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Greek finance minister Yanis Varoufakis resigns despite referendum no vote Greek finance minister Yanis Varoufakis resigns despite referendum no vote
(35 minutes later)
The Greek finance minister Yanis Varoufakis has resigned in the wake of the country’s resounding no vote rejecting the eurozone’s austerity terms. The Greek finance minister Yanis Varoufakis has quit, despite the country’s decisive rejection of the eurozone’s terms for the country remaining in the single currency
Writing on his blog on Monday morning he said that he would be standing down immediately after pressure from Greece’s European partners. Varoufakis, who infuriated eurozone leaders and recently compared Greece’s creditors to terrorists, said the Greek prime minister Alexis Tsipras told him to go, after pressure from European leaders.
“Soon after the announcement of the referendum results, I was made aware of a certain preference by some Eurogroup participants, and assorted ‘partners’, for my… ‘absence’ from its meetings,” he wrote. Announcing his resignation in a blog post entitled “Minister No More!” he wrote:
The prime minister Alexis Tsipras judged this to be “potentially helpful to him in reaching an agreement. For this reason I am leaving the ministry of finance today”. “Soon after the announcement of the referendum results, I was made aware of a certain preference by some Eurogroup participants [Eurozone finance ministers], and assorted ‘partners’, for my… ‘absence’ from its meetings; an idea that the prime minister judged to be potentially helpful to him in reaching an agreement. For this reason I am leaving the Ministry of Finance today.
He added: “The referendum of 5 July will stay in history as a unique moment when a small European nation rose up against debt-bondage. “I consider it my duty to help Alexis Tsipras exploit, as he sees fit, the capital that the Greek people granted us through yesterday’s referendum,”
“Like all struggles for democratic rights, so too this historic rejection of the Eurogroup’s 25 June ultimatum comes with a large price tag attached. It is, therefore, essential that the great capital bestowed upon our government by the splendid NO vote be invested immediately into a YES to a proper resolution – to an agreement that involves debt restructuring, less austerity, redistribution in favour of the needy, and real reforms. “And I shall wear the creditors’ loathing with pride.”
“I consider it my duty to help Alexis Tsipras exploit, as he sees fit, the capital that the Greek people granted us through yesterday’s referendum. And I shall wear the creditors’ loathing with pride. His departure is likely to help talks, as a flurry of meetings get underway. Angela Merkel meets François Hollande later on Monday, as the two leaders scramble to respond to Greece’s decisive rejection of an EU bailout plan.
He also praised the “superhuman effort to honour the brave people of Greece, and the famous OXI (NO) that they granted to democrats the world over, is just beginning”. Greek media immediately settled on Euclid Tsakalotos, the Oxford-educated chief spokesman of the economics ministry, who has led talks with Greece’s creditors, as the most likely replacement for Varoufakis.
“He is one of the most sensible/moderate figures in Syriza and his appointment, if confirmed, would increase the chances for a sensible negotiation and a positive outcome,” Demetrios Efstathiou of Standard Chartered bank said.
Greece delivered a landslide no vote to the eurozone’s terms for the country remaining in the single currency on Sunday night, confronting the EU’s leadership with one of its most severe ­crises of confidence and leaving Greece facing potential financial collapse and exit from the euro.
The German chancellor and French president spoke by telephone late on Sunday and said the referendum decision must “be respected”. The pair will meet in Paris from 6.30 pm (5.30 British summer time) in an effort to forge a common Franco-German response, setting the stage for an emergency summit of all 19 eurozone leaders on Tuesday.
Time is fast running out for Greece, with banks almost out of money. The Greek government promised banks will re-open on Tuesday, but this looks increasingly unlikely, as the European Central Bank is expected to withhold further emergency funding when it meets later on Monday.
The government of prime minister Alexis Tsipras has been counting on the ECB to restart emergency aid to Greek banks, after the programme was frozen at €89bn. But anonymous sources told Reuters the bank will maintain financial aid at current levels, when its governing council holds a conference call on Monday morning.
The ECB is expected to continue buying bonds of other vulnerable eurozone countries to prevent Portugal, Italy and Spain being dragged down by Greece.
European markets are expected to fall sharply on Monday, following a drop in Asian stocks. But the market fallout was smaller than had been feared, as investors cling to hopes of an agreement, as a flurry of meetings gets underway. Hopes of ECB action to defend southern Europe also helped take the edge off losses for the euro: the currency was down 0.5% at $1.1055, a recovery on a deeper fall below $1.10
Mario Draghi, the ECB president, who once promised to “do whatever it takes to preserve the euro”, will hold talks with Jeroen Dijsselbloem, the chair of the eurogroup of finance ministers, and Jean-Claude Juncker, president of the European Commission on Monday morning. In Athens the Greek prime minister will be meeting Greece’s top political leaders from 10am. “We must move forward immediately with negotiations … a strong national front must be created to seek an immediate solution,” Tspiras told the Greek president, Prokopis Pavlopoulos after the vote.
Meanwhile German and French finance ministers were set for talks beginning in Warsaw, while the euro working group of senior officials is meeting in Brussels.
As the eurozone enters a crucial 48 hours, it is far from obvious European leaders will be able to smooth over their differences. Germany’s vice chancellor and social democratic leader, Sigmar Gabriel, said Tsipras had burned his bridges with the rest of the eurozone. But Italy’s foreign minister Paolo Gentiloni said it was the right time to start trying for an agreement again. “There is no escape from the Greek labyrinth with a Europe that is weak and without growth.”
The gulf of opinion was reflected at the very top of Europe last week: Merkel refused to re-open negotiations with Athens ahead of the referendum, while Hollande wanted a quick agreement.
Few had expected such a crushing defeat for the yes side after polls suggested the race was much closer. The final tally showed that Greeks voted by 61.3% to 38.7% in support of the prime minister, spurning the extra austerity demanded – mainly by Germany and the International Monetary Fund – in return for an extension of bailout funds.
Five years of failed austerity policies in Greece and a total breakdown in trust between the leftwing Syriza alliance and the political leaders of its creditors climaxed in a national vote in which Greeks said no to the spending cuts and tax increases demanded by its lenders.
Tsipras campaigned for a no vote, arguing that this was the best way to secure a better deal, keeping Greece in the euro while obtaining debt relief from its creditors. The leaders of Germany, France and others stated the opposite: that a no vote meant the Greeks were deciding to become the first country to quit the currency, membership of which is supposed to be irreversible.
It is not clear which view will prevail. The EU mainstream hoped for a yes vote, not only because it would have represented democratic assent to the euro and acceptance of austerity, but also because the Tsipras government would have come under strong pressure to stand down. Negotiations between the two sides have gone nowhere for five months and have become particularly rancorous in the past month as bailout and debt repayment deadlines came and went, with Athens missing a €1.5bn repayment to the IMF. The country now faces a €3.5bn payment to redeem bonds at the European Central Bank in two weeks.
Dutch finance minister Jeroen Dijsselbloem, who chairs the eurozone group of finance ministers, said the result was “very regrettable” for the future of Greece. “For recovery of the Greek economy, difficult measures and reforms are inevitable. We will now wait for the initiatives of the Greek authorities,” he said.
Eurozone confidence in Tsipras is at rock bottom and there is virtually zero faith that he will implement the reforms needed to secure cash even if he agrees to them. For his part, the fiery Greek leader as recently as Friday accused his eurozone creditors of blackmail, extortion, and seeking to humiliate his country.
Predicting what happens next in the five-year saga that has shaken the eurozone to its foundations is sheer guesswork.