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Greece’s Dangerous Game of Chicken

DER SPIEGEL – By Martin Hesse, Christian Reiermann and Christoph Schult

In his first appearance before his foreign counterparts, Greek Finance Minister Giannis Varoufakis initially triggered astonishment, which then gave way to mild annoyance and finally culminated in rage and indignation.

Varoufakis, a professor of economics, used his visit to the special summit of the Eurogroup — which consists of euro-zone member state finance ministers — last Wednesday in Brussels to give a lecture. He spent half an hour talking about his view of the crisis and the “humanitarian catastrophe” in his country. But a concept for how he intends to tackle Greece’s gigantic debt load was not part of his presentation.

The response to his speech was unsurprising, with representatives of smaller countries, in particular, expressing their rage over the audacity of the newly elected Greek government’s demand to renegotiate aid from its partner countries. “Your standard of living is higher than ours, and we pay for your aid,” the finance minister of one of the Baltic countries said angrily, while his counterpart from Slovenia described the event as “a total waste of time.” “I can’t take that to my parliament,” the Estonian envoy complained.

European Central Bank (ECB) President Mario Draghi was especially irate. “We can do nothing at all if you talk like that,” he said. If all you do is “constantly talk about insolvency,” he added, “even the healthy Greek banks will eventually be insolvent.”

Ultimately, Eurogroup President Jeroen Dijsselbloem proposed writing a joint statement for last Thursday’s summit of EU leaders. An intense wrangling over the wording of the statement began, with Varoufakis fighting over every comma. “We are not at a Turkish bazaar here,” the Slovakian finance minister said testily.

After five hours of tough negotiations that included Christine Lagarde, managing director of the International Monetary Fund (IMF), a three-paragraph joint statement was finally completed. In it, Varoufakis agreed to extend the current bailout program and continue the reform policy. In return, the partner countries stated that they were willing to support this process with additional funds to cover the next few months. Varoufakis said that he needed to make one more phone call to Athens, and German Finance Minister Wolfgang Schäuble and his counterparts began heading home.

But by the time Schäuble landed in Berlin, the compromise had already fallen apart. Greek Prime Minister Alexis Tsipras had refused to agree with the terms and had ordered his finance minister back to Athens. “The Greeks have broken so much porcelain,” says one person who attended the meeting, “that they can’t come up with enough glue to put it all back together again.” At the EU summit on Thursday evening, Greek debutant Tsipras received an icy welcome from his European counterparts.

 

Austerity Has Done Nothing To Help Greece

SPIEGEL ONLINE – Interview by Thomas Huetlin and Alexander Neubacher

Interview with Greek Finance Minister Yanis Varoufakis

SPIEGEL: Mr. Varoufakis, you have referred to the European Union’s bailout policy for Greece as “fiscal waterboarding.” What exactly do you mean by that?

Varoufakis: For the past five years, Greece has been subjected to austerity measures that it cannot, under any circumstances, meet. Our country is literally being pushed under water. Just before we suffer an actual cardiac arrest, we are granted a momentary respite. Then we’re pushed back under water, and the whole thing starts again. My aim is to end this permanent terror of asphyxiation.

SPIEGEL: Do you really think “waterboarding” is an appropriate metaphor for a rescue package?

Varoufakis: Well, it managed to get your attention, didn’t it? So it worked.

SPIEGEL: You are comparing a rescue package with a form of torture the CIA used on prisoners. But Greece was showered with money, not water.

Varoufakis: That money was used to bail out banks, especially banks in Germany and in France, to prevent them from taking losses.

SPIEGEL: Greece would have become insolvent long ago if it hadn’t received help.

Varoufakis: The truth of the matter is that 90 percent of that money never arrived in Greece.

SPIEGEL: Going back to your metaphor, who is the torturer that keeps pushing Greece under water?

Varoufakis: The troika of technocrats sent periodically to Greece to enforce an unenforceable program, technocrats representing the European Commission, the European Central Bank and the International Monetary Fund. I have nothing against these three institutions as such. However, they sent a cabal of technocrats to Greece to implement and monitor an entirely destructive program.

 

No Time For Games in Europe

New York Times – Yanis Varoufakis Op-Ed

Game theorists analyze negotiations as if they were split-a-pie games involving selfish players. Because I spent many years during my previous life as an academic researching game theory, some commentators rushed to presume that as Greece’s new finance minister I was busily devising bluffs, stratagems and outside options, struggling to improve upon a weak hand.

Nothing could be further from the truth.

If anything, my game-theory background convinced me that it would be pure folly to think of the current deliberations between Greece and our partners as a bargaining game to be won or lost via bluffs and tactical subterfuge.

As finance minister of a small, fiscally stressed nation lacking its own central bank and seen by many of our partners as a problem debtor, I am convinced that we have one option only: to shun any temptation to treat this pivotal moment as an experiment in strategizing and, instead, to present honestly the facts concerning Greece’s social economy, table our proposals for regrowing Greece, explain why these are in Europe’s interest, and reveal the red lines beyond which logic and duty prevent us from going.

The post What The Foreign Press Thinks Of Greek Fiscal Crisis appeared first on The National Herald.

Source: The National Herald
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