Varoufakis removed from the government negotiating team

(New York Times) Ever since the leftist-led Greek government came to power in late January, the avatar of the country’s austerity-weary public has been its outspoken, motorcycle-riding renegade finance minister, Yanis Varoufakis.

On Monday, seeming to acknowledge that the rest of the eurozone has grown weary with the Varoufakis approach to debt negotiation, the Athens government announced a shake-up of the team trying to work out a plan with international creditors before the country runs out of money.

Prime Minister Alexis Tsipras took pains to say that Mr. Varoufakis would remain the team’s leader. But the day-to-day discussions will be “coordinated” by Euclid Tsakalotos, a deputy foreign minister and an Oxford-educated economist whose soft-spoken style contrasts sharply with that of Mr. Varoufakis.

Giorgos Houliarakis, who has been involved in negotiations, is to lead in talks at the technical level. He and Mr. Tsakalotos are both closer to Mr. Tsipras than is Mr. Varoufakis.

The shake-up came three days after Mr. Varoufakis drew fierce criticism from his eurozone peers at a meeting in Riga, Latvia. The other finance ministers voiced frustration over a lack of progress in talks to continue extending loan money that Greece desperately needs to avoid a default that could otherwise happen as soon as July. Part of their concern is that a default by Greece could force the country from the euro currency union, threatening the ability of the bloc to hold itself together.

Most European officials have said that they want to avoid such a prospect, despite having built firewalls against financial contagion since the last major Greek crisis in 2012. But some indicated after the Riga meeting that a “Plan B” for Greece should be considered in case talks collapse.

Although Mr. Tsipras’s office on Monday expressed support for Mr. Varoufakis, saying he had been “systematically targeted in the international press,” some Greek news media interpreted the move as a way of sidelining the finance minister.

Opponents of the government led by Mr. Tsipras’s party, Syriza, have publicly criticized Mr. Varoufakis for weeks. On Monday, a prominent conservative and former foreign minister, Dora Bakoyannis, called for Mr. Varoufakis to resign, saying he was a “drag” on the debt negotiations and was undermining Greek national interests.

It worth noting that calls for the resignation of a Greek minister have not been very common in Greek politics, even though political life in Greece is no stranger to scandals and accusations of financial impropriety and corruption; actual resignations in the national interest are rare.

Mr. Varoufakis was named finance minister in January largely on his international reputation as an economist who had long led a public campaign against the belt-tightening terms of the international bailout program agreed to by a previous government. After giving Mr. Varoufakis such a prominent stage, Mr. Tsipras might find it politically awkward to force him out. That could be a reason for saying Mr. Varoufakis will lead the negotiations, even as less polarizing figures are put in charge of the day-to-day discussions.

A European Union official with direct knowledge of the lenders’ talks with Greece hailed the change as a sign that negotiators could start bypassing Mr. Varoufakis.

The shake-up is a “necessary step,” said the official, who spoke on the condition of anonymity. “I think it’s easier doing business with Tsipras and his people,” the official said.

Another European Union official, with direct knowledge of what Greece’s international lenders are seeking from the government in Athens, said of the change announced on Monday, “It is a welcome development, which also reflects a more direct involvement of the prime minister in the process.”

But the official, who also spoke on the condition of anonymity, also warned that “there remains a long way to go to bridge the gaps on the substance” and that “time is very short.”

It was unclear what the changes would mean in practical terms, and whether they would improve efforts to reach a deal between Greece and its creditors before European finance ministers meet again next month. That meeting is scheduled for May 11, a day before Greece must pay 750 million euros, or about $815 million, to the International Monetary Fund as part of its loan agreements. A Finance Ministry official said Mr. Varoufakis would still represent Greece at eurozone meetings, with Mr. Tsakalotos “coordinating policy work in Athens.”

Mr. Varoufakis, after being heavily criticized at the stormy meeting with his eurozone counterparts last Friday, responded defiantly on his Twitter account the next day, quoting President Franklin Delano Roosevelt: “They are unanimous in their hate for me; and I welcome their hatred.”

Even though, without a doubt, the removal of Varoufakis from the negotiations was the result of political interference, his replacement, Mr Tsakalotos is not likely to be a ‘yes man’ either. Mr Tsakalotos is also an economics professor and a self proclaimed ‘traditional’ Marxist, who is unlikely to ‘forget it’, but who is nevertheless untested in European political negotiations and could also be accused by his European colleagues  to be an ‘academic and an amateur’ politician.

Today, political analysts are wondering if prime minister Tsipras decided to replace Varoufakis following his telephone discussions with the German chancellor and the the chairman of the eurogroup, and if the departure of Varoufakis from the negotiating team was part of a wider deal.

Maybe Mrs Merkel agreed to also remove the abrasive and intransigent Mr Shaeuble, who is past retirement age, from the negotiating team too?


Photo: Alkis Konstantinidis/Reuters – Yanis Varoufakis, the Greek finance minister, front, with Euclid Tsakalotos, no helmet, a deputy foreign minister who will take over the day-to-day discussions about Greece’s debt and bailout financing.