Yanis Varoufakis on Trumpism, European fiscal discipline and the US-China Cold War

On 10 November, Yanis Varoufakis was in conversation with Eurointelligence’s Wolfgang Munchau on Trumpism, European fiscal discipline & the US-China Cold War.


US Elections: I saw your Guardian article and my specific fear is that they start misinterpreting the whole thing and that they consider this as a rejection of Trumpism and reinforcement of the old way of transatlantic relations, that they see the defeat of Trump as a victory of centrist politics and that we can return to the multilateralism of the Obama years. Am I too alarmist in this interpretation?

“I don’t think unfortunately that you are too alarmist. The greatest problem with the EU is that because of its architectural design faults, there is a tendency to adopt the strategy of the least resistance and always to kick the can down the road, not to confront the difficult issues if they can avoid it.”

“The Biden victory has allowed them more space to kick the can down the road. In my conversations with some of the key players in the EU you can see that when you actually have a serious conversation with them, they do understand that the Biden administration is not going to constitute such a dramatic change in US posture vis à vi the EU. But in the theatre of public opinion, it gives them an opportunity to avoid the important questions involving international trade, the World Trade Organisation, the new cold war with China, serious conflict between the EU and the US regarding what free trade means.”

New divisions: How do you see the victory of Trump himself? Is this a purely right wing conservative thing or is there a divide going on that has its reflection in Europe as well — and not a divide between populists and others but a different kind of political divide that might play out in the next few years?

“It is a defeat for Trump personally, but it is a great triumph for Trumpism. Because the slump that is going to follow the COVID-19 is going to galvanize the right. The Trumpist have this — however fake feeling — that they have been robbed of the white house. They are going to take over the Republican party even more powerfully.”

“Beyond left-right, there is a very strong working class support for Donald Trump (…) due to the fact that on one hand you have socialism for the rich and austerity for most other people, and the complete incapacity of the establishment within the democratic party to address that beyond saying all the right things regarding racial harmony, regarding tolerance, regarding civilised mode of behavior which are all great things but they come to nothing when it comes to the working class men and women supporting Trump when their jobs are disappearing, when their life prospects are diminishing.”

What should the Left do: What do you think the Left should do in the US? Should they support Biden, should they try to drive a hard bargain or should they try to prepare for the post-Biden administration — play the long game and really try to capture the party? 

“The news I’m receiving from the other side of the Atlantic by my friends in the Left Caucus, in the Bernie Sanders team, in the AOC team, people I speak to — they are livid, they are bereft. The expression they used is ‘Biden has been liberated from us’ because hiding behind the loss of the senate and the loss of the landslide, Biden who was not very keen on the Green New Deal will now turn around and say: ‘Well, I wanted to, I agreed with you to push it forward, but I just can’t.'”

“The biggest problem that people like Alexandria or Bernie will have in the next two years during the slump that’s coming their way is: what do they say to the people that they dragged out of their homes and convinced to go to the polling stations or fill in the postal vote in favor of Biden? (…) The vote was in the end won by these people. These people will turn around to their own Lefties in the democratic party and and say why did you make me do that? He’s not doing anything for us.”

“While the right will be galvanizing, hardening, taking over the Republican party, becoming more unified, less fragmented, outside politics will be in disarray for structural reasons.”

“They need to continue to press Biden and the media in the direction of the Green New Deal and they have to keep reminding them that Trump is the result of Obama. (…) It was the democratic radical center which paved the ground for the proto-fascism of Trump. The Left must keep reminding the Biden team that it was they and their policies that made it possible for somebody as misanthropic as Trump to move into the White House even if it was for four years.”

European Union:  What should be the European reaction to what you call the ‘triumph of Trumpism’ and the defeat of Trump?

“The same historic process that we are observing in the United States is undermining the European Union. Macron’s victory the renaissance of Angela Merkel have lulled the liberal establishment into a false sense of security. COVID-19 is conspiring with the stagnation that the EU and the imbalances that have been growing during the Eurocrisis — they have conspired to create a wonderful breeding ground for right wing xenophobic populism.”

Recovery Fund: Is the problem the size? Is the problem that it is anchored in the EU budget? What should they have done instead, or could still do? 

“The problem is three-fold. It is the size, it’s micro-economically puny. It is the fact that it is embedded in the EU budget which makes it very cumbersome; it will be a very long time before a single penny or cent finds its way where it’s needed. And thirdly and far more importantly, the dynamic of it is economically regressive.”

“What could they have done instead? Well, our movement DiEM25 came out on the 10 March with a 3 Point Plan.”

EU foreign policy: The EU is currently struggling to find a common position on China, with different views. Angela Merkel has said that she opposes any sanctions, she doesn’t think human rights are that important as to stop trading. The Americans have called your country the ‘head of the dragon’ for the Belt and Road programme. Do you think the strategy towards China is changing?

“Look, I am an ardent critic of the Chinese communist party’s authoritarianism. I came out, supported with all my strength the students in Hong Kong and in particular during the fight for the HK Polytechnic, which was abysmal, the violence used against those students. The muslim minorities in China are very high in my priorities. I certainly think that human rights are crucial and can never be sidelined by international trade priorities. At the same time, I am aghast at the prospect of a new cold war between the West and China. China is very complicated, the best and the worst can be found in that country. There are boisterous democracies as we speak in certain precincts in China where the Chinese communist party’s choice of prefects is overthrown through elections. We have an important trade union movement. From my Left-wing perspective, there are people inside the communist party (…) they are criticising very severely and quite openly the economic policies and social policies of the Chinese government — adopting a general anti-Chinese posture at the moment. Embracing a new cold war would be devastating — it would be devastating for our people in China, for democrats in China, minorities in China, it wouldn’t be good for them if we adopted a Trumpist or even Biden opposition to China.”

“Europe should take a nuanced approach, we should support minorities in China, we should support democrats, we should criticise the Chinese Communist parties abuses of human rights while at the same time talking to them.”

EU foreign policy: What should we do about Russia? The Germans have their pipeline almost completed, I think they are 60k short. The US congress has made threats that the completion of that pipeline would be met with severe reprisals. Should the EU side with Germany? Should the EU reflect on its relations with Russia? 

“It certainly should reflect on its relations with Russia (…) I’m not a friend of Putin but at the same time I don’t want to see a cold war with Russia either. It is essential that again in exactly the same way that we should support human rights in China, we should support human rights in Russia, we should support those who want to oppose the imperialistic tendencies of Vladimir Putin but we should not turn Russians into the enemy of the European Union. I am very adamant on that.”

“When it comes to energy I think that we should have a serious investment in a Green New Deal.”

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