Cantillon: Greek game theorists get real on debt

Greek premier Alexis Tsipras appears to have relegated finance minister Yanis Varoufakis (above), the supposed maestro of game theory, who has failed to make headway the country’s quest for a big debt writedown.

As Athens skirts ever closer to bankruptcy, Tsipras has now appointed a new “political negotiation team” to conduct talks with international creditors.

Varoufakis will lead this group but deputy foreign minister Euclid Tsakalotos will co-ordinate its day-to-day work.

The rather pointed elevation of someone from a separate ministry is seen as an unambiguous effort to sideline Varoufakis, yet Tsipras praised him and claimed he has been “systematically targeted in the international press”.

Such remarks could yet prove as flimsy as official support for a doomed football manager just before the firing squad is called in.

Whether that proves to be case or not, the fact remains that the overhaul of the talks team prompted a dip in Greek borrowing cost and a rally in bank shares on its stock market.

A new funding deal can’t come too quickly, for Greece is running out of cash and the collateral its banks provide for special ECB aid is weakening steadily.

Varoufakis is badly out of favour with his euro zone counterparts. Heavily criticised by fellow ministers at talks in Riga last week, his own interventions in the meeting were greeted with silence.

Further concern centres on the fact that Greek engagements to date with “the institutions” – the bodies former known as the troika – have not featured direct contact with ministers in Athens.

Something had to give. Time is running out Greece and its lenders. The thing about game theory is that it’s just a theory. This the real world.