Recycling the surplus would mean, among other things, investing in the likes of Brodosplit in order to make their quality product price-competitive, not shutting them down because they can only price their outstanding product at a saleable price with the help of public subsidies. In other words, in order to compete with China you don't make high-end producers in low-capital-plant EU member states go out of business. You improve their capital plant.

The EU is currently unable to do this kind of thing, and the only surplus recycling allowed by market worship is the purchase of dodgy bonds. In fact, in investing in capital plant in chronically underinvested countries the EU would be introducing competition into the niche of historically well invested countries producing high-end goods.

Varoufakis' idea (part 3 of his modest proposal) is to have the European Investment Bank do it funded by contributions from the surplus countries to an EU-level budget.

Economics is politics by other means