On Yanis Varoufakis' appearance at 'The Rest Is Politics' podcast

2026-05-07

Today I watched with great interest the discussion of Yanis Varoufakis with the hosts of The Rest Is Politics podcast, Alastair Campbell and Rory Stewart: https://www.yanisvaroufakis.eu/2026/05/03/on-the-rest-is-politics-with-alastair-campbell-and-rory-stewart-from-the-2008-crash-to-the-rise-of-populism/.

Yanis was at the heart of Europe’s post-2008 financial and sovereign debt crisis, first as a commentator from the sidelines of the academia and then as the Greek finance minister. Throughout the show Yanis comments on past events. I am not interested in relitigating those controversies but in drawing lessons for the present.

Yanis is a freethinker extraordinaire. This necessarily makes him a misfit in the world of politics. To me, this is honourable. Where I think Yanis failed as a policy-maker is in his ambiguity on the notorious theme of “Grexit” (the exit of Greece from the Euro Area). Back when Yanis was the Greek finance minister there was a decent chance that Greece would discontinue using the euro. He never told us what he wanted from the negotiations he was engaging in at the time: to keep the euro, to switch back to the drachma, to have some kind of dual currency arrangement, or something else entirely.

In the podcast he employs the analogy of not taking on a credit card to pay off a debt while you are bankrupt. It is common sense. Then what is the policy proposal or at least the big picture view? I never heard it.

The exact answer does not matter. What is of interest is the absence of clarity, for it is indicative of the wider political left’s problem with European Union affairs altogether: there is no clear vision, no compelling story. Yanis is intellectually honest, mind you, yet he too is beholden rhetorically to a movement that considers certain opinions unacceptable.

Leftists at-large have no persuasive plan for the European Union. Not for “Europe” in some abstract sense, as that can easily be construed along the lines of international peace. I am specifically focused on the existing legal-institutional architecture which enshrines in treaties what effectively is anathema to progressives. Austerity is not the ephemeral policy of some elected government, such that it can be discontinued at the next election. No! It is the very essence of the primary law that underpins Europe’s economic governance.

The left cannot make bold pronouncements on the EU as such. If it accepts the status quo, then it necessarily agrees to live under a system that practically no democratic process can reform. Yanis learnt this firsthand: he had to resign from his post as finance minister because a resounding “no” at the referendum meant nothing whatsoever in substantive terms.

As things have stood since the early 1990s with the Treaty of Maastricht, the EU is caught in a situation where it has no natural unit of democracy. This used to be the nation-state back when there was a direct link between the legitimation of decision-makers and their attendant accountability. Decisions were adopted domestically and were, in principle, scrutinised there. The European Economic Community of the pre-Maastricht era was a free trade area with limited authority over national affairs.

The crowning achievement of the Treaty of Maastricht is the euro. Monetary policy has since been transferred to the European Central Bank. Fiscal policy is similarly conferred to the supranational level in a process that largely unfolded at the height of the 2008+ economic crisis. Without financial autonomy, the remaining areas of policy are severally constrained in advance, notwithstanding other European regulations. Recent developments in the proxy war with Russia are showing that the EU is eager to concentrate ever more power on matters of foreign policy and defence, and even meddle in the outcome of national elections under the pretext of combating “disinformation” campaigns carried out by the usual villains.

Meanwhile, the EU as a whole is not a democracy. The Commission is a bureaucratic apparatus. The European Council is a collection of governments, each of which has partialised sovereignty, elected on a national platform to pursue national interests yet supposed to make decisions in the name of Europeanness. In other words, we experience a mismatch of sovereignty: rules for the system as a whole without the commensurate cycle of legitimation and accountability.

Against this backdrop, Europe faces the same predicament it did in the 2010s. Namely, it operates in a grey area that is neither national nor supranational democracy. One path forward is that of federalism which sees the EU turn into a fully fledged federal republic. The other is a reconstitution of national sovereignty, which effectively means the disintegration of the Union as we know it.

For leftists this is an awkward historical turn:

• To side with the federalists is to accept that for the indeterminate future they will say nothing about the hardcoded neoliberal character of the EU’s economics. Or, worse, they will join the pro-EU camp anyway while rhetorically disagreeing with the most inflexible policies of the block.

• Dismissing the EU has far-reaching implications which lead to the formation of a programme that is nationalistic at heart: exit the euro, leave the Union, restore national sovereignty, pursue good relations with countries beyond Europe, et cetera. Regaining sovereignty will also affect immigration policy, not least in order to impose capital controls during the potentially long period of transition back to a national currency.

Yanis has had no answer to this conundrum. My view is that one has to decide what their priorities are and proceed accordingly. I have in the past leaned on the federalist side and still think it is worth the trouble if—and only if—it establishes a republic. Though I have long lost faith in the capacity of the EU to be refashioned into something other than the bureaucratic confederation it is.

Each system comes with its own potential owning to the relative power of its constituent factors and the particularities of their interplay. How can we get a European treasury, for instance, when the moment we try to pool national debts we encounter the toxic issue of the Dutch assuming part of the national debt of the Italians, the Germans doing the same with the French, and so on.

The nations still exist as do their cultures and historical biases. This is the fact of the matter. Federalism is an intellectual project that sounds nice in theory while it downplays or completely ignores the inescapable conflicts of interest among the member states of the Union. Considered holistically, to change the EU requires concerted action of the sort that is akin to planetary alignment.

Perhaps, then, intellectual honesty leads us to a nationalist turn; nationalist in the sense of restoring sovereignty at home and then working towards its democratisation; nationalist in order to develop the capacities for an internationalist outlook. This too is difficult, for sure, though each country can do it without depending on all the rest to reach consensus in practically every area of policy.