Greek Finance Minister Yanis Varoufakis put it rather bluntly, calling the euro monetary union a “house of cards” and noting that if the Greek card is removed, “they all come down.”
His defiance, along with a fiery “state of the Union” like speech to the Greek Parliament on Sunday by Prime Minister Alexis Tsipras, have left European leaders and economists worldwide stunned and have made the debt crisis a hot agenda topic on the upcoming meeting between German Chancellor Angela Merkel and US President Barack Obama in Washington.
“Exit from the euro does not even enter into our plans, quite simply because the euro is fragile. It is like a house of cards. If you pull away the Greek card, they all come down,” Varoufakis said in an interview with the Italian TV station RAI.
“Do we really want Europe to break apart? Anybody who is tempted to think it possible to amputate Greece strategically from Europe should be careful. It is very dangerous. Who would be hit after us? Portugal? What would happen to Italy when it discovers that it is impossible to stay within the austerity straight-jacket?”
“There are Italian officials – I won’t say from which institution – who have approached me to say they support us, but they can’t say the truth because Italy is at risk of bankruptcy and they fear the consequence from Germany. A cloud of fear has been hanging over Europe over recent years. We are becoming worse than the Soviet Union,” he concluded.
He shared similar sentiments with CNN’s Christiane Amanpour in an interview.
Varoufakis described the austerity measures as “trying to extract more milk from a sick cow by whipping it. You will kill it. You will not get more milk out of it.”
Tsipras maintains the same party line.
His coolness has caught Brussels, Frankfurt, Berlin, and the markets off guard. Most people assumed that the 40-year political rookie would back away from exorbitant demands in his landmark policy speech to the Greek parliament on Sunday night. Instead Europe heard a declaration of war.
Tsipras defiantly vowed to implement every measure in Syriza’s pre-electoral Thessaloniki Programme “in their entirety” with no ifs and buts. This even includes a legal demand for €11bn of war reparations from Germany, a full 71 years after the last Wehrmacht soldier left Greek soil.
“Greece shouldn’t assume that the overall mood in Europe has changed to the point that the euro zone would endorse Mr. Tsipras’s entire government agenda without limitations,” European Commission President Jean-Claude Juncker told reporters at an event near Berlin.
Berkeley economist Barry Eichengreen warned that a Grexit would be “Lehman squared”, setting off a calamitous chain reaction with worldwide consequences.
“What they want to do has nothing to do with all the agreements which have been made,” German lawmaker Michael Fuchs, deputy caucus chairman of Chancellor Angela Merkel’s Christian Democrats in parliament, said in a Bloomberg TV interview. “If Greece at the end of the day says the only way to get rid of the pressure is to step out of euro zone, it’s up to them. We are prepared for this moment.”