Yanis Varoufakis defends referendum, slams ‘terrorists’ for ‘fiscal waterboarding’

GREECE’S former Finance Minister Yanis Varoufakis has defended the controversial bailout referendum, slamming European creditors as “terrorists”.

‘They bring you to the point where you can’t pay’

GREECE’S maverick former Finance Minister Yanis Varoufakis has defended his decision to hold a controversial bailout referendum, saying he had “no alternative”.

Speaking to the ABC’s Lateline last night, Mr Varoufakis said his party wasn’t given a mandate to agree to an “ultimatum that wouldn’t render the Greek economy sustainable”.

“On 25th June in a Eurogroup meeting, when I was still Finance Minister, I was presented with a comprehensive loan package as well as reform package for the Greek economy,” he said.

“We studied it very carefully and I asked myself and my colleagues asked themselves a very simple technical question: is this manageable? Is this viable?

“And I asked my partners in Europe: do you think this is viable? If we agree to this, are we going to turn the corner? Are we going to be able to repay the new debt that we are piling up on existing debt?

“And the answer we all gave, including the institutions, including the International Monetary Fund, in all truth and honesty, was ‘No’.”

The Greek people overwhelmingly voted ‘No’ in the July 5 referendum, plunging the country and international markets into chaos. Despite the vote, Prime Minister Alexis Tsipras sparked outrage and protests by dramatically caving in to creditors demands.

Discussions over Greece’s third bailout in five years are set to begin in Athens imminently after Greece’s parliament yesterday approved tough new conditions set by European creditors.

Officials in Athens and at the European Union said negotiators are expected to start arriving on Friday, marking the first time high-level talks will be held in the Greek capital since Prime Minister Alexis Tsipras’ left-wing government assumed power in late January.

The news came hours after the Greek parliament approved a second round of reforms demanded by Greece’s creditors before the negotiations could start over a three-year financial bailout expected to be worth 85 billion euros ($A139 billion).

Mr Varoufakis revealed he resigned once he discovered this was the route Mr Tsipras was planning to take.

“The night of the referendum when I discovered that my prime minister and my government were going to move in the direction that you’ve mentioned, I resigned my post,” he said.

“That was the reason why I resigned, not because anybody else demanded it.”

At the time, Mr Varoufakis wrote on his personal blog that he was stepping down because he “was made aware of a certain preference by some Eurogroup participants, and assorted ‘partners’, for my ... ‘absence’ from its meetings”.

He told the ABC he stood by his use of inflammatory language like “terrorism” and “fiscal waterboarding” to describe creditors’ demands.

“I would probably use exactly the same language, but amplify more my words and maybe even have them cast in neon lights all over Greece,” he said.

“You bring them to the point of suffocation and then you give them a bit of oxygen. This is what the troika has been doing to previous governments, not just to ours for five, six years now.

“They bring you to the point where you can’t pay salaries, you can’t pay civil servants’ pensions, and then, at the last moment, they put you in a situation where either you have to introduce unsustainable new policies like increases in VAT, or your banks will be closed down or your economy’s going to become completely bankrupt in a kind of visible way as well.”