Thursday 8 December 2016

All's changed, changed utterly in Syriza aftershock

Yanis Varoufakis unnerved Europe's political elite but his legacy will ultimately be some level of debt relief

Published 11/07/2015 | 02:30

Outgoing Greek Finance minister Yanis Varoufakis leaves on his motorcycle with his wife Danai after his resignation at the ministry of Finance in downtown Athens this week
Outgoing Greek Finance minister Yanis Varoufakis leaves on his motorcycle with his wife Danai after his resignation at the ministry of Finance in downtown Athens this week

It has been a long-running saga but this week edged us closer to the finale of the Greek financial crisis. The country's banks and the economy have been on life support thanks to emergency funding capped at €88.6 billion from the ECB. But missing the deadline for repayment of the IMF loan plunged the country into potential bankruptcy and exit of the eurozone, a calamitous scenario which persists if the terms of a third bailout cannot be agreed tomorrow.

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Earlier intensive negotiations with Greece's international creditors to agree structural and tax reforms were close to a deal when prime minister Tsipras made the political call that he could not sell any deal which involved more reforms and additional taxes to his electorate.

His unexpected calling of a referendum to put the bailout package directly to the people caught everyone off guard. But he needed political cover before signing up to more imposed hardship, which he could not with integrity support. By advocating a no vote, he was confident that voters would give him a mandate to hang tough in future negotiations. His novel political moves have wrong-footed the eurozone governments. The possibility of a Grexit has constantly been described as "uncharted waters"; it was unforeseen that a member could leave the eurozone. But Syriza's unorthodox negotiating style too is an unknown quantity.

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