What Varoufakis got from London

What Varoufakis got from London

London, February 5, 2015/ Independent Balkan News Agency

By Thanasis Gavos

In meeting his British counterpart George Osborne at 11 Downing Street the Greek Finance Minister Yanis Varoufakis was aiming to win over another ally in his attempt to change the economic philosophy imposed on the Greek and the European economy.

Quite a tall order, as Mr Osborne himself is one of the most dutiful disciples of the tight fiscal policy dogma that has conquered the minds of Europe’s political elites. However, with less than a hundred days remaining until the May general election in the UK, the last thing the Chancellor of the Exchequer would want to see is yet another episode that would ignite the gunpowder stored at the euro zone’s foundations.

Mr Osborne said the meeting, overshadowed to a degree by the diametrically opposite stylistic choices of the two men, was “constructive”. Mr Varoufakis spoke of the common ground found during their 45 minute discussion in their determination to break “the extended pretence cycle which has rendered Greece a festering wound on the side of the eurozone.”

The overall statement by George Osborne was typically British – standing in the middle of an argument and trying to appear not to be taking sides. He said he had urged his guest to act responsibly. It was London’s way of telling the Greeks not to do anything ‘stupid’, meaning anything unilateral in terms of the debt and fiscal policy, anything not agreed with Germany. It was also a dig against Labour and their ‘irresponsible’ fiscal policy. But the Chancellor also sent a message to Germany, in saying that the euro zone must come up with a better plan for jobs and growth.

For good measure, and as a pre-emptive excuse for any future failings in his policy, he described the rift between Athens and its partners as the biggest risk for global economy and as a rising threat for the British economy.

What is certain is that Mr Osborne and Mr Cameron would not open a new front with Germany over Greece, when so much depends on Berlin for the future of the UK in the European Union. Greece has always been a convenient excuse for Mr Osborne’s economic choices, so he is probably in the camp of those who want to see the euro zone fudging another agreement, a compromise that will not change things dramatically towards Greece’s way, nor will it further undermine Europe’s growth prospects. ‘Extend and pretend’ in terms of the debt and a loosening of the austerity would do the trick from the British point of view.

As for Yianis Varoufakis’s meeting with more than a hundred bankers, investors, debt and equity experts from the City of London, his presentation seems to have gone down much better than a previous attempt before the elections by other SYRIZA financial team members. Although some investors were dismissive (“jokers”, was one debt expert’s conclusion) and many raised doubts about whether Germany and the ECB would accept the ‘debt swap’ proposal to replace the term ‘write-off’ and the reversal of troika demanded measures, many also appreciated the minister’s honesty and determination to fight for growth – without hitting the few private investors still left with Greek bonds.