Yanis Varoufakis Resigns as Finance Minister as Greece Mulls Next Steps on Debt – New York Times

Yanis Varoufakis, the Greek finance minister, surrounded by journalists in Athens on Monday, shortly after he announced his resignation.
July 6, 2015

ATHENS — Greece’s combative finance minister, Yanis Varoufakis, abruptly resigned Monday morning in what appeared to be the first move at conciliation by Prime Minister Alexis Tsipras toward the country’s creditors after Greek voters’ rejection on Sunday of a bailout linked to austerity.

Mr. Varoufakis’s announcement came as leaders around Europe sent conflicting signals about whether they would continue to support Greece, and whether a compromise could still be possible on a new bailout program or on debt relief — a question with implications not only for Athens but for the broader euro currency union.

In Germany, the eurozone country to which Greece owes the most money and the one that has tended to take the hardest line in the debt talks, a spokesman for the Finance Ministry said Berlin saw no new basis for negotiations with Athens at this point. The spokesman for Angela Merkel, Germany’s chancellor, said that while Greece was still in the eurozone, it was up to Athens to determine whether the country would stay.

The Greek government said Monday afternoon that Mr. Tsipras and Ms. Merkel had spoken by telephone and had agreed that he would present new debt proposals on Tuesday, when eurozone leaders are to meet in Brussels.

Interactive Feature | Latest Updates The Times is following the latest development in the Greek debt crisis with reporters and editors across Europe.

At a news conference in Brussels on Monday, the European Commission’s vice president for euro affairs, Valdis Dombrovskis, said that the no vote in Greece would “dramatically weaken” the country’s negotiating stand with creditors and had made things “more complicated.”

“At the end of the day, it will produce very few or possibly no winners whatsoever,” Mr. Dombrovskis said.

But he added that now was the time to seek a way forward, and he held the door open to a possible compromise between Greece and its creditors. “If all sides are working seriously, it’s possible to find a solution, even in this very complicated situation,” Mr. Dombrovskis said.

The French finance minister, Michel Sapin, said on French radio on Monday that while Greece’s no vote “resolves nothing,” France could support debt relief for Greece should Mr. Tsipras come forward with a proposal containing “serious” terms for a new bailout package. Mr. Sapin’s remarks came ahead of a meeting set for Monday evening in Paris between President François Hollande of France and Ms. Merkel to discuss how now to deal with Greece.

Graphic | After the ‘No’ Vote, What Leaders Expect to Happen Next International responses to Greece’s rejected referendum ranged from hopeful to dismissive.

Mr. Tsipras may recognize that Greece has only days, if not hours, to wring some kind of deal from its creditors before full-scale economic collapse sets in. The country’s banks are on the verge of running out of euros, and Greeks could soon begin to suffer shortages of fuel and other imported goods.

“By the end of the week, we may see most A.T.M.s out of cash, massive pressure on the payment of upcoming public sector wages, tourism issues and wider economic damage,” analysts at Deutsche Bank said on Monday in a note to clients.

Mr. Tsipras was expected to announce a more extensive cabinet shake-up later Monday, focused on putting a more centrist negotiating team in place to deal with creditors. But the critical issue was still what proposal any new Greek team would bring to the table.

Mr. Varoufakis, an academic with no political experience before he joined the leftist Tsipras government, had consistently argued that Greece desperately needed debt relief more than anything else. While that view was shared by many economists, he quickly became a lightning rod among Greece’s creditors for his aggressive negotiating style and heated language. Before the referendum vote, he had publicly accused the creditors of “terrorism” against his country.

With Mr. Varoufakis gone, Greece’s eurozone creditors may be more willing to continue negotiations on a further aid package. His departure, apparently at the urging of Mr. Tsipras, could be seen as a concession to the sensibilities of other eurozone leaders. But the next few days could determine whether the gulf between Greece and its creditors is now too wide to bridge.

The Eurogroup of eurozone finance ministers, with whom Greece broke off debt talks late last month, planned to meet in Brussels on Monday afternoon to discuss an offer by Athens to resume discussions. Because the deadline for the country’s second bailout package has lapsed, any talks in the Eurogroup on Greek proposals would most likely focus on the terms for a third aid package for the country.

The meeting between Mr. Hollande and Ms. Merkel on Monday evening could prove crucial because, while Germany has taken the hardest line against Greece, France has shown signs of being more conciliatory. The two leaders are scheduled to make a brief statement to the news media at 7:15 p.m. in Paris, before a working dinner, after which they do not plan to make any further announcement, the French government said.

Mr. Varoufakis, who announced his resignation via a Twitter message, said in a statement on his website that he was stepping down because Greece’s creditors had made it clear that they did not want to negotiate any further with him.

Multimedia Feature | Greece’s Debt Crisis Explained The weak link in the 19-nation eurozone is struggling to tame its debt. On Sunday, Greeks decisively rejected in a referendum the terms of an international bailout.

“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; an idea that the prime minister judged to be potentially helpful to him in reaching an agreement,” he said. “For this reason, I am leaving the Ministry of Finance today.”

Mr. Varoufakis called for the prompt conclusion of “an agreement that involves debt restructuring, less austerity, redistribution in favor of the needy and real reforms.”

He included in his announcement a Parthian shot at his interlocutors in the debt negotiations, saying, “And I shall wear the creditors’ loathing with pride.”

The French finance minister, Mr. Sapin, in his radio interview on Monday, criticized Mr. Varoufakis for the “terrorism” accusation against creditors.

“That was wrong,” Mr. Sapin said, speaking after Mr. Varoufakis announced his resignation. “This was a spirited man, who has faith. But he also made statements that were difficult to accept, especially in France, including using the term ‘terrorism.’ ”

But Mr. Sapin indicated that the French government would draw a distinction between any resentment of Mr. Varoufakis’s negotiating tactics and the problems still facing Greece.

If Greece now comes back to the negotiating table with a solid plan to jump-start talks, France could be prepared to “ensure that in the early days, the early years, Greece’s debt is alleviated,” Mr. Sapin said.

A Greek exit from the eurozone “is not desired by the French president,” Mr. Sapin said. Nonetheless, he added, if Greece were to leave the euro, the currency bloc would not be destabilized.

Jack Ewing contributed reporting from Frankfurt, James Kanter from Brussels, Melissa Eddy from Berlin, Keith Bradsher from Hong Kong and Niki Kitsantonis from Athens.

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