Can the EU change? Varoufakis warns of a half-century decline

Yanis Varoufakis delivered a blunt assessment: the European Union has missed every major chance to reform, poisoned its own democratic debate and is now entering a prolonged period of structural decline.

Speaking to AnewZ Editor-in-Chief Guy Shone on the sidelines of Web Summit in Doha, Qatar, the economist and former Greek finance minister said he saw no realistic path for the EU to transform beyond rhetoric and bureaucratic documents. His answer was “a flat no”, despite describing himself as a committed Europeanist.

He argued that the failures were now “beyond reasonable doubt”, rooted in long-standing design flaws embedded in the eurozone.

The euro crisis as a missed turning point

Varoufakis said the euro was created with “a central bank without a treasury,” a structure that left the bloc vulnerable. He noted that newer members now face the opposite condition: “treasuries without a central bank” able to support their banking systems.

This combination, he said, produced the eurozone’s severe currency, financial and banking crises. The core problem, in his view, was not simply economic failure but a political failure to learn. “We learned nothing, and we forgot nothing,” he said.

Institutions created afterwards – including the European Stability Mechanism and quantitative easing – merely “changed everything so that nothing changes.”

Pandemic response: another opportunity lost

The pandemic, he said, offered a “magnificent opportunity” to create a genuine, long-term eurobond backed by a functioning treasury. But the recovery package, the NextGenerationEU programme, did not meet that standard.

He argued that because the European Commission lacks independent taxing and borrowing powers, the bonds it issued were effectively “subprime”. Markets, he added, treated them as second-rate instruments that could not be relied upon to maintain liquidity in financial systems.

Poisoned democratic debate

Varoufakis said internal European debates have been distorted by years of mutual accusation, especially between northern and southern states. But in his view, however, the real divide was not national but between financial elites “in cahoots with one another against the rest of the population.”

After two decades of these tensions, he said the words “more Europe” no longer inspire confidence but fear. In his phrasing, citizens “hide under the table,” associating integration with future hardship.

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No political force left to argue for federation

He concluded that the EU now lives with an unresolved contradiction: “federal money without the prospect of federation.” With no political movement capable of making the case for a federal Europe, the structural impasse remains.

Varoufakis believes this means the continent is entering a long era of stagnation. His forecast is stark: Europe faces “maybe half a century, maybe more, of steady European decline.”

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EU Yanis Varoufakis European Union