Grexit: Yanis Varoufakis raises possible referendum if bailout negotiations fail

Greece’s Finance Minister Yanis Varoufakis has said it is possible that a referendum could be held if the eurozone rejects the country’s debt renegotiation plans.

The comments came ahead of today’s Eurogroup meeting in Brussels, where Greece is to give detailed plans of its debt and growth terms.

Greek PM Alexis Tsipras reacted by urging Yanis Varoufakis to use “fewer words and more action”.

The finance ministry clarified that eurozone membership was not in doubt.

In an Italian newspaper interview on March 8 Yanis Varoufakis was asked what his options were if a deal was not agreed.

“If needed, if we encounter implacability, we will resort to the Greek people either through elections or a referendum,” he replied.

This was interpreted by some as a threat to leave the eurozone if talks broke down, something the Greek government was quick to deny.

Greek officials pointed out that the words “for the euro” had been added to Yanis Varoufakis’s remarks in brackets in the article. Greece’s eurozone membership was “a given” and did not form any part of negotiations with the Eurogroup, they added.

Yanis Varoufakis later criticized the reports as “willful attempts to undermine the good course” of attempts to agree a deal with creditors.

In a widely leaked letter to the Eurogroup, Yanis Varoufakis set out seven key reforms which he hopes will appease eurozone lenders and allow the next installment of bailout money to be released.

Greece aims to save €200 million through public spending cuts, as well as streamlining bureaucracy and cracking down on tax evasion.

European Commission Vice President Valdis Dombrovskis has rejected the letter, telling a German newspaper that “a letter here or there isn’t going to change much.”

He said Greece must first implement its reforms, adding that he did not expect a deal to be completed at March 9 meeting.

Greece needs to agree terms so that it will become eligible for more credit from the eurozone and the IMF. This would in turn allow its banks to finance themselves from the European Central Bank.