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 Yanis Varoufakis, an avowed "erratic Marxist" economist who
infuriated euro zone partners with his unconventional style and
hectoring lectures, had campaigned for Sunday's sweeping 'No' vote,
accusing Greece' creditors of "terrorism".
"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," Varoufakis said in a
statement.
His sacrifice, after promising Greeks he would win a better deal
within a day of their overwhelming referendum vote, suggested
leftist Prime Minister Alexis Tsipras is determined to try to reach
a last-ditch compromise with European leaders.
Greece's chief negotiator in aid talks with international creditors,
Euclid Tsakalotos, a soft-spoken academic economist, is the
frontrunner to become finance minister, a senior government official
said. Tsakalotos had already taken over a prominent role with
lenders after Varoufakis was sidelined from the talks in April.
Austrian Finance Minister Hans Joerg Schelling, saying out loud what
many peers have whispered privately, said he hoped talks with Greece
would become easier with Varoufakis gone.
 To win any new deal, Greece will have to overcome the distrust of
partners, above all Germany, Greece's biggest creditor and the EU's
biggest economy, where public opinion has hardened in favor of
cutting Greece loose from the euro.
Varoufakis had a particularly acrimonious relationship with
Germany's Finance Minister Wolfgang Schaeuble. A German government
spokesman, asked about the departure of Varoufakis, told reporters
policies mattered more than people.
The door to negotiations with Greece on a new aid program was open
but the conditions were not yet met until there were new proposals
from Athens, spokesman Steffen Seibert said.
DEFIANCE
While jubilant Greeks celebrated their national gesture of defiance
late into the night, there was gloom in Brussels.
European Commission Vice-President Valdis Dombrovskis told a news
conference there was no easy way out of the crisis and the
referendum result had widened the gap between Greece and other euro
zone countries.
Greek political leaders met at the president's residence at 10 a.m.
as a strengthened Tsipras sought to build a national consensus
behind his negotiating position.
Tsipras has spoken by telephone to French President Francois
Hollande, who is trying to broker an agreement ahead of an emergency
euro zone summit on Tuesday. Hollande was due to meet later on
Monday with Germany's Chancellor Angela Merkel to seek a joint
response from the two biggest euro zone economies.
While France and Italy have emphasized the importance of more talks,
German public opinion is running out of patience. Merkel's
vice-chancellor, Social Democrat Sigmar Gabriel, said on Sunday that
Tsipras had torn down the last bridges of compromise with the euro
zone.
A German Finance Ministry spokesman pushed aside Greek demands for a
big debt write-down, as the International Monetary Fund said last
week may be necessary. He said the IMF was promoting its traditional
stance but Europe had opted for solutions other than debt cuts to
put countries back on track.
With banks shuttered, cash machines running out of banknotes and
sympathy for Athens among EU governments close to exhausted,
Greece's fate is largely in the hands of Merkel and the European
Central Bank.
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The ECB's policymaking governing council was starting a conference
call at 1000 GMT (6:00 a.m. EDT) to decide how long to go on keeping
Greek banks afloat after the overwhelming rejection of bailout terms
that the central bank had helped to shape.
Several people familiar with ECB policy said the central bank would
reject a Greek government request to raise the cap on emergency
liquidity assistance provided by the Greek central bank and leave
the limit unchanged, slowly tightening the noose on the banks but
giving them a few more days' air.
Greek bankers were expected to meet the central bank later in the
day, banking sources said, amid expectations that the government
will have to issue a new decree extending the crippling closure of
banks beyond Tuesday.
"BRAVE CHOICE"
After five years of economic crisis and mass unemployment, Greek
electors voted 61.3 percent 'No' to the bailout conditions rejected
by their radical leftist government, casting Greece into the
unknown.
"You made a very brave choice," Tsipras said in a televised address
as jubilant supporters thronged Athens' central Syntagma Square to
celebrate the act of defiance of Europe's political and financial
establishment.
"The mandate you gave me is not the mandate of a rupture with
Europe, but a mandate to strengthen our negotiating position to seek
a viable solution."
The euro tumbled against the dollar on Asian markets after the
setback for Europe's monetary union, and European shares and bonds
took a hit when markets opened after the weekend. But the losses
were contained and there was no sign of serious contagion to other
weaker euro zone sovereigns.
Asian stocks suffered the biggest daily fall in two years, partly
because of fears over China's economy, but Varoufakis' departure
softened the impact in Europe, maintaining a slender hope of a deal
to keep Greece in the euro.
Analysts with several major banks including Citi, Barclay's and J.P.
Morgan said a "Grexit" from the euro zone was now their most likely
scenario.
EU officials said it would be hard to give Greece easier terms, not
least because its economy has plunged back into recession since
Tsipras' Syriza party won power in January. Public finances were now
in a far worse position than when the rejected bailout deal was put
together.
But on the streets of Athens, citizens were unrepentant at their
defiant vote.
"I voted ‘No’ to austerity; I want this torture to end," said
42-year-old Katerina Sarri, a mother of two manning a Kiosk in
Athens.
"I’m aware that we will suffer for years but I’m still hopeful. I
need to know that there is light at the end of tunnel, that the
lives of my children will be better," she said.
(Additional reporting by; Writing by Paul Taylor; Editing by Peter
Graff)
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