Greece Just Clipped Varoufakis’s Wings

Greece reshuffled its bailout-negotiating team, reining in Finance Minister Yanis Varoufakis, after three months of talks with creditors failed to unlock aid and a meeting with his euro-area counterparts ended in acrimony.

The coordination of the day-to-day efforts to strike a deal with creditors was handed to Deputy Foreign Minister Euclid Tsakalotos, a Greek government official said in an e-mail to reporters Monday. Varoufakis will supervise the political negotiations with euro-area member states and the International Monetary Fund. No change was announced to Greece’s representation in euro-area finance ministers’ meetings, which Varoufakis attends.

A Eurogroup meeting in Riga, Latvia on Friday descended into name-calling as the currency bloc’s finance ministers hurled abuse at their Greek colleague, accusing him of being a time-waster, a gambler and an amateur. Still, the 54-year-old academic-turned-politician in the government of Prime Minister Alexis Tsipras remains popular at home, with 55 percent of respondents in an Alco survey published in Proto Thema newspaper Sunday expressing a positive view about him.

“This move squares the circle, because it doesn’t look like Tsipras is surrendering by firing Varoufakis, but it to some extent has the same result,” said Michael Michaelides, a strategist at Royal Bank of Scotland Group Plc in London. “It doesn’t change the issues, but given the interpersonal nature of the Eurogroup, and since the finance ministers still remain in charge, this is significant.”

Conciliatory Move

Greek shares rallied after the announcement, with the benchmark Athens Stock Exchange closing the day up 4.4 percent. Bonds rose, with the yield on 3-year notes falling 399 basis points to 22.32 percent.

The action was seen as a conciliatory move by the Tsipras government, according to two officials representing Greece’s creditors. One of them said it may be too late and expressed doubts over whether it can work, given the governing party’s stance on the bailout accord.

The change comes as Greece struggles to amass cash to pay its pensioners and employees this week. Europe’s most-indebted state is counting on deposits of local governments, cities and other funds to meet end-of-month payments of over 1.5 billion euros ($1.62 billion) after euro-area finance ministers on Friday said they won’t disburse more aid until bailout terms are met. State coffers will be further strained on May 6, when Greece needs to find 200 million euros for an IMF payment.

Cash Reserves

The Central Union of Greek Municipalities said Monday that cities won’t commit to transferring their cash reserves to the Bank of Greece for short-term state financing until the government explains how these funds will be managed.

Still, some city officials, including Yiannis Boutaris, the mayor of Thessaloniki, Greece’s second-largest city, have said they will comply with a government decree ordering them to deposit their reserves with the Bank of Greece, which in turn will invest them in government repurchase agreements.

Tsipras’s anti-austerity coalition has sought to get bailout funds released since agreeing to extend the program in February. The government has repeatedly expressed confidence a deal was imminent, only to be rebuffed by euro-area officials seeking concrete reform steps from Greece.

Last week was no different: days after Varoufakis said views were converging, his counterparts across the region hit him with a volley of criticism.

(Πηγή: bloomberg.com)