Former UT professor steps down from position as Greek finance minister

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Outgoing Greek Finance Minister Yanis Varoufakis is surrounded by media as he tries to leave on his motorcycle, after his resignation in Athens on Monday. Varoufakis, a former visiting professor in the LBJ School of Public Affairs, became an elected member of the Greek parliament in January.
Photo Credit: AP Photo/ Petros Karadjias

Former UT economics professor Yanis Varoufakis resigned from his position as Greece’s finance minister July 6.

Varoufakis remains in his position as a member of the Greek parliament. Robert Hutchings, dean of the LBJ School of Public Affairs, said he does not foresee Varoufakis coming back to teach at UT, as his visiting professorship ended right before he was appointed finance minister.

Varoufakis' resignation came after 61 percent of voters said “no” to a referendum that would have approved more austerity measures, such as cuts in spending and raised taxes, in a bailout offer from international creditors.

After the July 5 vote, Greece missed a payment of 1.5 billion euros ($1.6 billion) to the International Monetary Fund midnight July 7, becoming the first developed country to ever do so.

The International Monetary Fund, European Commission and European Central Bank collectively provided 220 billion euros over the last five years for Greece. They offered another $8.1 billion in loans if Greece agreed to more austerity measures.

Prime Minister Alexis Tsipras put the bailout offer to a referendum for the voters to decide if the country would follow creditors' demands. Greece already cut costs and raised taxes, but would have had to spend even less with more austerity measures.

Varoufakis had campaigned for a “no” vote on the referendum, and acknowledged the consequences of the referendum would be vast.

“Like all struggles for democratic rights, so too this historic rejection of the Eurogroup’s 25th June ultimatum comes with a large price tag attached,” Varoufakis wrote on his website. “It is, therefore, essential that the great capital bestowed upon our government by the splendid NO vote be invested immediately into a YES to a proper resolution – to an agreement that involves debt restructuring, less austerity, redistribution in favour of the needy, and real reforms.”

Varoufakis announced his resignation on Twitter, and explained his resignation on his website, saying his absence would help Tsipras reach a financial agreement with Greece’s creditors.

“I consider it my duty to help Alexis Tsipras exploit, as he sees fit, the capital that the Greek people granted us through yesterday’s referendum,” Varoufakis wrote on his website July 5.

The Eurogroup, a collective of all finance ministers in the eurozone, said they were disappointed by Greece’s actions to discontinue negotiations for further financial assistance from the Eurogroup.

“The euro area authorities stand ready to do whatever is necessary to ensure financial stability of the euro area,” the Eurogroup said in a statement June 27.

With their vote against the bailout, Greece now relies on emergency funding from the European Central Bank. Greece still owes the ECB another 3 billion euros by July 20.

Tsipras said in a statement July 5 he does not intend to break Greece away from the eurozone.

“Given the adverse conditions that prevailed last week, you made a very brave choice today,” Tsipras said in a statement July 5. “However, I am fully aware that the mandate you’ve given me is not to break with Europe, but rather to strengthen our bargaining power to achieve a sustainable agreement. With social justice, with prospects for our future and an end to the vicious cycle of austerity.”

Hutchings said it is always exciting to see colleagues in public positions.

"It's been really exciting for us here at the school because a lot of my students also were in Professor Varoufakis's class," Hutchings said. "The things he was talking about in class last fall he’s been acting on as a very important international figure, so it’s been exciting for us as a public policy school for us to have a ringside seat at this drama."