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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