Monday 24 October 2016

'The third bailout will fail' says former Greek finance minister Yanis Varoufakis

David Kearns

Published 18/07/2015 | 11:58

Yanis Varoufakis
Yanis Varoufakis

Former Greek finance minister Yanis Varoufakis believes the economic reforms Greece has accepted "have already failed".

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The outspoken finance minister said the bailout programme hammered out by Greece and the European Union this week "would go down in history as the greatest disaster of macroeconomic management ever”.

In an interview with the BBC, Mr Varoufakis said the reforms that Greece had been asked to carry out would fail regardless of who implemented them.

Asked how long it would take, he replied: "It has failed already."

Saying his country had been given no option but to sign, the former finance minister said he understood why Prime Minister Alexis Tsipras had agreed to them.

"He doesn't believe in the bailout... [but] we were given a choice between being executed and capitulating. And he decided that capitulation was the ultimate strategy."

Mr Varoufakis resigned earlier this month, in what was widely seen as a conciliatory gesture towards the eurozone finance ministers with whom he had clashed frequently.

Meanwhile Mr Tsipras' government has sworn in new ministers after a reshuffle expelled dissidents from his cabinet ahead of a new phase of negotiations for a third bailout package.

The deal, approved with the support of opposition parties on Thursday after 39 Syriza rebels withheld their backing, agrees a painful mix of tax hikes, spending curbs and pension cuts as well as a rollback of collective bargaining agreements.

In addition, €50 billion in public assets are to be placed in a special privatisation fund to act as collateral for loans of up to 86 billion euros that must now be agreed with European partners.

Mr Tsipras sacked hardline former Energy Minister Panagiotis Lafazanis and two deputy ministers on Friday in a change that marked a split with the main leftist faction in the ruling Syriza party following the rebellion over the bailout terms.

Panos Skourletis, a close Mr Tsipras ally who left the labour ministry to take over the vital energy portfolio, said the reshuffle marked "an adjustment by the government to a new reality".

In place of the rebels, Mr Tsipras named allies of his own or his junior coalition partners, the right-wing Independent Greeks party, aiming to seal the bailout accord with European partners over the next few weeks before likely new elections.

"Our aim is to negotiate hard for the terms of the agreement, not just to seal it, but on how it will be implemented. There are many vague terms in the text," said newly-appointed Labour Minister George Katrougalos.

He said the government, elected in January on an anti-austerity platform, would fight for an agreement that was "socially just" and dismissed suggestions that it would have to take on the powerful labour unions and risk street protests.

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