Tue | May 23, 2017

Change to Greek bailout negotiating team fuels market hopes

Published:Tuesday | April 28, 2015 | 4:00 AM
Greek Finance Minister Yanis Varoufakis. (Dmitris Sulzics/F64 Photo Agency via AP)

Greece reshuffled its bailout negotiating team on Monday following fierce criticism of its finance minister, a move that was received with market applause.

Investors hope it will facilitate a deal to save the country from bankruptcy.

A Greek official insisted Yanis Varoufakis, who has come under fire from his European peers for dragging his feet in the bailout talks, continued to enjoy the government's support. He will continue to lead the negotiations, which have been delayed for three months.

But Euclid Tsakalotos, who is minister of international financial relations and part of the foreign ministry, will handle the coordination within Varoufakis' negotiating team.

Tsakalotos is close to Prime Minister Alexis Tsipras and has often accompanied Varoufakis on trips to European capitals during the negotiations.

A separate team will be created to support technical talks in Athens, while the finance ministry's general secretary for fiscal planning was tasked with designing a plan for economic growth. The official spoke on condition of anonymity, in line with government regulations.

The moves suggest the Greek government is intent on reaching a deal, and the main Greek stock index rallied on the news, closing up 4.4 per cent. Yields on the country's two-year bonds - a gauge of market fears that the country might default - fell almost two percentage points to about 23 per cent.

It is unclear how far the reshuffling will curb Varoufakis' influence in the negotiations and, if so, whether that will change the tenor of the talks.

Varoufakis was rebuked by Greece's creditors most recently at a finance ministers' meeting in Riga, Latvia, where he failed to come up with a list of economic reforms creditors want in exchange for new loans.

In Athens, government officials say Varoufakis has been unnecessarily vilified and has been subject to a smear campaign by the international media.

On Sunday, Varoufakis took to Twitter with a Franklin D. Roosevelt quote. "FDR, 1936: 'They are unanimous in their hate for me; and I welcome their hatred.' A quotation close to my heart (& reality) these days," he tweeted.

Under a four-month bailout extension, Greece had until April 30 to come up with acceptable reforms so creditors can unlock the final €7.2 billion (US$7.8 billion) loan instalment. But a deal still seems far off.

Beyond the criticism of Varoufakis, European officials deplore the new government's intransigence and lack of progress in proposing acceptable reforms to unlock bailout funds that Greece desperately needs to avoid default and a potential exit from the euro.

Tsipras won January 25 elections on promises to repeal deeply resented austerity measures, including pension cuts and tax increases, which came as a condition for Greece's two international bailouts worth a total of €240 billion from other eurozone countries and the International Monetary Fund.

"Our intention is to keep Greece in the eurozone," German Finance Ministry spokesman, Martin Jaeger, said in Berlin on Monday.

"But I would like to point out again that the ball is definitely in the Greeks' court. We are waiting for proposals. We have been waiting for weeks. That is somewhat frustrating, but we are patient."

- AP