Yanis Varoufakis analyzes the US-Iran memorandum of understanding and its global implications
Glenn Diesen interviews economist and former Greek Finance Minister Yanis Varoufakis on the US-Iran memorandum of understanding.
Summary
Glenn Diesen interviews Yanis Varoufakis — economist, former Greek Finance Minister, and founder of DiEM25 — about the US-Iran memorandum of understanding, which Varoufakis describes as an unequivocal Iranian victory and a de facto American surrender at the diplomatic level. Varoufakis argues that the deal effectively kills the Abraham Accords, exposes the fragility of the petrodollar system, and creates the first serious public rupture between the US establishment and Israel. He contends that the Gulf States' reliance on the American security umbrella has been revealed as a strategic error, and that the flow of Gulf petrodollars into US money markets — critical to sustaining American financial hegemony — was directly threatened by the war. On Europe, Varoufakis argues that the continent has never been more irrelevant in a major global development, and that France and Germany's continued support for the Ukraine war is driven not by security logic but by the need for a weapons-based growth model in the absence of any viable alternative.
Key Takeaways
FULL TRANSCRIPT
Introduction and the US-Iran Memorandum of Understanding
Glenn Diesen: Welcome back. We are joined again by Yanis Varoufakis, a professor and former Finance Minister of Greece, and also the founder of DiEM25, the Democracy in Europe Movement. Thank you for coming back on.
Yanis Varoufakis: Well, thank you for having me, Glenn. It's great fun talking to you, and sometimes quite useful for the audience, not necessarily for us.
Glenn Diesen: I have been really looking forward to getting your take on this memorandum of understanding. I think for most people who looked at the war honestly and analyzed it accordingly realized that the Americans were losing this war, and that would be revealed in this memorandum of understanding. But these 14 points — even for me they seem to go a bit beyond what I had expected. I can't imagine this being implemented because it's going to be too difficult given the extent of the defeat here. But I wanted to ask you how you interpret this, because this is quite a shock not just to the US but to the world at large.
Yanis Varoufakis: Is it not interesting that they call it the Versailles Treaty? Because in a sense it's a dialectical inversion of the original Versailles Treaty. It would even make somebody like Hegel blush — that the self-declared winner, the United States, is putting up to $300 billion to reconstruct its victims. As we said, I can't see Congress ever going along with that. There are so many obstacles. Let's not mistake this memorandum for a done deal. We are light years away from any Iranian bank account seeing a single dollar from the Americans. I think the Iranians know that.
But it is symbolically hugely important that this memorandum of understanding has been signed. It is a declaration of an unequivocal victory for Iran and an unequivocal — I shouldn't say defeat, but temporary surrender at the diplomatic level — by the Trump administration. It's profoundly important for the general picture in the Middle East, in what we should be calling West Asia, because essentially the Gulf Council states are now out on their own. The Abraham Accords that Donald Trump had initiated with great success during his first term — the whole logic of essentially co-opting Arab states into the American design where Israel plays the linchpin role within the West Asian and North African realm — that's gone. The Abraham Accords are now dead in the water as far as the original design was concerned.
The Europeans have been left out in a spectacular fashion. Never has Europe been so irrelevant in momentous developments around the world. And in the end, we have possibly the first serious rupture in the official relationship between the United States and Israel. Netanyahu has the capacity to wreck this deal, but at the same time, this capacity and the fact that he's exercising this power is for the first time creating a rupture between the Israeli establishment and the Republican Party. So all these are quite momentous developments that I think are current, significant, and independent of whether this memorandum of understanding evolves into a treaty — which, as you said, I find it hard to believe it will.
Buying Time, the Language on Israel, and MAGA's Internal Split
Glenn Diesen: I also get the impression that one of the benefits for the Americans here is that they're buying some time to get some oil back to the markets. Indeed, when Trump was asked about this memorandum of understanding, he was making reference to them only having four weeks of oil left — so it had to be done. But that's not the same as suggesting you will implement it. For me, this reads as buying time. But it will still have significant impact. The language now being used about Israel — do you dismiss this as theater? Because even if it is theater, this is quite powerful language. It will certainly reshape some of the discourse and politics of both Israel and the United States.
Yanis Varoufakis: Theater should not be underestimated. Theater has been very important in human affairs right from the beginning, from 5,000 years ago. That particular theatrical act — the language that JD Vance used — was essentially a declaration that his side of the MAGA movement is gaining the upper hand. Remember, there are two factions in the MAGA movement: the one dominated by Trump's own family, who are in bed with the Israelis in every way — real estate, AI, all sorts of business deals — and the other side of the MAGA movement that is very skeptical of the manner in which Israel is dictating policy to Washington DC.
JD Vance's language now, in the wake of this memorandum of understanding between Trump and the president of Iran, is a declaration that the Israeli-skeptic part of the MAGA movement is now getting the upper hand. It's an "I told you so" moment. What Vance and his faction of MAGA said to the administration — which is now being confirmed — is: if you are totally in the pocket of Netanyahu, Netanyahu is going to drive you to a dead end. And this is the dead end in which Trump found himself when he started bombarding Iran, when he started the war against Iran, and now he's trying to reverse out of it.
He had no other alternative, because the MAGA movement generally is suffering very badly. These are the blue-collar workers, Glenn, that put him in power, and they simply can't make ends meet because of the price of petrol at the gas stations in the United States. Some of his constituents benefited enormously — those who had invested in AI and those who live off the fracking oil and gas business in the Permian Basin in New Mexico and in Texas. But the vast majority of his voters, whom he needs in November in the midterms in order to stay relevant and not become a lame-duck president — their interests, their survival probability, dictated to him that he side with JD Vance against Rubio, against the CIA, and against those who are completely in cahoots with Israel, like his son-in-law. All of that is hugely significant.
The 14 Points: What Is Possible and What Is Not
Glenn Diesen: Which do you think is the most difficult of all these points to implement? Because there's a lot here. First of all, all hostilities had to be suspended, which included Lebanon — very specific mention of Lebanon, not Gaza, though that's more complicated because of the whole board of peace approved at the UN. So you have the Lebanon issue. Then you have disentangling the Israelis. Ending the US blockade on Iran might be easier. Paying $300 billion to essentially fix what America destroyed in Iran — that's difficult for a variety of reasons. Removing all sanctions and not putting new ones on. And of course the provision saying Iran can't charge a fee in the Strait of Hormuz for the first 60 days — where no fee existed in the past, so not a fee at all, but a fee going forward. What do you think is possible and what is not possible on this list?
Yanis Varoufakis: You ask me to pinpoint the one item that is least likely to be implemented, and I think any transfer of monies from the United States to Iranian bank accounts will be the difficult one, because Congress has a significant amount of control over that. The Democrats together with the neocons amongst the Republicans — the pro-Israeli Republicans — are going to block that, and it will be very hard for Trump to move in that direction of actually transferring funds. It's not even a question of the United States giving Iran its own money to begin with. The number one item on the agenda regarding dollars is granting Iran access to its own dollars that have been frozen for decades.
That will be very hard for Trump, especially given that in 2015 when Obama struck his deal with Iran — including the Europeans, who were gung-ho in favor of that deal — Donald Trump went absolutely ballistic. The one thing he was targeting was: "You are going to give them their money back. How dare you?" So I can imagine campaign advertisements being prepared by the Democrats and also Trump's Republican opponents within his own party, exposing him as a fraud and as somebody going back on his word — doing far worse at the level of commerce than what he was accusing Obama of doing vis-à-vis returning Iran's assets to Iran.
Regarding Lebanon, I think Iran scored a magnificent diplomatic victory against the United States, particularly Israel, but also the opponents of Hezbollah within the Lebanese parliament, by making it clear that the ceasefire in Lebanon, the end of hostilities, and the removal of Israel's troops from South Lebanon is part and parcel — a very significant and substantial part — of the first item of the memorandum of understanding.
Essentially, aided and abetted by Iran, Hezbollah has been given a major victory. Let's face it: the Lebanese have been bombarded and invaded by Israel since time immemorial, and Hezbollah was the creation of one of those invasions in 1982. Hezbollah didn't exist before that. It was the ruthless, murderous invasion of South Lebanon in 1982 that created Hezbollah. Iran didn't create Hezbollah — it took advantage of the emergence of a resistance movement amongst the Shia population of Lebanon, supported them, and acquired without much effort a major ally. And now that ally, which was supposed to have been wiped out by Israel a year or two years ago, is back. Not only is it back, but it is the guarantor of peace and the end of hostilities, courtesy of the Iranian intervention with the Americans. That is a major success both for Iran and Hezbollah, and that cannot be taken away by Congress.
But the money transfer to Iranian bank accounts can be stopped. The question is whether the Iranian government is going to throw a fit when the money is delayed and doesn't arrive, or whether they are realistic enough to know that it was a symbolic victory — that the commitment to transfer their own funds back to Iran was in the memorandum of understanding, which gave them a lot of legitimacy in the region and within Iran — and therefore be very reluctant to blow up this agreement with Washington DC.
The Gulf States: Relief Tinged with Existential Dread
Glenn Diesen: I think that's a good point, because the American approach will be to string the Iranians along — "we can't release these funds because of Congress" — but if Iran gets something out of this, for example the US begins to distance itself from Israel or push it to cease some of its hostilities, what would be the interest of Iran in throwing everything away as opposed to holding on to what little it gets, and then possibly over time the Americans would incrementally cut a little bit more and more? At least this is what they've usually done in the past.
But for the region — you mentioned the Gulf States before. The US relationship with the Gulf States is quite important: it's a key region for transport, energy, and it upholds the petrodollar system. How do you see US relations with the Gulf States being impacted by this? Because even if the memorandum doesn't result in a deal and isn't implemented, surely this signifies a new position for the US in the world. If you're sitting in the Gulf States, would you put all your eggs in the American basket if they're no longer the winning horse?
Yanis Varoufakis: For the Gulf States, this Versailles deal is a relief tinged with existential dread and fear. They were caught in the crossfire of a war they did not want. In that context, they realized that having put all their eggs in the US security umbrella basket and allowing their territory to be used by the United States was a strategic error. It's clear they understand that now.
This memorandum actually does not resolve their predicament. It merely highlights the permanence of their troubles and woes. The Revolutionary Guards of Iran remain emboldened. They are capable of threatening the Strait of Hormuz — of closing it down at any point in time. Now they have effectively been enabled to charge fees. They would not call them fees already. Information I had last night is that about 30 vessels crossed the Strait of Hormuz and they have been charged an insurance cost — it's called an insurance cost by the Iranians — and that is within the confines of this memorandum of understanding.
So the Gulf States can see that this is now permanent. The use of missiles and drones that are very cheap to produce — they can be produced by Iran in huge numbers — can only be shot down by American or Israeli weaponry that is firstly extremely expensive, costing 100 times more per pound of flesh than the Iranian attacking drones and missiles, and cannot be produced and supplied in similar numbers. I have no doubt all six Gulf Council states will take this very seriously.
However, we shouldn't lump these Gulf States all together. There are very significant differences in their outlook. Qatar and Oman lean towards de-escalation with Iran — they've always tried to accommodate the Islamic Republic. Then you have the United Arab Emirates, which has a confrontational stance against Iran and is gung-ho about its complicity with Israel, its alliance with Israel. They are left hanging to a very large extent.
Saudi Arabia, which is of course the most significant state within the Gulf, has been on a different path since 2019. I remember when Iran, with its Houthi allies, launched a massive attack on petroleum facilities in Saudi Arabia. Since then, Saudi Arabia realized they need to find some kind of accommodation with Iran, and using China as a go-between, they established a détente with Iran — something very different to the stance of Abu Dhabi and Dubai, the United Arab Emirates.
We already see that the commitment of the Saudis to purchasing American weaponry has waned in the last few weeks. There are pacts being signed and negotiated with France and with Canada. It seems to me that these Gulf States are seeking alternative sources of weaponry from the United States.
Though the United States will remain central to the Gulf States' political economy — because these countries are essentially hooked up to the petrodollar system, which is an essential part of the mechanism that reproduces American hegemony around the world — what I mean by that is that since the early 1970s, ever since the Bretton Woods system was blown up by Richard Nixon, the United States' dominance has been based on its capacity to expand its twin deficits — its trade deficit on the one hand and its federal budget deficit on the other — by making other people's capitalists pay for them. The Gulf States are essential in recycling their own surpluses into the United States, therefore covering and paying for the twin deficit of the United States. The Gulf States are effectively vassals of the United States in that sense.
This is why they thought it was a no-brainer that, in the same way they are part of a dollar empire — making a lot of money out of that dollar empire while being vassals within it — what was wrong with also becoming vassals within an extended NATO, that is, the United States military presence in the region offering them security?
Well, what Iran has done now — with the closure of the Strait of Hormuz and the demonstration of its capacity, under intense and murderous bombardment from the United States and from Israel, to keep attacking Dubai, Abu Dhabi, Kuwait, and Bahrain, doing so surgically, going for American assets, going for data centers — remember, Anthropic was hit quite badly in Bahrain and Saudi Arabia. They launched 3,000 missiles and drones only against Dubai, and they did this while being under attack — something that no one else has ever managed to do. Even the Vietnamese during the Vietnam War did not have the capacity to retaliate while being bombarded by B-52s.
Now, with this agreement that has been signed in Versailles and in Tehran, what can these Gulf States make of it? The only conclusion they could draw is that it was a huge mistake to rely on the American defense umbrella. Their business model has been substantially undermined — and the business model is not just fossil fuels. It is the process of decoupling from fossil fuels. Dubai gets about 30% of its GDP from tourism, and that's gone. They now realize that Tehran can press a button and kill it off.
My view is that there's going to be a split. The United Arab Emirates will stick much closer to the United States and Israel, but Oman, Qatar, and Bahrain will join Saudi Arabia in a search — using Beijing, using China — for a rapprochement with Iran.
The Petrodollar System and Scott Bessent's Swap Lines
Glenn Diesen: I think many of them were already moving a little bit in this direction. The Saudis don't want to be a vassal — many there saw the rise of China and this new international distribution of power as allowing them to have a more balanced foreign policy, linking up with more large powers so they wouldn't be beholden to anyone. But these Gulf States do have the important role in what you call the dollar empire, which is a very proper term for it. What are the wider implications here? All of these petrodollars are being pumped into AI, which is important in the rivalry with China. Can the United States afford to see the Gulf States essentially turn away? One shouldn't assume the whole thing will fall apart overnight just because of this, but this is quite a significant event.
Yanis Varoufakis: It is indeed. I've been saying now for a few weeks that the alarms regarding the fear in Washington DC that their dollar empire is being threatened by the war that the Trump administration so idiotically embarked upon — those alarm bells started ringing at least in my head when Scott Bessent, the US Treasury Secretary, out of the blue announced that he's granting a swap line through his Treasury to the Gulf States.
That would have made absolutely no sense if you didn't understand how dollar hegemony is based on recycling other people's dollars. The reason it wouldn't make any sense is because Scott Bessent, the American Treasurer, is far more impecunious than the Gulf States are. He's got less access to dollars than these states do. Between themselves, these states have something like six and a half to seven trillion American dollars of assets, cash, and so on. Why do they need a swap line of 20 to 40 billion? They really don't need it.
So why is he offering it? My interpretation, Glenn, is that he was not offering a bailout to the Gulf States to tide them over during their hour of need when their revenues are drying up due to the closure of the Strait of Hormuz or the closure of airports and hotels. No — Scott Bessent was signaling to the American money markets that he is there, ready and willing to prop up the dollar empire.
I'll conclude this point by saying that if you look at the agreements the Trump administration had with the Gulf States over the last year and a half, ever since Trump was inaugurated for the second time, the agreements were for at least three and a half trillion dollars to flow from the Gulf States to the United States — at least two trillion for investments into AI in the United States and another 1.7 trillion of weapons to be purchased, particularly by Saudi Arabia but also the UAE and other Gulf countries, from the United States. That money was supposed to have been transferred within 18 months. We're talking about 3.5 to 3.7 trillion dollars that are essential to keep the American money markets going and to keep the AI bubble from bursting.
The moment the war started in Iran, the moment the bombs started raining down upon the people of Iran and Iran began retaliating, that money dried up. There was no way the Gulf States would send 3.7 trillion to the United States when their own revenues had dried up. It's not that they lacked the dollars — as I said, they have six and a half to seven trillion — so they didn't need a bailout. They didn't need a swap line from Scott Bessent.
So Bessent's statement regarding the issuing of a swap line to the Gulf States was all about not bailing out the Gulf States, who didn't need it. It was a declaration to the money markets — both bond holders in the United States and speculators on equities — that the Treasury was ready to pump up liquidity in the money markets in order to ameliorate for the fact that fewer petrodollars would be flowing from the Gulf States to New York City due to the war.
Europe's Irrelevance and Its Dependency
Glenn Diesen: This will have an impact not just on the US. You mentioned before that Europe showed how irrelevant it had become, and indeed it was quite absent. I thought it was a bit strange to see European leaders say they fully supported the US position in these negotiations and the memorandum even though they didn't know what was in it — a bit like the behavior of vassals. But how will Europe be affected by this war? They weren't directly participants, but are there wider ramifications?
Yanis Varoufakis: Europe is already stagnating. The cost of living crisis is getting worse as a result of what's happening. But these are all effectively collateral damage. There's more to it than that.
You heard Pete Hegseth, the Secretary for War of the United States, announcing that he's going to undertake a review of America's military commitment to Europe. Essentially, what he was saying is that the United States is going to — not formally withdraw from NATO or shut down its bases — but relocate much of its military expenditure from Germany, from Brussels, from Britain, to West Asia or more likely to the Far East.
The restrictions he's going to impose upon Europeans will be legally grounded in bilateral basing agreements. Essentially, what he's going to be saying is: unless you let us use our bases in Europe any way we want, without any of the restrictions we saw during the Gulf War — because there were some restrictions, at least theoretically, placed upon the United States on their use of European bases.
Now, personally, I don't give a damn. I would like to see all the American bases in Europe go. But our establishment in Europe is not of the same opinion. They rely — or think they rely — on the United States for the defense of Europe, but much more so they rely on the cash injections into their own economies. The area around Ramstein in Germany, for instance, is totally dependent on the presence of the American military there.
The insecurity in the mind of Europe's leaders is caused by their inability — and in many cases unwillingness — to understand that the United States and NATO have never defended Europe. They have been detrimental to the safety and security interests of the European Union and of Europe. Their salary depends on not grasping that, if you know what I mean.
Nevertheless, the fact that they were totally out of the picture during the Iran war — the only time they were mentioned was when Donald Trump berated them for being cowards and not helping him out, as if they could — in conjunction with Hegseth's review of American military commitment to Europe, is creating a great deal of consternation amongst them.
But of course it really doesn't matter from the perspective of the majority of Europeans. We are vassals to the United States. We have swapped one dependency for another. We used to be dependent on cheap Russian gas. Now we are dependent on hugely expensive fracked natural gas from the Permian Basin, from New Mexico and from Texas. We have no energy plan. We have no energy union. We have no European answer to the question: are we going to become more embedded in the petro-sphere around the world — the part of the world that increasingly depends, courtesy of Donald Trump's policies, on fossil fuels — or are we going to become electro-states, increasingly turning to solar power and renewables that produce electricity, with the concomitant replacement of the internal combustion engine by electric engines?
There is no such discussion in Europe. The absence of that discussion, together with the impotence of Europe in any of the major theaters of conflict — whether it is Ukraine, Iran, or Palestine — and the inability of our leadership to exit the Atlanticist mindset, which is simply not fit for purpose anymore, not even from a right-wing conservative perspective — if you put all these together, what you end up with is Europe's image as a chicken that has lost its head, running around bleeding without knowing what is happening to it.
The Ukraine War After Iran: Escalation or Exit?
Glenn Diesen: That picture summarizes well the state of Europe. I'm wondering though — the humiliating defeat in Iran could have some bad implications for the Europeans, because I think Trump is going to be in desperate need of a win. Much like the Venezuelan victory emboldened him to go into Iran, I feel the humiliating defeat in Iran will give him a need for another win — whether it be seizing Cuba or Greenland. If it's the latter, this could again be problematic for the Europeans. I saw Marco Rubio not that long ago make the comment that — when asked if he recognizes Greenland as part of Denmark — the answer was "well, for now," or something along those lines.
But my last question is about the other great war — one that worries me a bit more because it has the potential of escalating very quickly into potentially a nuclear war — the Ukraine war. How do you think the defeat in the Iran war will impact the Ukraine war? I see two possible paths. One is that if the Americans really want to end this war, this would free up a lot of their focus and they could try to get a win by ending that war. Alternatively, if the objective is to outsource the war to the Europeans and have them essentially bleed themselves white in order to weaken Russia, it could also escalate there. How do you see the situation?
Yanis Varoufakis: I'm not in the prediction game, but what I can comment on is that the second option you mentioned — subcontracting the Ukraine war to the Europeans — is something they have already done to a degree. But the Americans can't fully subcontract the war because the Europeans have no intelligence capacities. They can't provide the Ukrainian army with satellite data, with briefings from the CIA. They just can't do that. All they can do is buy American weapons and send them to Ukraine, which they have been doing. So I don't think the Americans can subcontract the war to the Europeans even if they want to, because the Europeans cannot carry that burden. They don't have the capacity and they don't have the money.
Remember, they borrowed a bunch of billions from the markets recently — about 90 billion, I think. That money has already run out. I don't think they have the capacity to borrow more. If you look at the European Union budget, it just can't afford it. They are haggling as we speak in Brussels over the next seven-year EU budget and they can't make ends meet, because now the chickens are coming home to roost. The Next Generation EU recovery fund of about 700 to 800 billion that was borrowed in order to divvy up amongst the oligarchs over the last two or three years — well, that money now has to be repaid. The Europeans will have to find that money every year to repay the loans they took out for the recovery fund, while at the same time — are they going to borrow more on behalf of Ukraine?
The fantasy that Russia is going to be made to pay reparations surely must have dissipated even in the minds of such irrational people as European leaders. They can't be that irrational to think they're going to make Putin pay. So I don't believe this war can continue for long with the Europeans running it.
The Americans will continue to run it as they are doing, but not so much pay for it. My suspicion — and this is not a prediction, Glenn, it's a suspicion — is that at some point, once he is finished with Iran, if he's finished with Iran, and in order to save some face — remember what he was saying before he was inaugurated, that he can end the war in Ukraine in 24 hours, in one day — at some point he's going to put on the table a peace deal between Russia and Ukraine and say to the Europeans and to the Ukrainians: take it or leave it. And if you leave it, I'm leaving the whole thing. I'm going to switch off the briefings. I'm going to switch off the data being shared with Ukraine. That's my hunch, but it's no more than a hunch.
Glenn Diesen: Well, he could have done that a year and a half ago and he didn't. But again, in the words of Trump — if the Europeans want to buy American weapons to fight Russia, then America is okay with it. I thought this was an honest approach, at least: the US makes some money, their allies become more dependent, and they carry the economic burden to weaken an American adversary. Not from a moral perspective, but otherwise it makes sense if the goal is to restore the empire.
Yanis Varoufakis: Except that the Europeans can't afford any more American weaponry on behalf of Ukraine. They've run out of money. They are running out of money very, very fast.
Why France and Germany Won't End the Ukraine War
Glenn Diesen: So this split — the report now in Politico is that the EU is apparently deeply divided because many countries would like to open diplomacy with the Russians, but essentially the French and Germans are saying no. And even if there are any talks, it shouldn't be led by the EU itself but by the E3 — that is, France, Germany, and Britain, who happen to have the three most unpopular leaders in Europe. Why don't they want to put an end to this? They just saw this humiliating defeat in Iran. They can see, I hope, where this is going in Ukraine. Why still go on?
Yanis Varoufakis: Two reasons, in my estimation. Firstly, France and Germany don't have a growth model. In 2019, remember, the Green Deal was supposed to be Europe's engine of growth — Ursula von der Leyen, supported by Germany and by France, was going to spend one trillion on the Green Deal. Of that one trillion, 29 billion were spent. That went out of the window. It died with the demise of the German Greens from the German parliament and the rise of the right. The Green Deal died.
So the only growth game left to Germany and France is weaponry. The Ukrainian war is essential for convincing — given their fiscal stress and given the fact that neither Germany nor France have powerful governments — I mean, Friedrich Merz, the German Chancellor, can't even command respect within his own cabinet, let alone the rest of the country. Emmanuel Macron is a lame-duck president. They don't have political power within their countries, and the only thing they can do in order to maintain a semblance of investment, of money flowing into businesses especially manufacturing, is weaponry — Rafale planes, Rheinmetall tanks, missiles, and ammunition. But for that they need to convince a very skeptical public that resources that are very scarce — and often have to be shifted from social spending, from health and education and infrastructure — to Rheinmetall, to weapons manufacturing, is essential because we have a war in our backyard. So they need that war to continue. They need Russians and Ukrainians to be dying. They need energy prices to go sky-high in order to maintain what is a really pathetic growth model. That's one reason.
The second reason is: imagine that Merz and Macron had an epiphany. They got together and said, "We'll have to end this awful war in Ukraine," and they put forward a peace plan to be taken to Moscow. What would happen? I think the Baltic states would veto it immediately. So would Finland, because this Finnish regime has gone completely awry — they've become warmongers galore. Similarly, maybe Poland, maybe Tusk would veto it too. These countries, especially the Baltic states, would veto it for only one reason: these governments have learned over the last 20 years or so that the way to punch above their weight in the European Union is by maintaining tension between NATO and Russia.
Macron — and I happen to know him personally, I don't know Merz personally — he's smart enough, he's a smart tactician, to know that whatever proposal for a peace deal with Putin he puts on the table, he's going to be humiliated by the Baltic states and Finland and maybe others — Poland, maybe Sweden — who will say no, go away. And then what is he going to have? Yet another proposal of his being shot down in flames.
Glenn Diesen: You would think that at least the Germans would have had some poor historical lessons with this military Keynesianism as a growth model. I would have thought there would be more opposition.
Yanis Varoufakis: Do you have any evidence that the German establishment learns from history? Because I haven't seen any.
Glenn Diesen: Fair enough. I stand corrected there. Anyways, thank you very much for taking the time on a Saturday to speak. Have a great weekend.
Yanis Varoufakis: Thank you very much, Glenn.