Revelations for Mr. Varoufakis

Sunday, April 26, 2015

Anyone closely following the Greek political and economic drama was expecting an “explosion” from the partners at some point. The Minister of Finances Yanis Varoufakis had been warned about this in Washington. Even his American counterpart urged him to stop the rhetoric and lectures and get to work.

He, however, insisted and since then not a day has gone by without comments, interviews and appearances in conferences. Once again, he essentially arrived unprepared at the Eurogroup, which as a result completely set him up against and isolated him from his 18 colleagues.

It is obvious that Mr. Varoufakis has lost all credibility and clearly cannot bring the much-desired, by the government, agreement. According to one take, the publication of the bust up in Riga aimed to pass this exact message on to Athens.

It is no coincidence that since Friday afternoon there have been rumours circulating in Athens from the government itself, regarding his replacement.

We do not know if the Prime Minister is going to sacrifice him, in hopes of saving the day. He we probably not do so though, as he perhaps believes that there is still room to negotiate, outside a community framework and rules.

There are many, both within and outside the country, who wonder whether the Prime Minister is also experiencing a similar problem in understanding the critical nature of the circumstances; if he too has adopted Mr. Flampouraris' simplistic belief that “we will exhaust our partners with the negotiations, we will terrify them and in the end, what else can they do, they will retreat”. It would be unfortunate for the country if that is the case.

All signs arriving in Athens from the European centers do not allow any room for the consequences, should Greece persist on violating what was agreed upon at the Eurogroup of 20 February.

If there is no agreement on the 11th of May, the country will fall into Draghi's hand and will first experience a “haircut” of funds the banks draw from the bonds which they use as collateral, then funding via the ELA will end and in the end a credit event.

The warning is direct. The potential implementation of the aforementioned will plunge the country into absolute poverty and disrepute. Nobody can now claim to be unaware of the danger. Not even the Prime Minister.

 

Antonis Karakousis

Originally published in the Sunday print edition