Less than a week into his new job, Greece’s finance minister is already performing the kolotoumbes, or policy somersaults, anticipated by several Athens commentators.
Yanis Varoufakis, an eloquent economics professor, has removed a key plank of the leftwing Syriza party’s pre-election platform: its longstanding demand that creditors should write off at least one-third of Greece’s huge public debt, which last year amounted to 175 per cent of national output.
Visiting London on Monday, the second stop of a tour of European capitals, Mr Varoufakis told the Financial Times that Athens would restructure its entire public debt by swapping bailout loans for new growth-linked bonds and issuing what he called “perpetual” bonds to replace Greek bonds owned by the European central bank.
The U-turn on the debt issue was so abrupt that some observers wondered whether Mr Varoufakis went off-message as he tried to reassure Greece’s eurozone partners and City investors that the Syriza-led government was serious about meeting its obligations to the EU and International Monetary Fund.
Not at all – Alexis Tsipras, the newly minted prime minister, is firmly in control, says a colleague of Mr Varoufakis at Athens university and experienced Syriza-watcher. “Whether or not the debt proposal flies, and it probably won’t, the finance minister comes across to Syriza’s voters as a brilliant and heroic fighter for the national cause,” he says.
Yet Mr Varoufakis’s swift political rise has come at the expense of other members of Syriza’s economic team. Euclid Tsakalotos, an Oxford-educated economist and the shadow finance minister, had been expected to get the finance portfolio. John Milios, a German-trained Marxist economist, oversaw policymaking until Mr Varoufakis became an adviser to Mr Tsipras last year.
That was before Mr Varoufakis, running for a parliamentary seat for the first time, won more votes than any other candidate (Greek political leaders are automatically elected if their party beats the 3 per cent of the vote threshold for entering parliament.), thanks in part to his frequent appearances on television chat-shows.
Now a deputy minister handling foreign economic relations, Mr Tsakalotos has been left dutifully accompanying Mr Varoufakis as he makes the rounds of Europe’s capitals.
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