Sunday 26 April 2015

Greek finance minister abused by €urozone counterparts

The Greek finance minister, Yanis Varoufakis, has been abused by €urozone finance ministers at a meeting in Riga for refusing to cave in to their unacceptable demands.

Varoufakis was called "a time waster, a gambler and an amateur" by his opposite numbers in the EU debt club for failing to agree to more austerity measures in return for another £5.2bn of debt.

It looks increasingly certain that Greece will become the first country to leave the single currency although what form that exit takes remains to be seen. There is no formal mechanism for leaving the €urozone and it's highly likely that the Greek government will want to retain the €uro rather than return to the Drachma so the most likely outcome is that Greece withdraws from the formal currency union but retains the €uro informally in the hope of re-admittance into the €urozone in the future.

Greece desperately needs to devalue to boost exports and bring in hard currency but a Panama-style unilateral currency union isn't going to achieve that. If Greece is going to recover from depression, Syriza needs to give up on the €uro and start formulating a plan for the return of economic sovereignty.