemingly never-ending crisis that began in Greece and then, unfortunately, spread out to the rest of the Eurozone.

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PERIES: That was a new finance minister of Greece, Yani Varoufakis, as he confronted his counterpart in Berlin. Shortly after this, the European Central Bank’s decision to stop funding the Greece lenders sent interest rates soaring and bank shares to plunge.

To discuss all of this and what this means to the Eurozone, the Greek government, and the Greek people, we have two guests.

Joining me from Toronto, Ontario, is Dimitri Lascaris. Dimitri is a partner with the Canadian law firm Siskinds, where he heads the firm’s security class action practice.

And we are also joined by Leo Panitch, also coming to us from Toronto, Canada. He’s the research chair in comparative political economy, and he’s a distinguished research professor of political science at York University, Toronto.

Thank you so much for joining us.

LEO PANITCH, PROF. POLITICAL SCIENCE, YORK UNIVERSITY: Hi, Sharmini.

DIMITRI LASCARIS, SECURITIES CLASS ACTIONS LAWYER IN CANADA: Hey, Sharmini.

PERIES: So, Dimitri, let me start with you. You just watched a press conference given by the new finance minister of Greece. Can you tell us what you heard?

LASCARIS: I think Schäuble’s speech could be characterized as a stern schoolmaster trying to bring into line his impudent student and explaining that none of the crisis in Greece is the fault of anybody other than the people of Greece, and that there was really no room for maneuver in terms of this austerity program that has caused a clear humanitarian crisis in the country, and that it was time for the Greeks not only to own up to the commitments that prior governments had made to austerity, but potentially to even pursue more rigorous forms of austerity in the future.

And then Mr. Varoufakis spoke, and at one point in his speech he said we didn’t even agree to disagree and proceeded to talk about the context and the history that has led to the current crisis and reminded the viewers–and he was in Berlin at the time–quite pointedly of the conditions that led to the rise of Nazism in Germany, namely, the harsh conditions that were imposed upon Germany after its defeat in World War I and the poverty and humiliation that the German people had experienced. And he talked about how in his own country in Greece this has led to the rise of not a neo-Nazi Party but a bona fide Nazi Party that now is the third-largest holder of seats within the Greek Parliament. So it was quite a dramatic moment.

And I think what–my impression of it was that Mr. Varoufakis has now sort of come to the conclusion that his best gambit is to use his position as a finance minister as a pulpit to speak to the people of Europe and to try to talk sense to the leaders of Europe through the populace of Europe and try to muster ground grassroots support for what is clearly the right path at this stage, a growth-oriented, anti-austerity regime which will help Europe’s economy recover and protect its most vulnerable members. So that’s my take on it.

Unfortunately, where we currently stand–you indicate dat the outset that there is a funding impasse with the ECB. Unless a sufficient pressure can be brought to bear upon Angela Merkel and the other members of the austerity bloc, it’s very unclear where this is going to head. Right now it’s at very unsatisfactory stage, as far as I can tell.

PERIES: Leo, your response to what Dimitri just said in terms of Minister Varoufakis’s comments.

PANITCH: It’s very important that Varoufakis has said rather explicitly what I said a few weeks ago when you and I were talking, Sharmini, that is, that if it turns out to be the case that a democratic socialist government in Greece is prevented from stopping the torture of the Greek people in the way it was elected to do, the conclusions that people in Greece and, I think, maybe even more likely in other countries of Europe, not least very big ones, including France, will come to the conclusion that the only governments that’ll be able to get them out of this are very far right governments who will break with globalization, but break with globalization, with global capitalism, in the way that the fascists broke with it in the 1930s. That seems to be Varoufakis’s message. It’s, I think, very important that he said that in Germany.

As for what effect it will have, I’m not sure. I think one has to see this in part of the terms of what effect it will have on the Greek people. I think that’s very important. And one needs to remember that they are, meanwhile, while these negotiations are going on over how much financial room for maneuver they will have, they are doing things at home. And these kinds of words will give them support for taking on the ruling classes and the corrupt bureaucrats at home.

PERIES: So, on msnbc, Joseph Stiglitz actually making reference to that, in which he said, we have to remember that Germany was also bailed out after World War II, and then someone actually challenged him, saying, it was a war and Greece is not in a war.

PANITCH: Yeah. Well, what they’re referring to is a arrangement that was made in 1953, negotiated over the previous year or two, which allowed Germany not to pay back its debts–not only debts from World War II, but debts from World War I. So that’s what he was referring to. And this was all part of what the Marshall Plan had amounted to, what the European Payments Union after the war amounted to, which was to ensure that Germany would remain a capitalist economy. That’s what the Americans were doing. But also–and here the Germans are not doing what the Americans did then–trying to develop, reconstruct the German economy so it could be a site of capital accumulation for American business, a site for American exports, etc. The Germans don’t seem very concerned about this at the moment. That’s partly because, of course, the Greek economy is so small relative to the rest of Europe.

PERIES: And, Dimitri, let me go to you. In Germany, Varoufakis is actually having some gravitas. The press is actually covering him quite well. How is he being received in Greece right now?

LASCARIS: Well, the reaction in the street, I think, suggests that he’s being received favorably. There were protests today–small-scale protests, but they were directed not at the government of Greece, but rather at the architects of austerity. And the press was commenting on how remarkably peaceful they were, on the fact that the police were not interfering for the first time in a long time with these protests, and people were allowed in fact to sort of wander up to the facade of the Parliament building and hold chats almost like old-style Athenian democracy about the current state of affairs.

So I think that at least at this very preliminary stage in the life of this government, there’s a great deal of sympathy amongst the electorate for the efforts of the government to secure a more humane package with Greece’s creditors.

And I also wanted to comment on something you said to Leo a moment ago about how Stiglitz had been challenged on NBC or msnbc about the fact that the bailout of Germany happened in the context of a postwar period. That’s absolutely correct. But that actually militates in favor of a more generous treatment of Greece, because Greece didn’t occupy anybody prior to this crisis. Greece didn’t invade anybody. Greece is a country that was, frankly, badly governed. SYRIZA has been quite candid in admitting that it was badly governed. There’s a significant degree of corruption. There was an oligarchy that has been engaging in voracious rent-seeking behavior, as Yanis Varoufakis has repeatedly pointed out. That is all true.

But the people who suffered as a result of these–you know, this misgovernance have been the people of Greece. They’ve not imposed this suffering upon others. And notwithstanding what Nazi Germany did, those countries that opposed Nazi Germany came to its aid in its time of need.

So I think that–and I believe Stiglitz pointed that out, and I think it’s a very compelling point. If Germany deserved a grace period and assistance from the victors in World War II, surely the Greek government deserves that from its so-called partners in the European Union.

PERIES: So, Leo, what do you think of what Dimitri is saying?

PANITCH: The United States would not have given Germany more rope if they had any sense that the German business class was going to be undermined in the postwar period. And the German business class looked to the United States at a time of its extreme unpopularity for having collaborated with the Nazis. It looked to the United States to establish the type of conditions that would allow it to go on. That’s what happened.

And I was astonished to find that in The Financial Times yesterday, Martin Wolf, who with Krugman and Stiglitz has represented the most progressive voice in the liberal left, in the business press, etc. in terms of calling for an end to austerity, saying very explicitly that the Greek government should be given room, that they should all be allowed. But then he adds suddenly at the end that Europe is a partnership which only works if it’s a community of values. If Greece wants to be something quite different, that is its right. But it should leave.

Now, what he means by that is that if SYRIZA’s values are really democratic socialist, if they have not just a strategy of doing more than Keynesian reflation but of democratizing the economy, of taking the economy away from the very few families that own and control the Greek economy, of turning the institutions of the state into agencies of popular democratic economic inventiveness in cooperation, well, then it’s a different matter.

And I think we have to be trying very hard to put people like Wolf and Stiglitz and Krugman on their democratic honor and say to them, look, a democratic government was elected that said that it wanted to socialize the Greek banks. It may not be able to do so in the short run, but it’s trying to democratize the economy and produce an honest democratic state. Will you support that? And will you allow such a state to be part of the European Union? That’s the test of democracy, after all. That’s the test that Western commentators, businessmen, politicians failed in Europe in the 1930s.

PERIES: Dimitri, what do you think of what Leo is saying?

LASCARIS: I agree wholeheartedly with what Leo has to say. I think it’s time to put a Grexit on the table. And the government is in a difficult spot, because the moment it begins talking openly about a Grexit, there’s going to be severe capital flight from Greece. So it can’t do that overtly, I think, without as a practical matter imposing some form of capital controls in advance of raising that prospect explicitly. But in it is private conversations, with its, again, so-called partners within the European Union and the Eurozone, it needs to be putting the Grexit on the table, because at the end of the day, the Eurozone is a straitjacket, from a democratic perspective, from a socialist perspective. And the only way that Greece is going to free itself from that straitjacket, potentially, is to exit the Eurozone. I fear that that’s the reality now confronting us. And I do agree with Leo that short of that rather dramatic option, any fixes that happen in Greece are going to be around the margins, and the democratization of the economy will never be realized.

PERIES: Leo?

PANITCH: That well may be, Dimitri. I’m trying to put the onus, as I’m sure you would and I know SYRIZA does, on the progressives in Europe. Rather than forcing Greece into that situation, why should it be forced to leave European Union and the euro for doing things that involve the most minimal requirements for stopping the torture of the Greek people? It seems to me that the onus should be put on progressives in Europe to allow the space for such a government to impose capital controls against its own minority ruling class, which is trying to make take money out of the country. The onus should be put on them, it seems to me, to do that before we opt for or encourage SYRIZA to opt for them taking the initiative.

PERIES: What does that mean, putting the ownership on the progressives and democratizing the economy?

PANITCH: Well, the European Union is not defined explicitly in its constitution as a capitalist union. It’s supposed to be a union of European democratic states. Some of them, of course, we know aren’t very democratic, but especially in Eastern Europe. Let’s leave that aside. And one or two countries there we have far-right governments in power already, and they’re still in Europe.

But it’s supposed to be–and the people who built Europe, many of them, were democratic socialists.

The onus really needs to be on European social democracy above all to stand up to its proclaimed principles. If it believes in democracy, if it believes in the electoral system, if it believes in freedom of association, then in every sense they should be supporting Greece and doing what it takes to turn that state into an honest state, to limit the flight of capital by a tiny minority that controls the economy, etc., etc. After all, they all had capital controls in the post-war period. When the so-called Keynesian welfare state was built. So that’s what I’m getting at.

LASCARIS: I would just want to point out, in an ideal world I agree that the onus should be upon the progressives. But me, what the most profoundly disappointing thing of we’ve witnessed thus far in Yanis Varoufakis’s tour of European capitals is the reaction of François Hollande. Here you have a self-styled socialist whose country is suffering deeply from the rigors of austerity and has the clout, has the economic wherewithal to stand up to Germany, and yet he appears to be intent upon showing nothing other than a slavish devotion to the rigors of austerity. If he cannot, if Varoufakis cannot enlist at this critical time in the economic evolution of France the assistance of a so-called socialist prime minister, then what progressives in Europe, progressives with real clout, are going to rise to the defense of the Greek initiative? I just don’t see it happening after that very disappointing reaction from the French government.

PERIES: Greece has many challenges ahead, and we will continue this discussion. Dimitri, Leo, I hope you join us again very soon.

LASCARIS: Thanks for having me.

PANITCH: So long, Sharmini.

LASCARIS: Thanks, Sharmini.

PERIES: And thank you for joining us on The Real News Network.

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