GREECE

Greece’s new cabinet sends defiant message to EU

AFP

Greece’s new Prime Minister Alexis Tsipras has picked a staunch critic of austerity as his finance minister, signalling his resolve to take a tough line with Greece’s creditors in an effort to write off a large chunk of the country’s debt.

Advertising

The new cabinet, which holds its first meeting on Wednesday, is a mixed bag of economists, lawyers, professors and journalists, spanning Syriza’s more radical and pragmatic wings.

It includes officials from its coalition ally, the right-wing Independent Greeks, who share Syriza’s aversion to the bailout terms but disagree with the left-wing radicals on almost everything else.

The key finance portfolio went to economist Yanis Varoufakis, 53, who has described the savage budget cuts imposed on Greece in return for a €240 billion bailout as “fiscal waterboarding”.

A self-styled “accidental economist” and “erratic Marxist”, Varoufakis studied in Britain and has also taught in Australia, Greece and the US. His unorthodox CV includes a stint as in-house advisor for video game maker Valve.

Like Tsipras, he wants to renegotiate the terms of Greece’s bailout deals and write off a large chunk of Greek debt, which stands at a whopping 175% of GDP.

He says repayment of the country's huge rescue package loans should be conditional on the return of economic growth, a policy change he argues would benefit all of Europe.

"It is a great challenge, but the challenge is how to minimise social costs that were unnecessary throughout Europe," Varoufakis told reporters following his appointment on Tuesday.

Despite his fiery rhetoric, the new finance minister is expected to adopt a constructive approach as he begins critical talks with Greece’s international creditors in the coming weeks.

‘Humanitarian crisis’

Varoufakis will be backed by former Communist politician Yannis Dragasakis, who took the deputy prime minister’s role and is expected to oversee economic issues.

Tsipras has also announced expanded powers for the ministries of development, environment, interior and public works.

His party secured a landmark victory in last week’s snap election on a pledge to reverse the belt-tightening measures that have slashed household incomes by a third, driven unemployment above 25% and pushed millions into poverty.

Greece’s new government is expected to pursue urgent social welfare policies aimed at tackling the country’s “humanitarian crisis”, including the distribution of food stamps and free electricity for the poor.

Syriza has pledged to reverse a cut to the minimum wage, restore collective bargaining agreements abolished under the bailout deal, and of €5 billion in incentives for firms to hire workers.

George Katrougalos, the new deputy minister in charge of administrative reform, said the government would reverse some layoffs of public sector workers, rolling back another key bailout measure.

Unlikely ally

One of the first decisions announced by the new government was to stop the planned sale of a 67 percent stake in the Piraeus Port Authority, Greece’s largest port, which looked set to go to a Chinese suitor.

Syriza had announced before the election it would freeze the sale of state assets agreed as part of the bailout deal.

Ironically, the sale of the port of Piraeus had been masterminded in 2008 by another member of Tsipras’s new cabinet, Panos Kammenos, who was then deputy minister of marine affairs.

Kammenos, the pugnacious leader of the right-wing Independent Greeks, announced he would join a Syriza-led government on Monday, giving Tsipras the seats he needed to secure a majority in parliament.

He takes over the defence portfolio, a move that has angered many of Syriza’s core supporters but also hinted at the radical left-wing party’s willingness to compromise as it grapples with the challenges of power.

Daily newsletterReceive essential international news every morning