Yanis Varoufakis is back. He, of course, would say he never went away, but in Greece’s hurly-burly world of politics his is a name prone to triggering toxic reaction.

Abroad, the shaven-headed economist is feted as the man who took on Europe’s establishment. At home, the former finance minister is seen, on both left and right, as a reckless incarnation of all that was wrong with Greece at the height of its struggle to remain in the eurozone. In Athens and Brussels, his confrontational style is still blamed for the price the debt-stricken country had to pay to be bailed out in the summer of 2015.

Although his resignation now seems a long time ago, the sight of Varoufakis launching his own party in Greece has unleashed emotions that have run the gamut from enthusiasm to anger and disdain. Media reaction has been cool; so, too, has that of politicians. None of which seems to bother him in the least.

“Nobody believes the systemic media in Greece, and they’re all bankrupt,” he told the Observer with typical defiance, days after announcing his new venture in a packed Athens theatre. “To those who say I cost the country, and I’ve heard €30bn, €86bn, €100bn and even €200bn… I say I cost exactly zero. The troika [of creditors] cost Greece two generations and continue to impose cost.”

Alexis Tsipras and his colleagues… have condemned Greece to debt and bondage for another 30 years

At 57, in his leather bomber jacket and boots, Varoufakis clearly relishes his anti-establishment role and believes the birth of his European Realistic Disobedience Front, AKA MeRA25, is not a moment too late. Greece, almost nine years after the eurozone crisis erupted, is still condemned to being a debtors’ colony, he says. Prime minister Alexis Tsipras, and his once radical leftwing Syriza party, not only gave up the good fight; they signed up to the draconian austerity demands of Germany in exchange for a third bailout that has only exacerbated the nation’s plight. For Varoufakis, it was a huge political – and personal – betrayal.

“I think Tsipras and his colleagues have seriously let themselves down. They are young people, and they have to walk the streets knowing that they have condemned this country to debt bondage for another 30 years,” he says. “I am probably the only one who did what they said they would do.”

Bankruptcy and Greece’s battle to keep it at bay was the force that prompted the academic to go into politics in the first place. On Monday, it was still the force that propelled him on to the stage to announce MeRA25, founded with the express purpose of not only reclaiming democracy but stopping Greece’s inexorable slide into further debt serfdom and insolvency.

In a political landscape that veers from the extreme left to the extreme right, Varoufakis believes there is room for impact. “Our target is the 1 million Greeks who don’t abstain from voting due to apathy but because they are highly politicised. It’s another unique phenomenon in this country.”

Under the party’s programme, on day one banks would be nationalised and proposals advanced to radically reduce Athens’s staggering debt load – at about €320bn or 180% of GDP, by far the highest in the EU. “I wake up, and dream at night, of debt [relief]. It’s like being a prisoner of war. You have to try to escape. Our country is a debtors’ prison.”

Part of the pan-European DiEM25, or Democracy in Europe Movement 2025, that he co-founded two years ago, this new grassroots alliance of leftwingers, progressives, feminists and greens already has a reported 7,000 members.

DiEM25, which is active in seven countries “but spreading fast,” reportedly has more than 100,000 members and the endorsement of the likes of Naomi Klein and Noam Chomsky, the radical linguist who via video link on Monday described MeRA25 as “a beacon of hope in a troubled world”.

But does Varoufakis mean trouble for Greece? After all, the new movement has set itself the not inconsiderable goal of dismantling Europe’s “toxic, class-oriented, powerless and discredited” establishment by 2025. At the height of the debt crisis, Varoufakis claimed the austerity measures Athens was being forced to apply were tantamount to “fiscal waterboarding”.

Far from being anti-EU, or in favour of the bloc’s break-up, Varoufakis insists supporters want more of it. “We are radical Europeanists, we are in the EU but against this EU,” he says. “We are not proposing exit or disbandment. We are not recoiling into the bosom of the nation state. We want to see Europe democratised, not disintegrated.”

The self-declared “erratic Marxist” has long argued that without reform, the continent is heading for trouble. Already the bloc has begun to breed monsters. The far right, xenophobia, racism are all in the ascendant. Stuck in its own Great Depression, Greece makes fertile ground for such malaise. “Europe must be saved from itself. If [Golden Dawn] hadn’t been such thugs,” he says referring to the nation’s own neo-Nazi party, “it would be 30%, not 10%, now.”

MeRA 25 has been working behind the scenes for a year now. Its plan is to contest the European elections in May 2019, although Varoufakis acknowledges Tsipras may elect to call a general election before that. After almost a decade under international surveillance, Athens will exit its third international rescue programme – the biggest sovereign bailout in global financial history – in August.

Macedonians protest against name change deal with Greece Read more

With his popularity compromised under the weight of enforcing measures he once vehemently opposed, Tsipras may opt to capitalise on the success of finally exiting the programme and economic oversight. “We have travelled the whole country and held rallies in all major towns,” says Varoufakis, adding that politicians are already expressing interest in jumping ship.

Far from being saved, Varoufakis believes Greece’s future has been put on hold. If anything, he argues, it is in for an even tougher time because Europe has elected to tackle its debt problem by taking the “extend and pretend” approach of prolonging repayment timetables and condemning the country to decades of further austerity. More pension cuts and tax hikes loom, legislated by MPs at the behest of the EU and International Monetary Fund.

Short of measures to stop the rot, Varoufakis quips that he sees Greece becoming another Kosovo, “with beautiful beaches, only it’s a protectorate emptied of its young people. Every month 15-20,000 young Greeks leave. Everywhere I go, I meet them.”

At the University of Athens, where he has returned to his old teaching post, students line up to get references for menial jobs, he says. It’s outrageous, he counters, that the government should choose to “celebrate” what it calls an almost seven-point drop in unemployment when the uglier truth is that so many people are leaving the country for wealthier climes.

Up close, Varoufakis is still all swagger and in chipper mood. But whether he can capitalise on Syriza’s losses is far from certain. At the last election – the first he contested as an MP – he won more votes than any other candidate on Syriza’s ticket. These days, Greeks have less appetite for confrontation.

Forever the maverick, Varoufakis announces that he doesn’t really mind. He always has “a book on the boil” and, anyway, he never wanted to be a minister.

“You have no idea what it is like to be on the receiving end of such toxicity,” he says, suddenly looking pained. “For me, personally, the worst thing that could happen is to go back to a parliament that is so distressing, unproductive and boring.”