27 Apr 2015

Syriza’s reshuffle: step forward a non-erratic Marxist

After a frantic weekend the Greek government sought to break the deadlock in its talks with lenders today by reshuffling its negotiating team.


Yanis Varoufakis, the finance minister who made the global headlines in the aftermath of Syriza’s election victory will take a back seat, while the lesser known economic specialist in the foreign ministry Euclid Tsakalotos will lead the talks.

Though both men are western educated, fluent English speaking economists, their styles – and politics – are different.

Mr Tsakalotos is a classic Marxist of the New Left who, when he addressed a meeting in the British parliament last month, brushed aside calls by left Labour MPs for Greece to ditch the Euro on the grounds that “national” economic programmes do not work. Mr Varoufakis once described himself as an “erratic Marxist”; Mr Tsakalotos comes from that school of Marxism which learned from the 1970s onwards to make compromises with capitalist reality.

He is not only softer spoken; he is very attached to the idea of Syriza as a reforming left-social government and existentially committed to the Euro. What is more, he is a longstanding member of Syriza, with a surer feel for what the party’s members will accept in the compromise that he’ll have to craft.

Read more: inside Syriza’s economic brain

But the issue is urgent. Those who’ve seen the books in Greece say the country will be able to pay salaries and pensions this week, but that the cash flow of the government looks bleak in May. By draining the cash reserves of public bodies – local councils for example – Mr Varoufakis has been able to keep Greece afloat, but in a way that saps the resilience of such bodies – councils, hospitals etc – should Greece break decisively with the ECB.

To be clear, Mr Varoufakis remains in charge of the finance ministry, and of the government’s economic strategy. But by placing Mr Tsakalotos – who’s been involved from the start – at the head of the negotiating team, Greek PM Alexis Tsipras is sending the strongest possible signal that he wants a compromise to keep Greece inside the Euro.

A sense of the frustration on the Greek side can be got from a briefing document, originating inside Mr Tsipras’ office, which Channel 4 News has seen.

It speaks of “memorandum inertia”, complaining that Eurogroup negotiators have continually tried to unpick the agreement Mr Varoufakis signed on 20 February.

Yanis Varoufakis: from Dylan Thomas to Titanic

The briefing note states: “There is no agreement on basic topics of the negotiation between the European Commission and the ECB on the one hand, and the IMF on the other. For that reason they plan to draft an internal document writing down their common points and differences.”

The document claims that the ECB is at odds with the European Commission over the framework of discussions – i.e. it wants the old bailout not the 20 February agreement as the basis; and it claims the European Commission is open to ending repossession of people’s homes, and “does not consider massive layoffs to be an issue”.

In a further concession to its lenders, Greece will facilitate the work of EU and IMF teams in Athens: it had insisted all discussions go via politicians rather than officials and it is this – procedural rather than substantial – spat that lay behind the fractious end to Friday’s Eurogroup meeting in Riga.

Austerity in Greece: a tragedy or triumph?

In years gone by, it would not have mattered to the international bond markets what sub-genre of Marxist they were dealing with: this news knocked several points off Greek bond yields.

It prompted puzzlement among some journalists, who claimed Mr Varoufakis was already “effectively side-lined” two months ago when Mr Tsipras began negotiating direct with the EU.

This misses a vital point: Mr Tsakalotos has decades of political capital with the inner core of a couple of thousands Syriza activists who will have to take the decision on whether to stomach the compromise Greece will need to do.

He’ll have to face down the party’s left, which on the last count had 41 per cent of the votes for rejecting any deal with the Eurogroup. Given his non-party background, that was always going to be Mr Varoufakis biggest hurdle; now it will be jumped by someone else.

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6 reader comments

  1. Andrew Dundas says:

    The key point is that Greece will never be able to re-pay the loans its previous right-wing governments had taken from the ECB and other European Banks. The Greek government is now a bankrupt. Institutions and investors that lent money to Greece should have taken more care. They were encouraged in their reckless lending by the delusion that ALL sovereign debts of Eurozone States were somehow guaranteed by the ECB/EU: they were not guaranteed.

    The way forward is for Greece to give notice of a default on its Bonds and for its creditors to accept the cut in their investments.
    Reckless lending has its own remedy: the lenders and depositors in Greek Banks take their ‘haircut’, and the borrower takes the stigma & austerity associated with bankruptcy.
    There is no provision in any Treaty that a defaulter should leave the Eurozone. There is no legal requirement for Greece to do so either.

    1. Steve Gaudi says:

      Andrew i have news for you
      that is exactly what the new greek government is trying to do: default and stay in the euro
      but the EU does not accept it- greek government is threatened with worse austerity and isolation if it does what simple logic dictates

  2. Mike Harland says:

    I think Merkel is already ahead of this ‘game theory’ and it is she who will sort things out directly with Tsipras in order to back Junker, sideline the thorn in her side of Schäuble, likewise the ECB and Goldman Draghi’s US influence in Europe, and distance Lagarde – the ‘Troika’ austerity will disappear in a puff of smoke to maintain EU ‘coherence’ and especially push on with fiscal union under German control – otherwise it will be Germany leaving first, with the rest left to flounder in their own debt.

  3. Philip Edwards says:

    Better an “erratic Marxist” than a far right neocon non-erratic thieving banker from the International Monetary Fund, the World Bank or the European Central Bank.

    Or for that matter from Channel 4 News.

  4. Pp says:

    You don’t think this could just be a ploy to buy time, Paul, do you?

    The left are very good at political analysis until it comes to Monty Pythonesque infighting. Then they’ll always assume the worst.

  5. gastro george says:

    “But by placing Mr Tsakalotos – who’s been involved from the start – at the head of the negotiating team, Greek PM Alexis Tsipras is sending the strongest possible signal that he wants a compromise to keep Greece inside the Euro.”

    But I was under the impression that it’s already been signalled in the strongest way that Syriza want to keep Greece inside the Euro. So I’m not sure that jumping and shouting any louder will have any effect.

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