EU on brink: Varoufakis warns bloc making ‘same mistake’ that plunged Greece into misery

The European Union has been holding talks with member states to reach common ground on how best to respond to the economic threat of the coronavirus pandemic. The EU27 reached a tentative agreement on Thursday during a special virtual summit after which they charged the European Commission with drafting a new €1.5 billion recovery fund. But speaking ahead of the summit, former Greek Finance Minister Yanis Varoufakis warned the bloc is yet again “kicking the can down the road” and is risking making the same mistakes as during Greece’s debt crisis.

Speaking to Euronews, Mr Varoufakis said: “I very much fear that it will be another demonstrable failure by our leaders to do what is right not for Greece but for Europe as a whole.

“Again, they are kicking the can down the road. They are dealing, just like 2010. There’s a connection with the error of 2010 with Greece.

“They dealt with that crisis as if it was a crisis of liquidity when it was a crisis of bankruptcy and they are doing the same thing at the European level now.

“Every billion or trillion they are referring to is loans. The last thing businesses in Germany, in Italy, in France, in Greece need now is loans.”

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Despite the agreement on the recovery fund, EU member states do indeed appear split on how the funds should be distributed.

Richer, northern European states like the Netherlands have been speaking out in favour of loans while Italy, Spain and France – who are among the worst affected by the virus – have been arguing for grants.

Asked about the best approach Brussels could adopt, Mr Varoufakis said: “Firstly, the European Investment Bank could be given the green-light to fund a major investment programme of £600 billion, 5 percent of GDP, supported by the European Central Bank.

“The European Central Bank could be issuing its own Eurobonds on behalf of the whole of the euro area, not pushing more debt on the shoulders of the Italian state, the Spanish state, the Greek state that cannot shoulder it.”

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Discussing his country’s reaction to the pandemic, the Greek economist insisted the Government stop “pretending that it can be business as usual” and accept new measures will need to be put in place to keep the Greek public from “going hungry.”

Mr Varoufakis continued: “I very much fear that Greece will have the largest number of people who go hungry as a result of the economic dimension of this pandemic.

“The Government is pretending that it can be business as usual once the lockdown ends but it cannot be business as usual.

“It cannot continue to sell non-performing loans to funds and do repossessions, especially when for so many weeks and months we’re asking people to stay in their homes.

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“Imagine if, once they’re out of their homes, we take their homes away on behalf of vulture funds that have purchased them.”

Greece has been amongst the most fortunate members of the EU as the coronavirus death rate has so far remained contained, with 127 deaths confirmed and only 2,463 cases reported in the whole country.

But with the rest of the European Union, including leading economies like Italy and France, struggling because of the pandemic, Greece is likely to suffer from the same economic consequences of the pandemic.

European Central Bank Governor Christine Lagarde warned leaders the pandemic could cost them up to 15 percent of their economic output.

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