Last week the markets were preoccupied with the debt situation in Greece, and they will be this week as well. This morning brings the surprise resignation of Greek Finance Minister Yanis Varoufakis, despite a victory for his anti-austerity position in the weekend’s referendum. The markets are left to wonder whether Athens can now strike a deal with its lenders.
The combative Varoufakis has been a thorn in the side of Greece’s creditors and has not had an easy relationship with his euro zone counterparts. He had recently been replaced as head of the negotiating team with lenders due to the increasingly acrimonious direction of the talks. One analyst described his presence as “toxic” and hoped a deal with lenders could still be found with his removal from the lead seat at the bargaining table.
Economist Peter Bofinger, a member of the German Council of Economic Experts, which advises German Chancellor Angela Merkel, said he hoped Germany would compromise, but thought it unlikely. Euro zone leaders are expected to meet on Tuesday afternoon to discuss their next move following the vote. Ahead of that meeting, the Eurogroup of euro zone finance ministers are due to meet at noon London time. Meanwhile, on Monday the European Central Bank will decide whether it should extend more emergency funding to Greek banks.
Other analysts were not so sure that Voroufakis’ departure would herald a new era of cordial and cooperative relations with Greece’s euro zone partners, who have become jaded with Greece’s defiant attitude toward reforms and spending cuts, despite its reliance on them for financial aid.
One analyst opined: “The one thing that is certain and there’s a 100 percent chance is that Greece will leave the euro. Will it happen this year, next year or the year after? Will it happen when the whole euro project implodes? Those are the questions, but I think that the euro project is toast, but it’s toast that may be burning very slowly.”
Note: CNBC reporting was used in the preparation of this post.