Greece’s outspoken finance minister Yanis Varoufakis has been sidelined after three months of fruitless talks with international creditors, which culminated in an acrimonious meeting of eurozone finance ministers last Friday.
The Athens stock market surged on the news of the reshuffle of the bailout negotiators, in which Alexis Tsipras, the Greek prime minister, promoted two low-profile UK-trained economists.
The move came after Mr Varoufakis was rounded on at last Friday’s meeting in Riga for his failure to make progress on reaching a deal with bailout monitors to unlock €7.2bn of funds frozen since last year.
The shake-up signals that Mr Tsipras may be preparing to make concessions to creditors as Greece struggles to raise €1bn to pay pensions and subsidies this month, and repay loan and interest of €880m to the IMF by mid-May.
“This is a positive development for the likelihood of a deal,” said Mujtaba Rahman of risk analysts Eurasia Group.
“Varoufakis has become the single biggest impediment to a Greek deal. His relationship with Tsipras and Tsipras’s willingness to cut him loose has been the central question investors have been focused on,” he added.
A government official said the finance minister would head a new “political negotiating team” and would remain “in the frame of collective decision-making and execution” by the leftwing Syriza-led government.
But Euclid Tsakalotos, deputy foreign minister for economic affairs, was appointed co-ordinator of the new team, in effect curbing Mr Varoufakis’s role. An Oxford-trained economist and Syriza’s shadow finance minister, he was passed over for the top job when Syriza came to power at the January election.
George Chouliarakis, who returned from teaching at Manchester University in the UK to head the finance ministry’s council of economic experts, will handle day-to-day bailout negotiations in Brussels.
He is seen as more moderate than his predecessor Nikos Theocarakis, a colleague of Mr Varoufakis who faced accusations by EU officials of foot-dragging in the negotiations.