Ireland should have told ECB to ‘bugger off’ during bailout talks, Varoufakis says

Greek economist believes Ireland was bullied into bailout, Greeks pay German prices on Bulgarian wages and global economy has moved into technofeudalism

Ireland should have told former European Central Bank (ECB) chief Jean-Claude Trichet to “bugger off” when he threatened to cut emergency funding to Irish banks unless the State accepted a bailout and a programme of austerity in 2010, Yanis Varoufakis says.

If you think, after all this time, Greece’s firebrand former finance minister has softened his stance on the troika or burning bondholders, think again.

Forcing the Irish State to take on the losses of German bondholders was not only immoral and illogical but illegal, Varoufakis says.

The Greek economist was in Dublin to join a panel discussion on the future of Europe hosted by Irish MEP Clare Daly.


“Your government had a duty to the people of Ireland when Jean-Claude Trichet picked up the phone and threatened you with the closure of your ATMs unless the Irish Government agreed to transfer the loan losses of the German bondholders onto the ledger of the Irish State,” he tells The Irish Times.

Trichet has denied he telephoned the late Brian Lenihan, Ireland’s then finance minister, warning him to save the banks “at all costs” but the State’s banking inquiry concluded that the ECB had explicitly threatened to cut off funding for Irish banks if bondholders were burned.

“At that point, your government should have said ‘bugger off’,” Varoufakis says.

He remains convinced that the ECB would have backed down and Ireland could have stayed in the euro zone “without having to suffer the ignominy of having had a gun pointed at your head in order to do something that is definitely illogical and – I would even say – illegal”.

Varoufakis shot to prominence at the height of the Greek debt crisis in 2015, not just for his polemical opposition to the troika’s proposed bailout terms for Greece but also for arriving at Eurogroup meetings on a motorbike, clad in rock-star-style black leather.

During the negotiations, the Financial Times called him “the most irritating man in the room” but in hindsight he believes he was “too diplomatic” in his dealings with other EU leaders.

Varoufakis says the austerity and liquidity policies pursued by the ECB to combat the banking crisis have destroyed Germany’s business model and led to economic stagnation across Europe.

“Germany has gone for 15 years without any serious investment in new tech. So now with the war in Ukraine destroying Gazprom’s deals with Germany, with the closing down of China, with the stagnation across Europe due to chronic underinvestment, the German business model is kaput, is finished,” he says.

“There is no way that the standard policy of wage repression, of more austerity, can revise the fact that Volkswagen cannot compete with BYD [Chinese car maker],” he says.

Varoufakis resigned as Greek finance minister in 2015 when then prime minister Aléxis Tsípras, the man who appointed him, accepted the terms of the troika’s bailout.

But does he think Greece’s recent economic turnaround – the Greek economy is forecast to grow by nearly 3 per cent this year, outpacing the euro zone average of 0.8 per cent while the banks bailed out during the crisis are on course to be reprivatised – now justifies the decision to accept the troika’s terms?

“It depends on your perspective – if you’re a financier you’re laughing all the way to the Cayman Islands,” he says, noting how investors picked-up non-performing loans for a fraction of their face value only to sell them later at a huge profit.

For most of the Greek population, however, real incomes are still 25 per cent below what they were 20 years ago, he says. “We pay German prices on Bulgarian wages,” he says, suggesting most Greeks find offensive “the insinuation that Greece is doing well”.

Varoufakis’s current thesis, outlined in his new book Technofeudalism: What Killed Capitalism, posits the notion that big tech companies such as Meta, Amazon, Apple and Alphabet haven’t just transformed capitalism but killed it off altogether.

These firms don’t produce capital instead they use algorithms to control our attention and our tastes, turning us into “cloud serfs” who amass cloud capital through posting and tweeting which the tech overlords then rent to traditional capitalists, usually for 40 per cent of the sales price. That’s not capitalism, it’s technofeudalism, Varoufakis says.

*This article was amended on Tuesday, April 30th, 2024

Eoin Burke-Kennedy

Eoin Burke-Kennedy

Eoin Burke-Kennedy is Economics Correspondent of The Irish Times