Italian daily Il Fatto Quotidiano interviewed me (see here) regarding the latest developments in Italy, Europe and Greece. The original Q&A (in English) follows: Greece is about to exit from the notorious memorandum, the austerity plan signed with the troika. Public finance has improved at a high price for the population as we all know. I fear you have been misinformed. The only thing that runs out this year is the loans from the troika. The austerity will get harsher and Greece will to deeper and deeper into its debt bondage until… 2060. Do you believe that your country would be better off if it had left the Eurozone? What I know is that we should not have accepted the 3rd bailout and the new austerity
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Italian daily Il Fatto Quotidiano interviewed me (see here) regarding the latest developments in Italy, Europe and Greece. The original Q&A (in English) follows:
Greece is about to exit from the notorious memorandum, the austerity plan signed with the troika. Public finance has improved at a high price for the population as we all know.
I fear you have been misinformed. The only thing that runs out this year is the loans from the troika. The austerity will get harsher and Greece will to deeper and deeper into its debt bondage until… 2060.
Do you believe that your country would be better off if it had left the Eurozone?
What I know is that we should not have accepted the 3rd bailout and the new austerity conditions it came with in 2015. And if the troika wanted to throw us out of the euro for doing the right thing, it would be regrettable and painful but, by now, Greece would indeed be much better off.
You told that you were attacked by the EU institutions when you asked for a debt restructuring and a reform of EU rules. Could you tell us how did the institution reacted to your requests and how they managed to break Tsipras initial beliefs?
They pretended they did not hear, use the European Central Bank to asphyxiate the banking system and the state and, in parallel, made promises to Tsipras that they would treat him well if he surrendered – promises that they never meant to keep and which they did not keep.
In the summer of 2015, before the referendum, you had in fact a plan for the Grexit, prepared – you said – in agreement with Prime minister Tsipras. But you state that even ECB, German finance ministry and Italian current minister, Pier Carlo Padoan, have one. What do you know about this last one?
I have seen no details. But I do know the European Central Bank, the Bank of Italy and various Italian governments do have a plan of how to respond to a crisis that, overnight, freezes Italy out of the euro. Let me put it differently: It would be criminally negligent not to have such as plan. It would be akin to the Ministry of Defence not having a plan for what to do if Italy were to be attacked by an enemy.
How does the Greek debt crisis of 2015 compare, in your opinion, with the current Italian situation?
There are important similarities and important differences. Both are countries are caught up in a conundrum: we are far worse off due to the euro but at the same time a euro exit would be very, very painful. It is as if we are in a burning house without exits. Another similarity is that both our countries are constantly under threat from Berlin and Frankfurt that, if we do not do as we are told, our ATMs will stop functioning and people will lose their deposits – while, at the same time, if we do as we are told, our societies will stagnate. Turning to the main difference, in 2015 our government did not want Grexit whereas any 5S-Lega government would welcome a financial crisis that forces Italy out of the euro. And given Italy’s size, that would mean the end of the euro.
Do you see a parallel between Tsipras’ decision to sign the memorandum and go to new elections and president Mattarella choice to prevent the formation of a Five Star-League government because of his disapproval of the finance minister designate?
Tsipras called the referendum in order to lose it and, thus, justify his surrender to the troika. Mattarella operated on behalf of the troika.
You wrote that President Mattarella made “a major tactical blunder”, “fell right into Salvini’s trap” and made a “fantastic gift to Salvini’s party”. Which consequences do you predict with regard to the Italian’s attitude towards the EU and the euro?
The continuation, and possible acceleration, of the steady loss of trust in European institutions amongst the Italian public.
With the second debt/gdp ratio after Greece, Italy is actually very dependent on the market in order to refinance that debt. Isn’t it inevitable for the markets to react badly to the leak about a plan for “Italexit”?
Italy is heavily dependent on the markets but, at the same time, the markets are heavily dependent on Italy! If Italy defaults countless very rich people will lose a great deal of money. In this sense, it is time both for the Italian government and the markets to grow up and to face up to the simple reality that everyone must have contingency plans while, at the same time, designing and implementing the reforms to the eurozone that would allow a country like Italy to stay in the euro without suffocating – the very reforms that Berlin is vetoing.
Italy has also a huge imbalance in the Target 2 system, 442 billion euros. Would an exit mean that we should repay that amount?
Of course not. These are accounting figures that make sense only within the eurozone. If they eurozone dies these figures evaporate into thin air.
Do you believe that Italy should anyway leave the Eurozone?
No, I don’t. But nor do I think that Italy can/should stay in the eurozone under rules that condemn the median Italian citizen to permanent stagnation.
What about the consequences, indeed: devaluation of the new currency, fall of households income (to make the devaluation work, the wages shouldn’t rise), redenomination of mortgages and bank loans. Do you believe that some countries should prefer these outcomes to a “memorandum” imposed by EU institutions?
Yes, Italexit would be painful and have dire consequences. It would be a terrible short, sharp, shock. But, at the same time, staying in the euro as things are, and with Berlin’s point-blanc refusal to reform the euro, Italians are facing a slow death by a million small, individually insignificant, cuts. This is why we shall be announcing on 13th June in Milano that DiEM25 Italia will be contesting the next elections in Italy, national and European: To propose an alternative to stagnation within the euro and Italexit.
Your movement, DiEM25, has put forward an European New Deal which provides, among the other proposals, to “save the Eurozone by ending self-defeating austerity and minimising the cost of its disintegration in case of its occurence”. What does it mean in practice?
It means the redeployment of the European Investment Bank, the European Central Bank, and the European Stability Mechanism, within the letter of their existing rules and charters, in order to deal simultaneously with the public debt crisis, the banking crisis, the crisis caused by under-investment and, finally, the rise of poverty all over Europe.