There was a big meeting Thursday between Greece’s new finance minister, Yanis Varoufakis, and his German counterpart, Wolfgang Schaeuble.
In a post meeting press conference, Varoufakis made waves by comparing Greece’s current situation with Weimar Germany. His comments included:
“Germany should understand the most what it’s like to be stuck in a gruesome deflation and debt crisis … When I go home today, I will go home to a country where the 3rd biggest party is not a neo-nazi but a nazi party.”
This is one of many strongly worded comments by Varoufakis to the media regarding Greece’s debt situation in the two weeks since the Greek elections that brought the radical leftist Syriza party to power.
Europe has yet another Greek crisis on its hands, and Varoufakis and Alexis Tsipras, the new Greek prime minister, seem like they are trying to play hardball.
The problem is they don’t have much of a negotiating position. The Greek government, and by extension its banking system, is in deep financial trouble. Syriza campaigned on a hardline platform against its current deal with the troika (its three creditors: the ECB, the European Commission, and the IMF). But now that Syriza is in power, its leaders know they have to cooperate in order to get some sort of deal done.
That’s led to rhetoric that’s all over the place. Here’s a sampling of how Greece’s position on its debt problem has changed since the elections on January 25:
The Hard Line
“Europe in its infinite wisdom decided to deal with this bankruptcy by loading the largest loan in human history on the weakest of shoulders, the Greek taxpayer,” [Varoufakis] said. “What we’ve been having ever since is a kind of fiscal waterboarding that have turned this nation into a debt colony,” he added. — January 26 (Telegraph)
“Our first action as a government will not be to reject the rationale of questioning this program through a request to extend it.” — January 30 (BI)
“‘It has never been our intention to act unilaterally on Greek debt,’ Tsipras said in a statement to Bloomberg News. But he said Greece needed greater leeway to tackle root problems in its economy, such as tax evasion, corruption and policies that favour only a wealthy few. ‘We need time to breathe and create our own medium-term recovery programme,’ he said.” — February 1 (Guardian)
“Mr Varoufakis told the Financial Times the government would no longer call for a headline write-off of Greece’s €315bn foreign debt. Rather it would request a ‘menu of debt swaps’ to ease the burden, including two types of new bonds… Mr Varoufakis said the government would maintain a primary budget surplus of 1 to 1.5 per cent of gross domestic product, even if this meant Syriza, the leftwing party that dominates the ruling coalition, would not fulfil all the public spending promises on which it was elected.” — February 2 (FT)
“The government ‘remains unwavering in the goals of its social salvation program, approved by the vote of the Greek people,’ according to a Finance Ministry statement issued overnight. It’s aim is ‘coming up with a European policy that will definitively put an end to the now self-perpetuating crisis of the Greek social economy.’ … While [Tsipras has] retreated from demands for a debt writedown, he’s so far sticking to promises to increase pensions and wages that breach the conditions for financial aid.” — February 4 (Bloomberg)
“Ahead of a crunch meeting with his counterpart Wolfgang Schaeuble on Thursday, Mr Varoufakis compared his country to a jobless worker with a mortgage. ‘Would you give him another loan so he can make payments on his house? That cannot work. I’m the finance minister of a bankrupt country!’ he told Germany’s De Zeit newspaper.” — February 4 (Telegraph)
Though the official line seems to have softened, Varoufakis’s made clear during his press conference with Schaeuble that Greece is still dragging its feet on negotiating. Invoking the nazis was big as far as shock factor, but there was something Varoufakis said at the beginning of his statement that was more interesting, if you’re trying to figure out what’s actually going on: he said that he and Schaeuble “didn’t even agree to disagree.”
They made no progress, in other words. Varoufakis hasn’t moved from his position that the Greek government will let the bailout lapse when it expires at the end of February.
It’s been a roller coaster couple of weeks for Greece, but it doesn’t seem like the government has actually gone anywhere.