Greece moves to sideline Varoufakis after reform talks fiasco

Mon Apr 27, 2015 4:43pm EDT
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By Renee Maltezou and Deepa Babington

ATHENS (Reuters) - Greek Prime Minister Alexis Tsipras on Monday reshuffled his team handling talks with European and IMF lenders, a move widely seen as an effort to relegate embattled Finance Minister Yanis Varoufakis to a less active role in negotiations.

An anti-austerity economist who has angered peers with his brash style, Varoufakis is facing calls to quit after returning from a meeting of euro zone finance ministers in Riga isolated and empty-handed while Athens scrambles to avoid bankruptcy.

Tsipras and senior aides publicly voiced support for Varoufakis at a meeting on Sunday and agreed the finance minister would supervise a new team negotiating a reforms deal with lenders, a government official said.

But Deputy Foreign Minister Euclid Tsakalotos - a close Tsipras ally and soft-spoken economist liked by officials representing creditors - was appointed coordinator of the group, the official said. This would elevate him from his current position and give him a more active role in the negotiations, pushing Varoufakis to the sidelines.

The latest developments suggested Tsipras was ramping up efforts to ease tensions with lenders and strike a deal to unlock aid so Greece can avoid defaulting on payments, which could force it out of the 19-nation euro zone.

The news spurred a rally in Greek stocks and bonds. Greek two-year bond yields fell 250 basis points to a two-week low of 23.55 percent, reversing an earlier rise. Athens stocks rose 4 percent while Greek bank shares jumped 9 percent.

"We are constantly making improvements to coordinate in a better way and have a more effective stance, because this is what people, the times and the negotiations demand," Tsakalotos told lawmakers. "We are learning from our mistakes."

Later on Monday, the government said it was preparing a bill to legislate reforms already presented to the lenders, in an effort to inject new momentum into the slow negotiations.   Continued...

Minister of Finance of Greece Yanis Varoufakis speaks at a news conference during an informal meeting of Ministers for Economic and Financial Affairs (ECOFIN) in Riga, Latvia, April 24, 2015. REUTERS/Ints Kalnins