Greece’s former controversial and flamboyant finance minister has made a surprise intervention by urging Prime Minister Alexis Tsipras to turn his back on the lenders.
The Greek Australian academic encouraged Tsipras to adopt a parallel payment system that he himself was responsible for designing back in 2015 and to unilaterally restructure the European Central Bank loans it holds.
“This two-pronged preparation is the only way to prevent another excruciating retreat by the prime minister in the short term and [German Finance Minister Wolfgang] Schaeuble’s plan in the long term,” Varoufakis wrote in an op-ed in Efimerida ton Syntakton on Saturday.
Varoufakis has suggested that Schaeuble’s strategy is to lead Greeks to the point of exhaustion so they ask to leave the euro themselves and as such, implying that all sides are at best deluding themselves or at worst lying as he wrote on his blog just over a month ago
‘’The problem with Greece is that everyone is lying. The European Commission and the European Central Bank are lying when they claim that the Greek “program” can work as long as Greece’s government does as it is told. Germany is lying when it insists that Greece can recover without substantial debt relief through more austerity and structural reforms. The current Syriza government is lying when it insists that it has never consented to impossible fiscal targets. And, last but not least, the IMF is lying when its functionaries pretend that they are not responsible for imposing those targets on Greece.
When so many lies – with so much political capital invested in their perpetuation – coalesce, disentangling them requires a swift coup, akin to Alexander cutting the Gordian knot. But who will wield the sword?
Tragically, the problem is both obvious and extremely simple to solve. The Greek state became insolvent a year or so after the eruption of the 2008 global financial crisis. Against all logic, the European establishment, including successive Greek governments, and the IMF extended the largest loan in history to Greece on conditions that guaranteed a reduction in national income unseen since the Great Depression. To mask the absurdity of that decision, new loans – conditioned on more income-sapping austerity – were added.
“When one finds oneself in a hole, the simplest solution is to stop digging. Instead, Europe’s powers-that-be, the Greek government, and the IMF blame one another for driving Greece’s people into an abyss,’’ Varoufakis adds.