Greece’s former finance minister, Yanis Varoufakis, now standing as a leftist candidate for the European Commission presidency, told the EU on Tuesday (26 March) to stop blaming China for an unbalanced economic relationship because the playing field “was never levelled in Europe”.
His comments, made at an event organised by the Bruegel think-tank, came as French President Emmanuel Macron, German Chancellor Angela Merkel and European Commission President Jean-Claude Juncker met in Paris with Chinese President Xi Jinping to discuss bilateral relations.
On Tuesday, the Commission also issued a recommendation to bolster cybersecurity in the deployment of the next generation of mobile technology (5G).
The proposal came in response to the potential risks of cyberespionage, especially by Chinese companies.
Asked about China’s Huawei, which is at the heart of the controversy, Varoufakis enthusiastically encouraged member states to use its products.
“The idea that there will be spying on us is laughable,” he said.
“Who was exactly tapping Angela Merkel’s communications? It was not the Chinese, was it? It was our great friends from the other side of the Atlantic,” the economist added.
Varoufakis criticised Europe’s growing nervousness toward China and the renewed efforts to rebalance the bilateral relationship.
Echoing Macron’s comments from last Friday, he said that Chinese investment came to Europe because of the monetary and fiscal policies that depressed the European economy.
“We are idiots. Don’t blame the Chinese for this… We created a vacuum and the Chinese are filling it,” he said.
EU institutions, diplomats and companies’ representatives have complained over the past months about certain Chinese practices, including the forced transfer of technology, the steal of intellectual property and the economic barriers to access the local market.
Varoufakis recommended that Europe “stop demonising China”.
“We Greeks have learnt one thing over the last ten years. It is important to look at ourselves in the mirror before we blame anyone else,” he said.
He disregarded the concerns about the Communist Party’s strong hand in the Chinese economy and added that European companies also benefited from public subsidies.
As the Europeans want to rebalance the bilateral relationship with China, he said that the level playing field “was never levelled in Europe.”
“The difference is that they have been doing it well.”
“We depend on them,” he insisted as he added that the two forces that kept capitalism alive last year were the US Federal Reserve and the Chinese economy.
“We are children, not adults yet. We should start looking at the world how it is,” he stated.
New investment plan
Varoufakis is the lead candidate of European Spring, a coalition of left-wing parties, for the European elections in late May.
He defended as his flagship initiative for the campaign a new investment plan financed by the European Investment Bank and backed by the ECB, worth 5% of Europe’s GDP.
“Things are better than in 2010… but that is not saying much,” he said, as investment continues to be “spectacularly low”.
Varoufakis argued that the €500-billion firepower of the European Investment Bank could help to create “high-quality green jobs”. The ECB would help to control any pressure from the markets and maintain the yields of the bonds issued by the EIB under control.
This proposal would be at the heart of his programme for the next five year-political mandate.
As his coalition of national parties is not polling among the top ones, the Greek economist said that, after the elections, his alliance would we willing to support any candidate for Commission president who agrees with them on this issue.
“We don’t care who is sitting in that seat” as long as they agreed on the way forward, he said.
Although the European economy has returned to solid growth figures, investment remains below the pre-crisis level.
Commission President Jean-Claude Juncker also made of investment a top priority when he took over in 2014 and launched his own initiative (Juncker plan).
Juncker described his initiative as a success, as it helped to mobilise more than the initial target of €315 billion.
However, Varoufakis said the ‘Juncker plan’ was a “fraud” because most of the money was redeployed and it worked through a complex system of guarantees rather than direct grants.
“Our proposal will be plain vanilla,” he said.
He explained that he had already made this proposal when he was Greece’s finance minister in the first half of 2015 and his idea was not rejected by the EIB board. But it never took off at the Council
No eurozone budget
Once a consensus is reached on this new investment package, Varoufakis would like to address more complex issues such as Germany’s massive trade surplus and a new European Constitution to achieve a democratic and transparent federal Europe.
Before that, he would not back the idea of a eurozone budget, seen by supporters as a fiscal tool to protect the euro area against sudden economic shocks.
In his view, Marcon’s proposal for a euro area budget was “insignificant” from a macroeconomic standpoint.
In order to have a significant instrument, “we need democratic oversight”.
That would come only once a new Constitution is in place, he said. But in order to get there, the bloc needs first to balance the region with his new investment plan.
[Edited by Zoran Radosavljevic and Sam Morgan]