The Greek finance minister who accused the country’s creditors of “terrorism” ahead of Sunday’s national referendum has resigned.

Yanis Varoufakis announced his departure in his blog early Monday, only hours after the No side – rejection of the creditors’ terms for a new bailout deal – won a resounding victory.

Mr. Varoufakis’s combative, unyielding style won him no friends among Greece’s creditors and it appears he was sacrificed by prime minister Alexis Tsipras as a sort of peace offering to the creditors. But is also possible that his resignation was planned ahead of the vote no matter which way it would go. He had said that he would resign only if the Yes side were to win the referendum. The Greek government had been campaigning for a No vote.

In his blog, Mr. Varoufakis said “Soon after the announcement of the referendum results, I was made aware of a certain preference by some eurogroup participants, and assorted ‘partners’, for my… ‘absence’ from its meetings; an idea that the Prime Minister judged to be potentially helpful to him in reaching an agreement. For this reason I am leaving the Ministry of Finance today.”

He added that “I consider it my duty to help [prime minister] Alexis Tsipras exploit, as he sees fit, the capital that the Greek people granted us through yesterday’s referendum. And I shall wear the creditors’ loathing with pride.”

For weeks, as the negotiations between the Greek government and the creditors descended into acrimony, there were rumours that Mr. Varoufakis was on the verge of resigning or being ousted as finance minister. One rumour said he had fallen out with Mr. Tsipras and that he would start his own political party.

An economics professor who has described himself as a libertarian Marxist, Mr. Varoufakis did not say what his next career move would be.

His departure caps a momentous string of events that has shaken Europe. Defying the polls that called for an evenly split vote, the referendum went strongly in favour of the No side – 62.3 per cent. Some representatives of the creditors, which had urged a Yes vote, condemned the result, accusing Mr. Tsipras and his radical left Syriza party of pushed Greece dangerously close to exit from the euro zone.

Jeroen Dijsselbloem, the Dutch finance minister who is chairman of the euro zone finance ministers’ group, was quick to warn that the referendum “result is very regrettable for the future of Greece. For recovery of the Greek economy, difficult measures and reforms are inevitable. We will now wait for the initiatives of the Greek authorities.”

On Monday morning, European leaders and finance minsters were scrambling for a response. The heads of the European Central Bank, the European Commission and the euro zone finance ministers were due to hold a conference call Monday morning. Later Monday, German chancellor Angela Merkel and Francois Hollande, the French president, are to meet in Paris. On Tuesday, the European Union leaders are to hold a summit.

The markets reacted positively to the news of Mr. Varoufakis’s departure. The euro bounced off is lows, for an early morning loss of 0.5 per cent in European trading. The European bond markets had no dramatic response to the referendum’s No victory, but Greek bonds got slaughtered. The yield on Greece’s two-year bonds rose by more than 20 percentage points, to 54 per cent.

On Sunday, after the referendum results were confirmed, Mr. Tsipras used his victory speech to declare that he was ready to resume negotiations with the creditors immediately and that debt reduction would have to be on the table. “The mandate you’ve given me does not call for a break with Europe, but rather gives me greater negotiating strength,” he said.

All eyes will be on the ECB today, which will decide whether to withdraw, increase or keep unchanged the amount of emergency loans it has been providing to the Greek banks since February. A decrease, which is unlikely, would no doubt kill the banks. Given the result of the referendum, an increase is also unlikely.

But even keeping the emergency loan assistance (ELA) program intact at the current level would hurt the banks, whose doors have been closed since last Monday in an effort to slow a deposit run. There is thought to be only about euros 500-million of ELA left, suggesting the banks and their ATM machines could run out of cash any day.

ATM withdrawals have been limited to euros 60 a day. On Monday morning, long ATM line-ups returned as customers feared that the cash limit would soon be reduced to euros 40 or even euros 20.

ATHENS — The Globe and Mail
Published Monday, Jul. 06, 2015 2:02AM EDT
Last updated Monday, Jul. 06, 2015 8:43AM EDT