This article is from the source 'nytimes' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at http://www.nytimes.com/2015/07/03/business/international/greek-finance-minister-says-hell-resign-if-referendum-endorses-bailout.html

The article has changed 6 times. There is an RSS feed of changes available.

Version 3 Version 4
Varoufakis Says He’ll Resign as Greece Finance Minister if Referendum Endorses Bailout I.M.F. Agrees With Athens That Greece Needs Debt Relief
(about 9 hours later)
ATHENS — Finance Minister Yanis Varoufakis of Greece said on Thursday that he would resign immediately if Greeks voting in a referendum on Sunday endorse efforts to secure an international bailout deal for the country. His comment is the starkest sign yet that the government of Prime Minister Alexis Tsipras is likely to be reshuffled or could even fall if a yes vote prevails. ATHENS — The International Monetary Fund, a big Greek creditor, conceded a point on Thursday that the Athens government has long been making: Without some reduction in the country’s staggering debt load, Greece has little hope of a sustained economic recovery.
Mr. Tsipras’s government has been exhorting Greeks this week to vote no in the referendum, which, while couched in confusing language, effectively asks whether the nation is willing to accept more austerity in exchange for billions of euros that the country needs to return to solvency. It was a significant acknowledgment, and an indication that if or when bailout negotiations resume, Greece might win some relief from its debt of 300 billion euros, or about $330 billion. It just might not be relief granted to the leftist government of Prime Minister Alexis Tsipras.
After a remarkable series of twists and turns in negotiations with creditors this week, the proposal on which Greeks will be voting is no longer even on the table, as the bailout package expired Tuesday night. The I.M.F. argued on Thursday that the five-month-old government bore the blame for having made Greece’s economic situation so much worse that a new €50 billion relief program is now necessary.
Nonetheless, in televised remarks and interviews played on repeat on almost every Greek television station, Mr. Tspiras and Mr. Varoufakis have urged Greeks to vote against the package. They say that a no vote would give the government a stronger hand in negotiations with Greece’s creditors, as Athens seeks to repudiate austerity and to reduce its mountainous debt load, one of the world’s largest. The organization did not mention Mr. Tsipras or his party by name, but said the country’s economy and finances had deteriorated sharply because of government policies since the end of last year. Mr. Tsipras took office in January.
If Greeks were to vote yes, it would signal their desire to accept the bailout with austerity conditions that Mr. Tsipras has been pushing against, and it would effectively be a repudiation of Mr. Tsipras and his government’s negotiating strategy. That could lead not only to to Mr. Varoufakis’s resignation but also to the withdrawal of numerous other government members from Mr. Tsipras’s leftist Syriza party — and possibly of Mr. Tsipras himself. The report is likely to stoke tensions with Greece’s European creditors at a critical moment, just ahead of a Greek national referendum on Sunday over whether to accept a bailout package that Mr. Tsipras has opposed — in part because it does not contain debt relief. By essentially concluding that any new bailout deal for Greece must include debt relief, the I.M.F., whether intentionally or not, turned up the pressure on Europe to acknowledge that point.
In an interview with Bloomberg Television on Thursday, Mr. Varoufakis said that he would not remain finance minister after a yes vote, but that he would help his successor steer Greece out of its debt crisis. He added that he would “rather cut off” his arm than sign a new deal with creditors that does not restructure Greece’s debt. The Greek finance minister, Yanis Varoufakis, said on Thursday that he would step down immediately if Greeks voted yes. Mr. Varoufakis, who even before the leftist government was elected had argued that much of Greece’s mountain of debt needed to be forgiven, has been a key player in the months of talks that have led to the current impasse.
In many ways, Mr. Tsipras’s negotiating tactics have always been about achieving his government’s overarching goal of reducing Greece’s debt burden, which Mr. Varoufakis has argued time and again is unsustainable. The I.M.F. appeared to have little remaining patience with the Greek government, which this week became the first developed nation to effectively default on a loan from the fund.
By continuing to accept bailouts with austerity conditions, Mr. Varoufakis argued in an interview after being installed as finance minister in January, Greece has piled debt on top of debt, while subjecting its people to “fiscal waterboarding, where we are constantly having our head held under water.” But patience has also run out among the other eurozone countries, whose taxpayers have lent Greece more than €130 billion. On Thursday, the head of the eurozone’s group of finance ministers, Jeroen Dijsselbloem, suggested Greeks would need to vote yes on Sunday for any future bailout talks to make headway.
In a blog post Wednesday afternoon, Mr. Varoufakis offered six reasons Greeks should vote no in Sunday’s referendum. “The Greek government is rejecting everything with the suggestion that if you vote no you will get a better or less tough, or more friendly, package,” Mr. Dijsselbloem said. “That suggestion is simply wrong.”
But an opinion poll on Wednesday by euro2day.gr showed that the results of the referendum were too close to call, with 47 percent planning to vote yes and 43 percent veering toward the no position that Mr. Tsipras’s government wants. If Greeks were to vote yes, though, it would signal their desire to accept the bailout with austerity conditions that Mr. Tsipras has been pushing against. As a de facto repudiation of Mr. Tsipras and his government’s negotiating strategy, a yes vote could lead not only to Mr. Varoufakis’s resignation but also the withdrawal of numerous other government members from Syriza, Mr. Tsipras’s leftist party — and possibly the departure of Mr. Tsipras himself.
Analysts at Eurasia Group, a consultancy, said in a note to clients Thursday: “Creditors want a change in government in Athens, and they see this Sunday’s referendum as their first possibility to achieve it.”
The I.M.F. denied on Thursday that it was trying to influence Greek politics and said the timing of the release of the report was not related to the referendum on Sunday.
A senior I.M.F. official said the organization released the report Thursday because elements of it were leaking out. “I don’t see how we can be seen as interfering with anything,” the official said on condition of anonymity during a telephone briefing with reporters.
Mr. Tsipras’s government has been exhorting Greeks this week to oppose the referendum. Although couched in potentially confusing language, the referendum effectively asks whether the nation is willing to accept more austerity in exchange for billions of euros that the country needs to return to solvency.
But after a remarkable series of twists and turns in negotiations with creditors this week, the proposal on which Greeks will be voting is no longer on the table. The €240 billion bailout program on which the offer was based expired on Tuesday night.
Nonetheless, in televised remarks and interviews played in a seemingly continuous loop by Greek television stations, Mr. Tsipras and Mr. Varoufakis have urged Greeks to vote no to the package. Such an outcome, they said, would give the government a stronger hand in negotiations.
In an interview with Bloomberg Television on Thursday, Mr. Varoufakis said that he would not remain finance minister if the yes vote prevailed, although he said he would help his successor steer Greece out of its debt crisis. He added that he would “rather cut off” his arm than sign a new deal with creditors that does not restructure Greece’s debt.
In many ways, Mr. Tsipras’s negotiating tactics have always been about achieving his government’s overarching goal of reducing Greece’s debt burden, which Mr. Varoufakis has argued is unsustainable.
Even before Syriza took office, many economists, and European leaders themselves, acknowledged that Greece could not possibly pay down its mountain of debt — which amounts to around 185 percent of annual economic output — unless creditors forgave some of it.
While international financial institutions wrote off billions in Greek debt obligations in 2012, today most of Greece’s debt is held by taxpayers across Europe. And while European leaders concede that Greece may never be able to repay them in full, they resist imposing any losses on their own people.
The I.M.F. itself had previously urged European governments to write down some of Greece’s debt.
And in 2012, when Greece was still in the throes of a recession, the European Union promised to provide further debt relief to Greece so long as it met budgetary targets and kept pledges to make changes in the economy under its bailout program. But last year, after Greece appeared to be getting back on its feet, the leaders said they were no longer certain that Greece needed that relief.
On Thursday, though, the I.M.F. said that the policies pursued by Mr. Tsipras, and the economy’s relapse into a recession after he took office in January, had moved Greece in the wrong direction.
The I.M.F. report accused the government of failing to enact economic changes required under the bailout program, including better tax collection, cracking down on corruption and making Greece an easier place to do business. Had the government followed through, the I.M.F. said, “no further debt relief would have been needed.”
At the very least, the I.M.F. added, Greece will need to delay repayment of much of its debt. More likely, its creditors will need to write off some of the debt and absorb losses, taking a “haircut” on the debt.
A Greek government spokesman, Gavriil Sakellaridis, instead of responding to the I.M.F.’s criticism on Thursday, noted that the report agreed with the government that Greece needed debt relief. The report, Mr. Sakellaridis said, “fully vindicated the Greek government, both as regards its opinion about the unsustainability of the Greek debt and as regards its insistence that any new agreement with creditors must definitely include a debt restructuring or haircut.”
Of the €50 billion relief that the I.M.F. cited, €36 billion would need to come from the other eurozone countries. And those figures may be too low, because the report was prepared before the situation in Greece deteriorated even further this week. The government closed Greek banks on Monday to stanch an outflow of deposits, and on Tuesday it missed a loan payment of about €1.6 billion to the I.M.F.
Plans to sell government assets, already behind schedule when the Tsipras government took office, are even further in jeopardy, the I.M.F. said. Revenue from sales of state assets amounted to just €3.2 billion as of the end of March, the I.M.F. said, far short of a target of €50 billion by the end of the year.
The new government has placed further conditions on privatizations that will make it even more difficult to sell assets like airports or real estate. And one of the main categories of assets — stakes in the country’s largest banks — has become nearly worthless because of questions about whether the banks can survive.
“Coming on top of the very high existing debt, these new financing needs render the debt dynamics unsustainable,” the I.M.F. said in the report.
A senior I.M.F. official, who spoke to reporters on the condition of anonymity on Thursday, acknowledged that Greece needed “breathing space.” But that would most likely happen only if Athens and other European governments made tough decisions.
”We are asking the Greeks to do very difficult things,” the official said. “We are asking the Europeans to do difficult things also.”