Varoufakis to take a backseat in Greece deal

As Greece moved closer toward bankruptcy, Prime Minister Alexis Tsipras seemed more eager to strike a deal with his international creditors.

Tsipras was finally ready to cut pensions, speed up privatizations and increase Value Added Tax (VAT) in luxury islands like Mykonos and Santorin. These proposals would be soon presented to the European Union (EU) and the International Monetary Fund (IMF), media reports said on Monday.

"We need to find a solution by mid-May," Nikos Filis, parliamentary representative of Tsipras' party Syriza said on Greek radio.

'They want his head'

Tsipras was finally ready to negotiate after he spoke with German Chancellor Angela Merkel and Eurogroup chief Jeroen Dijsselbloem in separate phone calls on Sunday. He then met Finance Minister Yanis Varoufakis, causing the media in Greece to speculate that Varoufakis might eventually be removed from the position of chief negotiator in Greece's talks with its creditors.

Tsipras' decision could be traced back to a Eurogroup meeting in Riga last week, where eurozone finance ministers accused Varoufakis of being a "gambler" and leading his country in the wrong direction. "They want his head," said a headline in the Greek daily Ta Nea.

Euclid Tsakalotos, the deputy foreign minister, would henceforth lead all bailout talks for Greece, Tsipras said. However, Varoufakis would still remain finance minister, although his close confidante was being replaced with Nikos Chouliarakis, who has worked with the IMF, the EU and the European Central Bank before. "Everyone will breathe a sigh of relief when they see Chouliarakis as the Greek representative," an official at the Greek Finance ministry told German news agency dpa.

Prospects for Tsipras

Greece is facing a tough schedule and will soon have to default on its payments if eurozone leaders do not agree to release 7.2 billion euros ($7.6 billion), the last tranche of a 240-billion-euro rescue package.

Experts say that Prime Minister Tsipras will need to make tough choices, like cutting pensions and reducing public spending to convince his financiers. If he does not agree, the country could default on its payments, but if he agrees to the reforms, he could face opposition from radical leaders in his own Syriza party.

The toughest challenge for Tsipras would be to get support from Parliament on implementing pension cuts. However, advisors say Tsipras should decide on spending cuts through a referendum to solve the problem.

mg/bw (AFP, dpa, Reuters)