Greece's rejection of austerity is just the beginning

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This piece originally appeared on Common Dreams and is reprinted with permission under the Creative Commons Attribution-Share Alike 3.0 License.

Even with a historic political victory in his pocket after seeing his nation vote overwhelmingly against the imposition of further austerity in exchange for a new loan package from foreign creditors on Sunday, Yanis Varoufakis, the outspoken finance minister of Greece's Syriza-led government, announced his resignation on Monday morning. 

In a statement posted to his personal blog, Varoufakis said he "shall wear the creditors' loathing with pride" after it was made clear to him that his "absence" from future talks was urged by negotiating members of the so-called Troika -- the European Commission, European Central Bank, and International Monetary Fund.

"Soon after the announcement of the referendum results, I was made aware of a certain preference by some Eurogroup participants, and assorted 'partners', for my… 'absence' from its meetings; an idea that the Prime Minister [Alexis Tsipras] judged to be potentially helpful to him in reaching an agreement. For this reason I am leaving the Ministry of Finance today," he stated. "I consider it my duty to help Alexis Tsipras exploit, as he sees fit, the capital that the Greek people granted us through yesterday's referendum."

Varoufakis described Sunday's vote as "a unique moment when a small European nation rose up against debt-bondage," and said he would continue to fully support Tsipras, the next finance minister, and the Greek government overall. "The superhuman effort to honour the brave people of Greece, and the famous OXI (NO) that they granted to democrats the world over, is just beginning," he declared.

What is now essential for Greece, Varoufakis said, is that "the splendid NO vote be invested immediately into a YES to a proper resolution -- to an agreement that involves debt restructuring, less austerity, redistribution in favour of the needy, and real reforms."

Gabi Zimmer, president of the European leftist coalition GUE/NGL, mirrored Varoufakis' sentiments by saying now that Greece has made it clear what they say 'No' to, it is now equally important to recognize what they are saying 'Yes' to.

"The NO in the referendum means the Greeks are saying YES to a socially just distribution of the burdens for the sustainable reforms necessary in their country to fight corruption and nepotism," explained Zimmer. "They are saying YES to sustainable reconstruction and growth of their economic structures and to reduce military spending. Above all, they are saying YES to mandatory negotiations on debt restructuring, including a haircut. They are saying YES to European integration and YES to European democracy."

Offering a mid-day breakdown of the latest developments, the Guardian reports:

The scale of yesterday's No vote has stunned Europe this morning, as leaders prepare for Tuesday's emergency summit.

Italy's Matteo Renzi has just posted on Facebook that Europe must find permanent solution to the Greek crisis and go beyond austerity.

But European Commission vice-president Valdis Dombrovskis has warned that the No vote makes the situation even more complicated.

Angela Merkel and Francois Hollande are due to meet tonight in Paris to discuss the crisis. UK prime minister David Cameron has already held a meeting in London to discuss the impact on Britain response.

The Greek banking system continues to creak after a week of capital controls; some ATM machines are now only dispensing €50 per day, rather than the €60 limit.

With congratulations to the Greek people being expressed from around the world in the wake of the vote, what comes next for the nation remains anything but clear. As eurozone ministers plan for a meeting slated for Tuesday, it was reported that Tsipras has already been on the phone with ECB president Mario Draghi. Bank officials are said to be convening a teleconference later in the day to discuss their next move.

As Yves Smith writes at Naked Capitalism, "the key party to watch to see whether the lenders are prepared to soften their stance much is the ECB. The central bank is to decide today whether to increase the ELA [an emergency funding program], which is a necessary step for the punishing bank holiday to come to an end. Varoufakis had promised Greek banks would open no matter what on Tuesday. It's hard to see how they could given that even cash itself is running scarce."

It was also reported by Reuters that Tsipras will be speaking by phone with Russian President Vladimir Putin, raising familiar speculation about financial assistance from Moscow should the Troika members remain stubborn to Greek's demand for debt relief and other new loan conditions.

For many, of course, the critical question is whether the Troika members will now bend to the democratic voice of the Greek people and offer a new deal that could be accepted by the Syriza-led government. And if not, what becomes of Greece -- and is an exit from the eurozone the only likely option?

Jeroen Dijsselbloem, the Dutch finance minister who is also president of the Eurogroup, said on Monday that his ongoing desire is to keep Greece within the eurozone.

"That is their goal, and still mine," he told reporters on his way to The Hague on Monday. "But we will have to see if it happens."

However, citing the historic examples of Iceland and Argentina -- two nations in recent years who have defaulted on unsustainable debt in order to save their economies -- Nobel-winning economist Paul Krugman, in his New York Times column on Monday, argued: "Unless Greece receives really major debt relief, and possibly even then, leaving the euro offers the only plausible escape route from its endless economic nightmare."

And, he adds, "let's be clear: if Greece ends up leaving the euro, it won't mean that the Greeks are bad Europeans. Greece's debt problem reflected irresponsible lending as well as irresponsible borrowing, and in any case the Greeks have paid for their government's sins many times over. If they can't make a go of Europe's common currency, it's because that common currency offers no respite for countries in trouble. The important thing now is to do whatever it takes to end the bleeding."

This piece originally appeared on Common Dreams and is reprinted with permission under the Creative Commons Attribution-Share Alike 3.0 License.

Photo: flickr/ Bob Dass

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