ATHENS – Firing a shot across the bow of international lenders, Greek Finance Minister Yanis Varoufakis said if the country is forced out of the Eurozone that the financial bloc will crumble.
That warning came as his plan to restructure Greece’s debt deal is getting a cold shoulder from the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) that put up 240 billion euros ($272 billion) in two bailouts since 2010.
But that came with attached austerity measures that brought down two governments and led angry Greeks to elect the Radical Left SYRIZA party of Prime Minister Alexis Tsipras on Jan. 25, setting up a collision course with the lenders as he vowed to re-do the deal.
In an interview with Italian state television network RAI, Varoufakis said Greece’s debt problems must be solved as part of a rejection of austerity policies while trying to meet some of the reforms demanded by the lenders.
He called for a massive “New Deal”investment program funded by the European Investment Bank.
“The euro is fragile, it’s like building a castle of cards, if you take out the Greek card the others will collapse.” Varoufakis said according to an Italian transcript of the interview released by RAI ahead of broadcast.
The Eurozone faces a risk of fragmentation and “de-construction” unless it faces up to the fact that Greece, and not only Greece, is unable to pay back its debt under the current terms, Varoufakis said.
“I would warn anyone who is considering strategically amputating Greece from Europe because this is very dangerous,” he said. “Who will be next after us? Portugal? What will happen when Italy discovers it is impossible to remain inside the straitjacket of austerity?”
That ploy isn’t playing with the lenders, especially German Chancellor Angela Merkel, whose country put up much of the monies but demanded big pay cuts, tax hikes, slashed pensions and worker firings in return. She has rejected all of SYRIZA’s demands.
Varoufakis and Tsipras received friendly words but no support for debt re-negotiation from their Italian and French counterparts but he said privately they said the hope he can rearrange the Troika thinkings.
“Italian officials, I can’t tell you from which big institution, approached me to tell me they backed us but they can’t tell the truth because Italy also risks bankruptcy and they are afraid of the reaction from Germany,” he said.
“Let’s face it, Italy’s debt situation is unsustainable,” he added to what he said was Greece being in the same boat and unable to pay its debt without changing the terms.
If Europe continues to pursue counterproductive austerity policies the only people who will benefit will be “those who hate European democracy,” he said, citing the Golden Dawn party in Greece, the National Front in France and the United Kingdom Independence Party in Britain.