Sent off

AT LAST, Greece may be about to step back from a potentially disastrous default. The sudden demotion of Yanis Varoufakis, the argumentative finance minister, suggests a last-minute policy switch by Alexis Tsipras, the Greece's left-wing prime minister—one which could re-invigorate fractious bail-out negotiations with the country's international creditors. A deal would unlock €7.2 billion ($7.9 billion) of much-needed bail-out aid. The government is already struggling to pay pensions and state subsidies for April (it has scratched together enough money for salaries) and has strong-armed local authorities to hand over €2 billion of spare cash to cover payments until mid-May. Without an agreement with its European creditors and the IMF, Greece faces a near-certain default in June.

Officially Mr Varoufakis was moved sideways: he will sit on a new economic policy committee and continue to attend meetings of Eurogroup finance ministers, according to government officials. But he is no longer managing the bail-out talks. That job has gone to Euclid Tsakalotos, an Oxford-educated economist and, unlike Mr Varoufakis, a long-serving member of Syriza, the ruling party.

Mr Tsakalotos, another fervent left-winger, will in turn be closely supervised by Yannis Dragasakis, the pragmatic deputy premier and Mr Tsipras’s enforcer. At the same time, Giorgos Chouliarakis, also in Mr Dragasakis's camp, takes over from Nicos Theocarakis, a friend and academic colleague of Mr Varoufakis, to handle day-to-day negotiatons with the EU and International Monetary Fund.

There are other signs that a compromise may be in the works. Mr Tsipras predicted in a late-night television interview on Monday that a deal may be reached by May 9: three days before Greece is due to repay €750m to the IMF. In a nod to Syriza’s restive far-left wing, he also threatened to hold a referendum if the lenders try to push Athens too far. Meanwhile, the finance ministry is rushing to complete a draft bill containing reform measures for which international lenders have been pushing since the Syriza-led government came to power in January. These include a move to cement the independence of the chief tax collector and to auction off new television licences. (The Greek oligarchs who control private television channels have never been asked to pay for broadcast licenses.)

Markets showed only modest interest in the new developments. In part that reflects the fact that few large investors are placing bets on Grexit, one way or the other. But in part it reflects an assesssment that it is too early for euphoria over a Greek deal with the Eurogroup. Mr Varoufakis's flamboyant style and erratic negotiating positions have been blamed for much of the difficulty Greece has had negotiating since Syriza took power. But the fundamental tensions are between Syriza's need to show its voters that it has won some of the concessions from Europe that it was elected to extract, the difficulty of asserting the government's authority over Greece's oligarch class, and the Europeans' unwillingness to release funds until they see evidence of fiscal and structural change in Athens. Those underlying problems will not disappear just because the Greek government has swapped a leather jacket for a tie.