Mitterrand Warned Delors In 1993 That Eurozone Collapse Lay Ahead – Claims New Book




The deep impact of the Global Crash of 2008 that unravelled the Eurozone  was exacerbated by inadequate responses from European leaders. Their dismal failure to resolve the Eurozone crisis has prompted a rise of the European Right says a new book by a Greek economist.

New book  edition asks What future for the global economy?

New book edition asks What future for the global economy?

The European Union, writes Prof Yanis Varoufakis, has a long tradition of treating democracy as a luxury and a nuisance but since 2010 its fiscal waterboarding of one proud European nation after another — turning each against the other — has helped empower the “worst, most misanthropic political movements from France to Greece and from Denmark to Hungary”.

A French edition of Prof Varoufakis’  “Global Minotaur”, an analysis of why the seven year long  Global Financial Crisis (GFC) has left Europe in such a mess, will shortly be  released in Paris . Below is the preface to the book showing how EU politicians continue to fiddle while Europe burns.

Preface to the Le Minotaure Planétaire by Prof Yanis Varoufakis

The Global Minotaur: America, Europe and the future of the world economy is about to be published in French, as Le Minotaure Planétaire, by newly established, progressive publishing house LES ÉDITIONS DU CERCLE. Read on for a draft of the Preface I composed for this French edition (which is now added to the German, Spanish, Italian, Czech, Finnish and Greek editions)…

France remains, as it has been for centuries, Europe’s frontline. The vista upon which Europe’s greatest ideas, brightest hopes and worst nightmares clash for dominance.

It is a frontline that, alas, begins increasingly to resemble the Maginot Line more so than the trenches of Verdun. The invading crisis is overrunning one defensive line after the other, yet the elites in charge seem clueless as to the nature and ways of the ‘enemy’. Even worse, their incomprehension leaves them unashamed.

The result is Paris’ pointless tussle with Brussels and Berlin over a fraction of a percentage point of the French government deficit. So, while the hideous prospect of a postmodern Vichy is on the cards, French officials are fighting over minutiae that are utterly irrelevant to the real causes of, and useless in stopping, the deconstruction of everything that made France, and Europe, the cradle of Enlightenment. Every time France’s Prime Minister, or her Finance Minister, demands that the European Commission treat France “with the respect it deserves”, respect and democracy are devalued one notch. And not just in France.

This book is about the deeper causes of France’s travails and of the Eurozone’s never-ending crisis, just as it is about

  • the reasons behind America’s inability to find its footing after the disastrous 2008
  • Germany’s rising poverty levels and burgeoning recalcitrance
  • Japan’s lost decades
  • Greece’s Great Depression
  • China’s fears of a ‘hard landing’
  • Latin America’s diminishing prospects.

Put simply, this book is about our planet’s systemic post-2008 economic, political and social crisis, which our leaders have systematically treated piecemeal.

Why is Europe in deconstruction mode?

In the last couple of years (according to the EU’s Eurobarometer surveys) Europeans have turned against our common institutions, declaring in no uncertain terms a pronounced lack of confidence in them. Who can blame them?

Before the Euro Crisis commenced, our leaders treated electorates with contempt. When, for example, French voters rejected the European Constitution in a 2005 referendum, Brussels and Paris pushed through anyway a slightly amended copy of that piece of legislation. When the Irish rejected EU proposals in a similar referendum, they were told that they would have to vote again and again, until they delivered the ‘right’ answer. Today, against the will of a crushing majority across Europe, Brussels is pushing for a free trade agreement with the United States (the Transatlantic Trade and Investment Partnership) which has nothing to do with trade and everything to do with imposing the multinational corporations’ will upon Europeans’ concerns over the environment, standards, labour protection and intellectual property rights.

The European Union has, as the above examples testify to, a long tradition of treating democracy as a luxury and a nuisance. However, it took the Euro Crisis to send Europe’s democratic deficit to the stratosphere. Since 2010, Europe’s institutions have been fiscally waterboarding one proud European nation after another, turning them against each other, and empowering the worst, most misanthropic political movements from France to Greece and from Denmark to Hungary.

Why have Europe’s veritable institutions (e.g. the European Commission, the European Council, the European Central Bank) created the conditions for their own de-legitimisation? The answer is that our institutions, especially those of the Eurozone, were never designed to sustain the shockwaves of a global earthquake as colossal as that of 2008. And they were not designed to do so because our leaders, and our so-called elites, mistakenly believed that the so-called Great Moderation of the 1980s and 1990s was here to stay. They mistook, as the Bourbons had done, a temporary equilibrium for permanence. And they built the Eurozone upon this shaky foundation.

François Mitterrand, President of France, in 1984  (Credit James Cavalier, USM Wikipedia)

François Mitterrand, President of France, in 1984 (Credit James Cavalier, USM Wikipedia)

This book tells the story behind that ‘temporary equilibrium’ which France’s elites took, catastrophically, for granted since the mid-1980s, at the time when Jacques Delors, under the guidance of President Francois Mitterrand, and in collaboration with Chancellor Helmut Kohl, began the process of monetary union. The following pages,

  • narrate the manner in which the semblance of ‘Great Moderation’, which was the backdrop against which the euro emerged, hid underneath it highly immoderate, and ludicrously imbalanced, capital and trade flows
  • explain, in a language that borrows from the tradition of Ancient Greek mythology, the circumstances under which Europe removed crucial shock absorbers from its midst and, at the same time, ensured that the shock, when it came, would be gigantic.
  • illustrate Europe’s inane responses to the inevitable crisis’ early warnings, beginning with the Greek, Portuguese, Irish and Spanish so-called bailouts, which in turn created the circumstances for spreading to Italy and to France the contagion they were meant to… prevent.

The Global Minotaur

The book’s primary argument is that the Crash of 2008, that led to the unravelling of the Eurozone and to France’s current predicament, was enormous because three decades of supposed tranquillity and moderation were a façade under which increasingly imbalanced capital and trade flows raged. So, when this pent up imbalance was unleashed, following Wall Street’s collapse, the shock was tremendous and its worst victim was the Eurozone; an edifice that (unlike the United States, Britain, Japan etc.) was built on the assumption that such shocks would never eventuate.

In more mythical terms, this book argues that the cause of our post-2008 planetary crisis, and its many manifestations around the globe, was the mortal wounding of an almighty, albeit allegorical, beast which I have named the Global Minotaur. This metaphorical creature was born in the mid 1970s. Soon, it started creating an appearance of global calm that allowed France’s (and the rest of Europe’s) elites to imagine that it was safe to embark upon a monetary union with Germany (and other surplus nations) that would be the first step toward some future political union.

Like a splendid riverboat launched on a sea of financial tranquillity, the Eurozone began its majestic journey dazzling everyone with its splendour. But when our Minotaur was mortally wounded in 2008, the victim of its own handmaidens in Wall Street and in Europe’s financial markets, suddenly the waters turned stormy and our riverboat began to list. Instead of admitting that it was badly designed, its officers and crew, many of them French, got engaged in vitriolic debates on how to re-arrange the deckchairs. As long as that denial prevails, there is little chance that equilibrium will be restored. Until it does, the only winners will be the racists, the misanthropes and assorted vulture hedge funds that know when to ‘short’ stressed financial assets.

The Global Minotaur, a book  explaining why the Eurozone remains in turmoil, is to be released in French.

The Global Minotaur, a book explaining why the Eurozone remains in turmoil, is to be released in French.

From ancient metaphor to contemporary crisis

The Global Minotaur is my metaphor for America’s two deficits (its trade and budget deficit) that, from the late 1970s to 2008, were playing a crucial role in stabilising the global economy. These two deficits, whose emergence had killed off the post-war Bretton Woods system (that operated like a global currency system from the late 1940s to 1971), operated like a huge vacuum cleaner that sucked into the United States the net exports of Europe, Japan and later China.

And how were these deficits paid for? By the same vacuum cleaner that sucked into Wall Street the world’s excess, or surplus, capital – thus completing (what this book refers to) the global recycling of surpluses: surplus money from the rest of the world rushing into Wall Street to pay for the surplus products of the rest of the world that the American economy was consuming with gusto. In this sense, the book could have been called “The Global Vacuum Cleaner”. The reader will excuse my decision to opt for a more mythological metaphor, one borrowed from my Cretan background.

I wrote The Global Minotaur for a simple reason: to appeal to readers searching for a dispassionate explanation of what happened in 2008 and beyond. Of why the ‘certainties’ that our ‘elites’ had been led uncritically to adopt buckled under reality’s relentless pressure. TheGlobal Minotaur points no moralising fingers. It does not even blame the bankers for what happened. Indeed, it blames no one in particular but seeks to explain ‘events’ (including the rise of insufferable greed amongst the financiers) in terms of:

  • a history of world capitalism that begins at the ‘beginning’, in the 17th and 18th centuries
  • an explanation of the simultaneous rise of the networked corporation and early financialisation in the first part of the 20thcentury
  • an account of the post-1929 Great Depression
  • a history of how the United States forged the Global Plan that was capitalism’s Golden Age (1940s to 1971)
  • the weird, wonderful and toxic second post-war phase (1971-2008) which the book labels as The Global Minotaur Phase
  • the origins of the Crash of 2008 in precisely this second post-war phase
  • the reasons why this long post-2008 crisis is still with us, infecting Europe with the virus of disintegration, deconstruction, fragmentation and discord.

Delors, Mitterrand, Kohl and their successors

In 1993, as his efforts to lay down the foundations of the Eurozone were coming to fruition, Jacques Delors had a hunch: Europe’s monetary union required more than a Bundesbank-like Central Bank and the Maastricht rules. To stave off shocks, and to be able to recover once shocks did hit, Delors correctly concluded that a common Eurozone-wide project bond should be created. To this purpose, in a White Paper tabled in December 1993, he recommended that these, effectively, eurobonds be introduced as essential cogs in the Eurozone’s machinery and, additionally, that a European Investment Fund be instituted.

To give his recommendation political impetus and macroeconomic significance, Delors tried to convince President Mitterrand that these eurobonds should do for the Eurozone what Union Bonds had accomplished for Franklin Roosevelt’s New Deal, where they had funded an impressive investment-led recovery program, keeping the United States’ federal budget deficit low from 1933 until the beginning of the Second World War.

Mitterrand listened carefully but replied: “Jacques, you are quite right. The European monetary union needs these instruments. But, we are not going to do it. Helmut (Kohl) and I do not have the political clout to do this. We have power to bind together our countries monetarily – to forge a common currency. But we do not have the power to create common debt. Let me say this, however: When in 10 or 15 years time a big financial crisis hits Europe, our successors will have a choice: Either to implement your idea. Or to let the European monetary union collapse.”[1]

Mitterrand was proven right on both counts: A major global crisis did come fifteen years later, in 2008, and, moreover, Europe’s leaders were faced with the dilemma between consolidation (along the lines of Delors’ Union Bond proposals) and fragmentation. Where he, and Chancellor Kohl, proven wrong was in their (unspoken) belief that their successors would choose consolidation. To this day, they are sleep-walking straight into the arms of fragmentation…

This book throws light not only on the causes of the crisis that President Mitterrand had presciently predicted but, also, on the reasons why his successors resemble rabbits caught in the oncoming truck’s headlights.

On a personal note

This French edition of The Global Minotaur is more important to me than the reader may think. I grew up with my father’s tales of his own French upbringing, by a French educated mother intent on raising him on a diet of Voltaire, Rousseau and Mirabeau. As a boy growing up under the US-backed Greek dictatorship of the 1960s, France was synonymous not only with the triptych of its Enlightenment but also with a principled, Gaullist, opposition to the polarisation of the Cold War. So it was that, despite my antipathy toward the Brussels’ technocracy and Jean Monnet’s appallingly anti-democratic concept of a ‘Europe of States’, I always felt that, as long as France was in the European Union’s core, Europe had a chance to develop into a locus of shared prosperity and inclusive democracy for all Europeans. Alas, the crisis of the Eurozone has put paid to this dream. Starting from my home country, Greece, this destructive process has spread like a bushfire, transmitting its frightful effects all the way to France. Europe is being poisoned by this malaise and France seems unable to oppose it. If this book, my Global Minotaur, goes some way to explaining to a French readership the reasons, I shall be pleased.

Yanis Varoufakis
11th November 2014

[1] These words are not verbatim. But I have it on good authority, by a colleague who was privy to the conversation, that this was the gist of what President Mitterrand said.

Republished with acknowledgements and thanks to Prof Yanis Varoufakis and his blog Thoughts for the post-2008 world.



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