During an interview with ZDF, Mr Varoufakis was asked whether the German chancellor has made a U-turn when it came to the financial policies of the EU in dealing with the coronavirus crisis. Mr Varoufakis was the Greek finance minister and had repeated run-ins with the Brussels bloc.
He said: “Only the governments of the south made a U-turn.
“At first, they called for eurobonds, as is their job, not only for the benefit of the south, but ultimately also for the benefit of the north.
“Ms Merkel replied with her famous ‘no’. And they immediately began to sing praises for the alternative she offered them.
“But these are not eurobonds, it is not a debt rescheduling or a community of debts.”
Angela Merkel and Yanis Varoufakis (Image: Getty)
Yanis Varoufakis warns Angela Merkel’s plan will be destructive for the EU (Image: Getty)
The idea of eurobonds was first raised in 2011 during the European sovereign debt crisis and once again this year as a response to the COVID-19 pandemic.
Concerns were raised that these eurobonds would help indebted states access cheaper credit thanks to other eurozone communities.
However, the plan to introduce them never moved forward due to opposition from Germany and The Netherlands.
But according to reports, Ms Merkel’s alternative deal has increased concerns that eurobonds will be introduced through the backdoor.
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Yanis Varoufakis had repeated run-ins with the Brussels bloc when he was Greece’s finance minister (Image: Getty)
Mr Varoufakis ultimately denied the introduction of eurobonds but warned Ms Merkel’s plan could be “extremely negative and destructive for the EU”.
He said: “I think that those who accuse Ms Merkel of doing this are wrong.
“She buried the eurobonds and closed the coffin lid.
“Countries like Italy, Spain or Greece will now be forced to borrow either on the markets or with the European Stability Mechanism (ESM).
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EU’s budget factions mapped (Image: Express)
“Which means that they add to the national debt.
“Therefore, Ms Merkel has remained absolutely true to herself, but in a way that is extremely negative and destructive for the EU.
“A communalisation of debts would have been essential to save the eurozone in the long term as an area of shared prosperity.”
Since the outbreak of COVID-19, EU countries have argued whether aid should be paid out in grants or loans.
German chancellor Angela Merkel (Image: Getty)
But Mr Varoufakis referred to the economy crash in Greece and said while the “structural funds” helped his country, they were “insignificant” compared to the austerity the troika imposed.
He said: “The plan does not include a debt transfer, but this dispute is important.
“The larger the portion that is given as a loan, the less important the whole package becomes.
“This package is not nothing, but it is significant compared to the wave of recessions we are facing.
Greece’s Prime Minister Kyriakos Mitsotakis (Image: Getty)
“To put it simply; we have had experience with structural funds in Greece since 2010. They helped.
“They were not without importance.
“But they were insignificant compared to the austerity that the troika imposed on us.
“The whole EU will face this in the coming years.”
Mr Varoufakis went on to say how the euro is “not viable” and, although it can be “kept alive artificially” it will eventually weaken Europe.
Additional reporting by Monika Pallenberg