Tsipras Taps Longtime Ally to Soothe Debt Confrontation

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Euclid Tsakalotos Named Greek Finance Minister

Greek Prime Minister Alexis Tsipras is counting on a change of style, if not necessarily substance, by turning to a longtime ally to seek a deal with creditors to keep his nation in the euro.

Euclid Tsakalotos was named finance minister to replace Yanis Varoufakis, who resigned Monday after more than five months of fruitless back-and-forth. An Oxford-educated economist who was previously deputy foreign minister, Tsakalotos had already begun to take a leading role in debt talks before Tsipras’s surprise referendum call brought them to a halt on June 27.

Tsipras is betting that a new, less confrontational face will help him bring German Chancellor Angela Merkel and other European leaders back to the table after Greeks voted to reject further austerity in Sunday’s vote. Varoufakis had vowed to “cut off my arm” rather than sign a bad deal, and was involved in a long series of spats with negotiating partners in his six months on the job.

“It’s an important symbolic and necessary move,” Famke Krumbmuller, an analyst at political consultancy Eurasia Group, said by e-mail. Creditors “now really need to see the trust restored by a serious and credible commitment from the Greek side to implement reforms,” she said.

Clock Ticks

Time is running short: Greek banks are almost out of cash and commerce is grinding to a halt in the absence of a new bailout deal and lifeline from the European Central Bank. Tsipras’s government has extended bank closures and capital controls through Wednesday to stem withdrawals.

Unlike Varoufakis, who joined just before elections in January of this year, the new finance minister has been a member of Tsipras’s Coalition of the Radical Left, or Syriza, since 2004. He first won election to parliament in 2012.

Born in 1960 in the Netherlands -- the home of Jeroen Dijsselbloem, the president of the group of euro-region finance ministers with whom Varoufakis sparred repeatedly -- Tsakalotos was educated in the U.K., at the universities of Sussex and Oxford, where he received his doctorate in 1989. Like the U.K.’s Conservative Party chancellor of the exchequer, George Osborne, he attended St. Paul’s, a London private school that traces its roots to the 15th century.

‘Crucible of Resistance’

Tsakalotos became more prominent in Greece’s debt negotiations in June as relations between Varoufakis and creditors worsened. Varoufakis today said he was resigning because “there was a certain preference” among some European governments that he be “absent” from the next round of talks, if and when they begin.

Though Tsakalotos’s button-downed style may help endear him to creditors, he’s still a staunch supporter of Syriza’s more radical policies and a harsh critic of European austerity, putting him on the opposite side of the ideological spectrum from key politicians including Germany’s Wolfgang Schaeuble.

“I don’t expect Tsakalotos’s appointment to lead to a significant change in Greece’s policies but his less confrontational approach should definitely help negotiations,” said Diego Iscaro, an economist at research group IHS Inc.

The new minister’s likely approach to talks can be divined from the most recent book. Co-written with the economist Christos Laskos, it was titled “The Crucible of Resistance: Greece, the Eurozone and the World Economic Crisis” and printed by self-described “radical publisher” Pluto Press.

It criticized “permanent austerity” and argued that Syriza represents a model for other European countries to emulate. The book was endorsed, among others, by Varoufakis.

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