Yiannis Varoufakis has made it clear where he wants to see Europe go. He wants a surplus recycling mechanism where the taxes paid by Germans (German exporters) are recycled back into countries like Greece.
This money will be funneled either directly to the banks in Greece for them to make loans and/or funneled to Greek businesses through the EIB (European Investment Bank)
So how does his strategy effect his negotiation tactics with the Eurogroup?
Obviously German taxpayers and probably the German government are opposed 100% to this idea. The idea of funneling their money, for free, back into a country whose government they see as incompetent is unacceptable.
Varoufakis has stated that the Federal system of taxation in the USA is the model he wants to see implemented in the EU
You can imagine how happy this idea makes the ECB and the EU bureaucracy in Brussels. And you can imagine the level of support he is going to be receiving from the EU establishment players and those in the ECB.
In the scheme of the negotiations you have the attack dog that is Varoufakis working for all the players who want to see an EU with its own tax raising powers and all the players that want to start lending billions if not trillions of Euros to this new EU government that has it’s own tax raising powers.
And on the other side you have Germany and any other country that will be the net loser in any recycling mechanism.
I have written about this dynamic before here https://independence4walesdotcom.wordpress.com/2012/02/25/germany-vs-ecb-greece-is-caught-in-the-middle-will-greeks-have-to-starve/
(Long before Varoufakis was ever in the running for the finance minister position).
Do the EU and the ECB actually need a rogue minister to turn opinion against Germany?
Germany has been approaching the whole Greek government crisis from the logical perspective, namely that there is absolutely no reason why the Greek government needs outside assistance in any shape or form.
You would have to agree with the German position.
So in a logical world, there is no way this recycling mechanism is going to materialise. There is simply no need for it and any recycling mechanism is only going to “enable” corrupt and incompetent politicians and bureaucrats to continue acting in the same way, the same way that created their own crisis.
So what is left is emotion and/or moral outrage. Is Varoufakis prepared to cut of his nose to spite his face? Is he prepared to create some sort of genuine crisis in Greece to put “moral” pressure on the Germans to change their policy. He will have a lot of leeway to do so, given the parties that are in his corner.
So where does that leave the negotiations at the Eurogroup?
You can continue to see Varoufakis making waves, at and away from the negotiating table. And what worries me the most is that a so called “Socialist/Communist” government is already threatening to put pensioners at the top of the list when it comes to cutting spending, something that will surely create some sort of crisis in Greece.
Varoufakis and Tspiras have given their hit list ie those people who they are going to hurt first if they do not get their way, the ball is firmly in the German court as to what comes next.
Varoufakis is hand is getting stronger by the day, as the bills get bigger and more frequent he simply has to not fall of the wave before is breaks on the beach.
By the day, the German hand is getting weaker for the same reasons. The only way logic will win the day is if the players with the weakening hands simply stop playing until the rules are in their favour but I can not imagine the German government leaving the negotiating table which would leave only one possible outcome.
Varoufakis 1 – German Government & Greek people 0