Greece on track, but Varoufakis stint cost it ‘billions,’ says ESM chief

Greece is on course to economic recovery after reaching the end of its third bailout in eight years next month, but SYRIZA’s first term in power with then finance minister Yanis Varoufakis cost the country “billions,” European Stability Mechanism (ESM) chief Klaus Regling said.

Speaking to Germany’s Handelsblatt, Regling said that the leftist party’s victory in January 2015 was a setback at a time when and end to the recession appeared to be in sight. Greece, he said, “embarked on a wrong path for six months, costing the Greeks billions.”

However, he added, efforts started once Prime Minister Alexis Tsipras agreed to a fresh austerity program in exchange for additional assistance are now bearing fruit, thanks to “profound and painful structural reforms.”

“Since 2016, the country whose deficit stood at 15 percent of economic output in 2009, is consistently at a black zero,” Regling said.

Greece, said the ESM chief, was a tougher challenge than other euro areas countries that needed to be bailout out like Portugal and Cyprus, because in “no other program country were the problems so great and the administration as weak.”

Despite some similarities between the five program countries, he said, all the structural weaknesses in Greece were “one size bigger.”

Ireland, Portugal and Cyprus were able to complete their aid programs after three years and Spain only needed 18 months, Regling said. “By contrast, the Greek patient spent more than eight years in the intensive care unit.”