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Euclid Tsakalotos becomes Greece's new finance minister; deal remains elusive

By Andrew V. Pestano
Euclid Tsakalotos is set to become Greece's new Minister of Finance. File Photo by Sinn Féin/Flickr
1 of 4 | Euclid Tsakalotos is set to become Greece's new Minister of Finance. File Photo by Sinn Féin/Flickr

ATHENS, Greece, July 6 (UPI) -- Oxford-educated economist Euclid Tsakalotos is set to become the new minister of finance for Greece but the prospect of a potential deal remains complicated.

Former Finance Minister Yanis Varoufakis resigned Monday shortly after helping lead a historic financial referendum that rejected bailout demands from international creditors.

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Varoufakis said he resigned because many creditors did not want him present during further negotiations and as to continue his support for Prime Minister Alexis Tsipras.

In response to the referendum, European Commission Vice President Valdis Dombrovsk said the vote of "no" is "neither legally nor factually correct," also adding that the Commission will not negotiate with the Greek government until it receives a mandate from the Eurozone's finance ministers who meet tomorrow.

In the referendum, the Greek people were asked if they accepted the terms of an international bailout submitted by the European Commission, the International Monetary Fund and the European Central Bank.

The IMF is prepared to respond as needed following the Greek referendum.

"The IMF has taken note of yesterday's referendum held in Greece. We are monitoring the situation closely and stand ready to assist Greece if requested to do so," Christine Lagarde, head of the IMF, said in a statement.

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With a voter turnout of 63 percent, 61 percent of those voters cast "OXI" or "No" ballots, effectively rejected the creditors' terms.

"The referendum of July 5th will stay in history as a unique moment when a small European nation rose up against debt-bondage," Varoufakis said on his blog. "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 judged to be potentially helpful to him in reaching an agreement. For this reason I am leaving the ministry of finance today."

Varoufakis is considered by many to be outspoken, combative and quarrelsome. He's often clashed with creditors during and outside negotiations.

"I shall wear the creditors' loathing with pride," he said, adding that he will support the new finance minister and Tsipras' leftist, anti-establishment Syriza government.

Needing to pay a $1.7 billion payment to the International Monetary Fund by the end of June, but not having the cash to do so, Athens engaged in numerous negotiations over the last four months -- hoping to strike a deal to unlock the remainder of $7 billion in relief cash previously granted by the organization.

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However, demands by creditors for Athens to cut government spending in exchange for the relief aid proved to be the deal breaker.

Tsipras repeatedly rejected the offers, saying the cuts would affect Greek workers' wages and state-funded pensions.

Greece has a public debt of $361 billion from previous loans keeping the country afloat for the past five years. On June 30, Greece became the first developed nation in history to default on a loan from the IMF.

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