We recently met Yánis Varoufákis in Paris. Former Minister of Finance in the first government of Alexis Tsipras during Greece’s debt crisis, he is the founder of DiEM25 (Movement for Democracy in Europe in 2025), a movement which aims at democratizing E.U. institutions. He is the author of several books, including Adults in the Room: My Battle with Europe’s Deep Establishment (2017), in which he recounts his version of the events that occured before the Greek referendum in 2015. Well versed in the inner workings of Brussels negotiations and machinery, he scrutinizes the members of the European establishment who, in his own words, “are, like Macbeth, doomed to pile up mistakes overs mistakes until they realize that their crown does not symbolize the power that they have, but the power that has slipped”.
Groupe d’études géopolitiques: How do you understand the concept of sovereignty?
Yánis Varoufákis: In continental Europe, we tend to confuse the concept of sovereignty with that of power. That leads to a deep misunderstanding, which makes us narrow the very notion of sovereignty. We end up thinking that state sovereignty no longer has much value because we now all supposedly live in weak states. Therefore, we should all unite to all be better off. What is at stake in the European project based on such a perspective is therefore power, not sovereignty. That is a huge mistake, and leads to a lack of democracy.
Do you have an example in mind to illustrate this dissociation between power and sovereignty on the state level?
Take Iceland, for example. It is a state whose size is practically negligible if you compare it with the rest of the world. And yet, its monetary sovereignty has allowed it to escape the fate that befell Greece. Thanks to its sovereignty, Iceland has done what firms do every day when their debt becomes unbearable, saying: “We cannot pay, we will not pay”. Then they negotiated. Sovereignty allows a certain degree of control within the limits of your power, or absence of power.
Do you think the concept of sovereignty is still indispensable to develop progressive policies?
You think conflating sovereignty with power deteriorates the democratic process. How do you apply this to the situation of the European Union?
Misunderstanding the political concept of sovereignty is one of the grave mistakes that the EU has made. As a Greek, I would not mind transferring Athens’s sovereignty to Brussels. Except that is not at all what we did. There is no democracy in Brussels! Brussels is an area that determines a space without democracy. The intergovernmental institution was created to shortcut democratic mediation. When Wolfgang Schaüble told me the election outcome could not, in fact, change the orientation of economic policies, what he meant was precisely that there is no room for democratic sovereignty in Brussels.
How can European sovereignty be democratized?
My position, and that of DiEM25, is very simple. We want a federal democracy. We are asking for a transfer of sovereignty on several issues: monetary policy, fiscal policy, fiscal harmonization, ecological investments. We need to make sure that European sovereignty will be framed by a federal democratic process, which is what we lack the most in the EU.
Through which concrete political process do you think this program can be implemented? How do we give Europe a sovereign democracy?
We will have to build a European « demos », and thus reach sovereignty.
Is it possible to build a “European demos”?
I find it surprising when I hear people say that it is not possible to have a European demos. The German demos has not always existed. For a good part of its history, Germany was divided into principalities, states, it did not exist as a country. Sovereignty and demos are a process. We shape the demos through our political actions. What all this essentially boils down to is a fundamental alternative that Europe has to resolve: do we want the dissolution of the European Union and the reinstallation of national manifestations and state sovereignty; or do we want to build a European demos and go beyond intergovernmentalism through a transnational political action? One of DiEM25’s objectives for 2019 is to set up a transnational list of candidates for the E.U. parliamentary elections, in order to contribute to building a European demos.
Wouldn’t such a federal democracy projected to the European scale end up transforming the very idea of a state?
If we truly wish to create a sovereign union on a European scale, then yes, we must re-examine the old idea of a Westphalian state based on clear cut geographical borders, and imaginary units made of a people, a religion, a culture, a language, a nation, and a sovereignty. Tertium non datur. We are beginning to rethink and adjust the concept of sovereignty based on a European demos that would permit the exercise of citizenship in each country on different scales. To take an example drawn from current events, if Catalans want a state separate from Spain, they should not have to choose how their sovereignty is effective in a purely binary logic. If they want a Spanish passport, they should have it as well as they should have a Catalan passport. The E.U. should allow holding three passports: European, Spanish, Catalan. In order to create a new European sovereignty, we must break away from the connection between nation, religion, culture and sovereignty.
What comes after the nation state?
That is the question. I would say that after the nation state in Europe, we will witness the birth of transnational sovereignty, expressing a transnational demos. At the end of this process, Europe will replace the intergovernmental mechanism by a democratic European constitution that will allow us to say: “We, the people of Europe…”
In your opinion today, which is the geopolitical entity that has a sovereign function in Europe?
None. That is truly the tragedy we are experiencing inside the EU.
What political entity should, in your opinion, have this sovereign function in Europe?
People—especially Eurosceptics—often say Germany is close to having this control.
No, even Germany, as powerful as it may be, does not truly embody a sovereign function. The country has become a slave to its current account surplus.
When your surplus reaches 10%, you become enslaved to those to whom you lend money. Such an excedentary commercial balance gives you a huge capital surplus. Not to invest it would be a waste. But the German housings, firms and government do not really need so much money. Therefore the German nation is forced to lend all of its savings to the Greeks, the French, or entities that it does not have control over. That is why we all need a macroeconomic balance and a European demos.
The political game does not always tolerate double contradiction. How will you position yourself in the perspective of the alternative that may structure the next European elections, that is to say the alternative between Macron and the European neo-nationalists?
Together with DiEM25, I think that the Macron-Merkel-Schulz establishment, the transnational offers and the neo-nationalists partake in the same process. They feed and support each other. The neo-conservative idea in Europe can only survive politically in a context of nationalist threat. And the nationalists only survive because of the failures of the neo-conservatives and that of the neoliberal establishment. Their incapacity to solve the crises and the shocks that Europe faces feeds the nationalists. So this is an artificial opposition.
But you called for a Macron vote in the second round of the French election…
Of course, that does not mean that we cannot still prefer Macron to Le Pen. That is the reason why DiEM25 called to vote for Macron in the second round of the French presidential election. The problem would be to stay focused on this opposition, to consider it relevant. The accumulation of bad solutions tends to make Europe fail. What we try to do is to find an alternative to this fake opposition by delivering a consistent statement about Europe, carrying one single history, one single manifesto, one single political frame, inside one single transnational party.
What are you fundamental propositions?
Our two cornerstone propositions fall into different time frames: while we work through existing institutions to stabilize the main crises, we start a process of federalization, in order to achieve a sort of “big bang federation”.
Would that imply not engaging at first in a discussion about changing the treaties?
Absolutely, but only in very short term, in the first 6 to 24 months. Any discussion about changing the treaties, considering the current state of the European Union, would only paralyze us further. On the contrary, we consider using the existing institutions in a broader interpretation of their statutes and jurisdiction. From there, we will be able to address the old crises undermining the continent: crises of public debt, of private debt and finance, of low investment—especially in new technologies, transportation and energy—, and finally poverty. That could be done immediately.
And you will put off the constitutional process to later time?
Yes, the idea would be to give birth to discussion all around Europe about the type of European constitution we want, that would replace the treaties and initiate a true federal democracy. That, of course, will take ten years, but we have to start thinking about it as soon as 2019. Although we sometimes have common views, not one of today’s Europeists, like Merkel or Macron, from their narrow perspective, could succeed in creating a transnational constitutional assembly at the scale of Europe.
What do you think of the Macron-Merkel meeting of January 21st?
It will be forgotten, as it deserves to be.
You said that “the European Union does not yet exist, although it would be a good idea”. Is there a problem in the EU’s current geopolitical shape, particularly in the articulation between the scales of power and that of political decision, that prevents it from achieving unity?
Absolutely. We have a confederation, but no union. For instance, we do not have one migration crisis in Europe. We have one in Greece and one in Italy. Thousands of refugees are parked in islands, or in camps in Italy, or, even worse, in Libya, where we pay gangsters. That is unacceptable.
A refugee who arrives in Greece receives a few documents and is allowed to travel inside the country, but cannot go to Austria or Germany. That is not a union, it is a series of borders and walls.
We want transnational lists of candidates for the 2019 election, but we are not allowed to have them. Therefore, we will just simulate them by creating parties in each country, and at an imaginary level we will say that it is a transnational party. But in reality, right now we cannot have them. I cannot run for national elections in Germany, and a German cannot run for national elections in Greece. Here is another example: if an Italian bank goes bankrupt, the Italian state has to handle that alone. Imagine if, when the banks in Nevada went bankrupt in 2008, the state of Nevada alone had been responsible for saving them—the United States would be in a deep crisis today.
What is the origin of this lack of geopolitical conceptualization?
First of all, let us not forget how the European Union began. The Union was conceived as a heavy industry cartel: the European Coal and Steel Community. That is not quite the democratic heritage we tend to imagine. It was a cartel. Then, this cartel widened. Step by step, we integrated the French farmers through the Common Agricultural Policy, then through the banking system. However, the problem with cartels is that, though they do well in times of prosperity—when their legitimacy is not in doubt—in hard times they are capable of killing each other. Look at what happens in OPEC countries when the price of oil goes down. That is exactly what we witnessed during the crisis.
Could the effects of the economic crisis on Europe have been avoided?
Yes, and that is the problem. Because there is another way of looking at the situation, which makes it even more serious. The European Union was built on the bases of fixed exchange rate, handled by the Americans. That is what we call the Bretton Woods Agreements. When this monetary system came to an end in 1971, the Europeans tried to replace it, and they made a huge mistake. They had not learnt the lessons the Americans had already learnt in the 1920s, which is that for a fixed exchange rate regime (MCE, MCE II, Euro) to be stable and able to cope with shocks and the formation of economic bubbles, it must be sustained by a political mechanism.
The Americans knew it. This was at the root of the Marshall Plan. It was not about loans. It was money taken here and moved there. And the Americans did not only do that through the Marshall plan, but throughout the 1960s with the Japanese industry, for instance. They understood that fixed exchange rates cannot do without the stimulation of a federal government. We did not learn this in the EU. We created a gold standard in the 1920s, then we had our moment in 1929 and 2008. Ever since, we have not been able to learn this.
Is there a problem with the organization of the European Union?
Allow me to answer through a metaphor. In 2008, American and European finance crashed. The Americans sat around the table and asked themselves: “How can we stop this crisis from killing us?” That was the right question.
What happened in Europe? European leaders asked themselves a very different question. They said: “Well, our rules are not that relevant, how can we act as if they were working?” We found an answer in financial rescue and austerity. European institutions therefore failed twice. They could not prevent the crisis from happening, and then they could not cope with it