On a razor’s edge

On a razor’s edge

There is no doubt that the Greek finance minister, Yanis Varoufakis, has now become an international celebrity. Since his first appearance at the finance ministers’ meeting of the eurozone, immediately after the radical leftist Syriza won the Jan. 25 general elections, he managed to grab the media’s attention both for the right and wrong reasons. He is seen either as a highly qualified theoretician of economic theories who thinks that the eurozone “will inevitably die if it does not change,” or as an arrogant finance minister who challenges the very core of policies that shaped the theoretical foundation of the eurozone, or as a recently elected politician who was given the hottest job in the new government of an almost bankrupt country. Or – worse – as a narcissistic, self-promoting, self-projecting academic theoretician, writer and blogger who landed awkwardly in the real politics of Brussels and, obviously, managed to get everybody to turn against him at the expense of his country’s interests. 

So it was not a surprise that the rumors of his imminent resignation spread rapidly last week as Greece is struggling to get a final agreement with its creditors while its reserves are about to dry out. Was the rumor true? Was he made the sacrificial lamb after the huge reaction and disfavor he received during the last meeting of his eurozone colleagues in Riga? The rumor was immediately denied by the government and by himself, who reminded everybody that he “remains in charge of the Finance Ministry and its policies.” 

The truth may somewhere in the middle. Varoufakis offered his resignation to the Greek prime minister, but Alexis Tsipras refused to accept it. Tsipras, while maintaining now a warmer relationship with the strongest leader of the eurozone, Angela Merkel, decided to change the make-up of the Greek negotiating team and put Varoufakis’ deputy in charge. Euklid Tsakalotos is another Oxford University-educated professor of economics who was seen by the international media as a “the polar opposite” of Varoufakis, i.e., “low-key, methodical and tenacious.” 

In spite of the change in tone on the part of the Greek negotiating team, the talks with Greece’s creditors have remained stalled so far. The 7.2 billion euros ($7.8 billion) in bailout money that Greece should have received is not being released as the creditors (EU-IMF) need more drastic reforms in the economy. These reforms which extend from mass layoffs of civil servants to further cuts in salaries and pensions are in direct breach of Syriza’s “red lines” for which the party was voted into government. And it is also the “red lines” of many Syriza party members who see any breach of their electoral promises as a good enough reason to ask for a further public mandate through elections or a referendum. 

In his numerous articles and interviews over the past few years, Varoufakis has always claimed that the structure of the eurozone gave Greece an opportunity to ask for help as an equal partner from the existing EU institutions, instead of a bailout agreement. 

Speaking on TV yesterday, one of the deputies of Syriza was very open. “If our European partners do not step back from their demands for reforms, we are going to have a ‘credit event,’” he said.
Tsipras is at a very delicate point. After replacing the irritating Varoufakis with the mild Tsakalotos, he has to find the money, convince Europe of his political credibility and placate his party. And most of all, he has to ask Greek people to trust him.