World Economy

Greece Bows Down to Creditors

Former finance minister Yanis Varoufakis
Former finance minister Yanis Varoufakis

As Greece passed another set of stringent reforms on Tuesday demanded by its lenders, the country’s former finance minister Yanis Varoufakis told CNBC that the country had become like a “slave” to creditors and that the country had less freedom than a “small suburban council.”

Varoufakis, Greece’s former finance minister who oversaw fraught talks with the country’s international lenders in 2015 at the height of its financial crisis, said that Greece’s third bailout package forced Greece to agree with its creditors.

“The Greek authorities have committed to agreeing with (lending) institutions. I can assure you that if you were going to sign a contract like that with me you would become my slave,” he told CNBC on Tuesday.

Varoufakis attracted notoriety during Greece’s negotiations with lenders last year for his outspoken and controversial comments on Greece’s fellow eurozone countries and the European Central Bank, the International Monetary Fund and European Commission—the so-called “troika” of institutions lending money to Greece.

This led him to resign after it was suggested to him by Prime Minister Alexix Tsipras that he was hindering negotiations with lenders.

In the end, Tsipras signed up to a third €86 billion ($96 billion) bailout last July, averting an impending bankruptcy and exit from the eurozone but going against the wishes of the Greek people (and Varoufakis) who had voted against more austerity measures—and had elected Tsipras’ Syriza party earlier in the year specifically because it had opposed austerity.

In Greece on Tuesday, lawmakers passed more reforms sought by the country’s lenders to cut pension spending and speed up the privatization process in exchange for more financial aid. More need to be done and Greece has been accused of being slow to progress with reforms, however.

The former finance minister said that it was unrealistic to see a recovery on the horizon and that reforms were not enough to rescue Greece.

“(Former prime ministers) all promised that within six months just around the corner we have a recovery coming, (but) it is impossible to have a recovery coming when tax rates keep going up,” he said. “It’s game over. And either we reboot the program, we tear it up and start afresh, or only by a miracle, of biblical proportions, can change be effective,” Varoufakis said.