Yanis Varoufakis Accuses Germany of Using Greece’s Euro Exit to Frighten French

“My conviction is that the German finance minister wants Greece to be pushed out of the single currency to put the fear of God into the French and have them accept his model of a disciplinarian eurozone.” “Schaeuble is convinced that as things stand, he needs a ‘Grexit’ to clear the air, one way or another,” said Varoufakis, who stepped down as finance minister on Monday after months of wranglings.

Greece’s parliament was expected, in the early hours of Saturday, to approve last-ditch government proposals to its eurozone creditors aimed at preventing a messy exit from the currency union.

The vote comes as months of bitter wranglings between Greece and its creditors are reaching a climax, themselves the culmination of a years-long debt crisis that has engulfed the eurozone, including it’s second-largest economy France.

France’s parliament on Friday adopted reforms designed to jump-start the country’s moribund economy, which is struggling with meagre growth and sky high unemployment, as well as a vast debt pile that has created friction with Brussels.

Varoufakis said the Germans, seen as Europe’s paymasters and the drivers of austerity, wanted to use Greece as an example to keep the French in line.

“Suddenly, a permanently unsustainable Greek public debt, without which the risk of ‘Grexit’ would fade, has acquired a new usefulness for Schaeuble,” he said.

When Greece became insolvent in 2010, instead of restructuring the debt and reforming the economy, the “toxic option” was chosen: “Extending new loans to a bankrupt entity while pretending that it remains solvent.” Varoufakis said that by the time Syriza won power in January, “a large majority within the Eurogroup – under the tutelage of Schaeuble – had adopted Grexit either as their preferred outcome, or weapon of choice against our government”.

He claimed that, if Greece did end up leaving the eurozone, it would more than a year to achieve.

“Grexit would be the equivalent of announcing a large devaluation more than 18 months in advance: a recipe for liquidating all Greek capital stock and transferring it abroad by any means available,” he wrote.