Yanis Varoufakis Exit Stage Left

For weeks he has dominated the headlines across Europe, but now Greece's finance minister, the professor-turned politician-turned superstar, seems to be shunning the spotlight.
Yanis Varoufakis leaving Alexis Tsipras' office, Maximos Mansion.

When the Greek prime minister, Alexis Tsipras, made his way to Berlin on Monday for talks with Chancellor Angela Merkel, his finance minister, Yanis Varoufakis, was notably absent from the delegation.

And the charismatic minister has also avoided the spotlight this week by canceling trips to London and Brussels.

Mr. Varoufakis appears to be taking a backseat in contentious negotiations with Germany, or at least keeping out of the media glare.

“There is a mood within the government which suggests that he should tone down his level of public exposure,” Spyros Economides, a professor of international relations at the London School of Economics, told Handelsblatt Global Edition.

A sudden celebrity in European political circles, Mr. Varoufakis's blunt, tough-talking profile has almost overshadowed his country’s plight. Greece is on the brink of leaving the euro zone if it does not secure a deal with its European partners.

Yet media attention been largely focused on the country’s charismatic finance minister.

A scandal over whether he gave the symbolic middle finger to Germany during a talk in 2013, a photo shoot with Paris Match magazine and verbal sparring with his German counterpart, Wolfgang Schäuble, have made the minister himself the story, perhaps complicating attempts by his own government to reach a deal with its European lenders.

The Paris Match article, which featured Mr. Varoufakis at home, playing the piano and drinking wine with his wife on the terrace, even drew criticism from his allies in the radical leftist Syriza party.

He is extremely self-confident but this may not be what the government wants or what his party needs. Spyros Economides, London School of Economics

Dimitris Papadimoulis, a member of the European Parliament for Syriza, tweeted: “Kind request: fewer interviews and more work. The times require seriousness, solutions and measurable results.”

And even the minister seemed to realize that all the media attention was getting out of hand. At an event in Italy last week he said that the Greek government now needed "peace and quiet" in order to get "down to work to put Greece on the path of recovery."

Another sign of Mr. Varoufakis seeking to step out of the limelight came when he decided not to make a trip to London, where he was scheduled to speak to the City and global investors in a presentation entitled: “Future of Europe: the Greek perspective,” as well as some other events.

He also failed to attend the Brussels Forum at the weekend, an annual event organized by the German Marshall Fund, that brings together politicians, business leaders and journalists.

It would seem Mr. Varoufakis could have even started to become a liability for his government.

“He is abrasive. He is extremely self-confident but this may not be what the government wants or what his party needs. They need somebody who can deliver in political terms both internally and externally,” Mr. Economides said.

“There is a sense that Varoufakis has to keep his head down after all those PR gaffes,” Damian Mac Con Uladh, an Athens-based journalist, told Handelsblatt Global Edition. “The opposition here has said Varoufakis has damaged Greece's image but there isn't a widespread feeling that he should resign.”

Many Greeks still regard Mr. Varoufakis as a breath of fresh air. There was a widespread perception that the previous governments were lackeys, who merely implemented the dictates of the troika. Many Greeks welcomed the fact that the new government seemed to be standing up to the troika for the first time.

After winning elections in January, Mr. Tsipras’ decision to appoint Mr. Varoufakis, an academic and not a career politician, to the position of finance minister was praised by many as a bold move.

Mr. Varoufakis had been an articulate critic of the austerity regime imposed on Greece as part of its bailout programs with the European Union, European Central Bank and International Monetary Fund.

Yet some now argue that the finance minister’s abrasive demeanor may have damaged their cause with the international lenders that the country depends upon.

In particular Mr. Varoufakis’ public run-ins with both Mr. Schäuble and the head of the eurogroup of euro zone finance ministers, Jeroen Dijsselbloem, has soured the mood in some European capitals towards the new government in Athens.

Showing distinct disregard for diplomatic niceties, after a meeting in Berlin, the Greek finance minister even contradicted his German counterpart after he had said the two had “agreed to disagree.” The fact that he leaked documents to the press in the midst of negotiations also did little to endear him to European officials.

In another sign of possible shifts within the Syriza party, long-time advisor to Mr. Tsipras, Giannis Milios, resigned last Wednesday, on the eve of a crucial European Union summit in Brussels.

The decision by the Marxist professor of economic policy could be a sign of shifts within Syriza as the government seeks to find a deal with its lenders to avoid bankruptcy.

Furthermore, the deputy prime minister, Giannis Dragasakis, regarded as a relative moderate within the party, has been taking a more prominent role in recent weeks. In an article in the Financial Times last week, entitled “All we ask is that Europe give Greece a chance,” Mr. Dragasakis argued that Greece was asking for equal not special treatment.

Greece has been given a four month extension on its current bailout regime, although lenders have said they are not prepared to release the remaining funds until Athens makes further commitments to reforms.

Reining in Mr. Varoufakis is part of the strategy to secure those funds, according to Theodore Pelagidis, professor of economics at the University of Piraeus, Greece.

“The government desperately needs money," he told Handelsblatt Global Edition. "So, Tsipras saw the failure of Varoufakis and took over to get at least a small tranche to survive until June.”

According to Mr. Economides, the fact that Mr. Tsipras is taking a more prominent role is also part of a strategy in Greece to politicize the debt crisis. “This marginalizes the minister of finance, because he is more in charge of the hard economics.”

To that end Mr. Tsipras made his way to Berlin on Monday for his first one-on-one talks with Chancellor Merkel.

Although officially a joint decision by the eurogroup, Germany, as the biggest contributor to the Greek bailouts, will likely have the biggest say on any agreement.

After the talks, the two leaders sought to strike a conciliatory tone.

While Mr. Tsipras is no less a critic of austerity than Mr. Varoufakis, as a politician he is more au fait with striking the right tone in the right setting.

The Greek prime minister said in the joint news conference that there needed to be an end to the heated rhetoric in both countries, which have seen relations strained by the euro crisis and repeated demands from Greece of war reparations.

"Neither are the Greeks lazy louts nor are the Germans to blame for Greece's ills – we have to work hard to overcome these stereotypes," he said.

After the talks on Monday, Ms. Merkel emphasized that she sensed "an appetite for cooperation.”

Ms. Merkel’s stance was designed to show that she still wants Greece to stay in the euro zone, even though she knows that any compromises or new bailout funds would be highly unpopular both with the German public and with her own Christian Democrats party.

The government desperately needs money. So, Tsipras saw the failure of Varoufakis and took over to get at least a small tranche to survive until June. Theodore Pelagidis, University of Piraeus, Greece

“Schäuble wants the Greeks to give in 100 percent,” a high-ranking German government official told Handelsblatt. “The chancellor would be prepared to concede 15 percent if the Greeks would give her 85 percent.”

Even that could prove difficult.

In a letter to Ms. Merkel ahead of the talks, Mr. Tspiras had said that Greece might soon have to choose between paying pensions and salaries and maintaining debt repayments.

The government has said it hopes to make greater efforts to crack down on tax evasion and corruption. One other possible form of income could be to increase sales taxes on tourist islands, which up to now had enjoyed lower taxation rates.

On Tuesday, a Greek government spokesman said Athens would present its proposed package of reforms to its euro zone partners by next Monday at the latest, in hopes they will release much needed cash.

Gabriel Sakellaridis said Mr. Tsipras and Ms. Merkel had discussed the outline of the reforms but did not go into details.

"I believe points of convergence were found," he said.


Siobhán Dowling covers European politics for Handelsblatt Global Edition. Jan Hildebrand in Berlin and Gerd Höhler in Athens contributed to this article. To contact the author: [email protected]