ATHENS (Reuters) - Yanis Varoufakis, Greece’s former finance minister who transfixed Europe with his unconventional style at the climax of the debt crisis, launched a new party on Monday promising to free his country from debt bondage.

The academic economist - who once described the austerity imposed by Greece’s creditors as “fiscal waterboarding” - said his new MeRA25 party would revive the economy through debt restructuring and other measures.

Varoufakis’ regular criticism of euro zone policy and his anti-austerity stance angered Greece’s creditors and brought the country to the brink of a euro exit in 2015 before he resigned.

He won a measure of celebrity through his combative stance, though there have been no recent polls to test whether that will be enough to take his party past the 3-percent threshold to enter parliament.

Greece was living as a “debtors’ colony”, which would eventually lead to its “desertification”, Varoufakis told reporters at a central Athens theatre, his black shirt still untucked.

He said the debt-strapped country had suffered a quadruple bankruptcy - a bankrupt state with bankrupt banks and households and nonviable businesses “where everyone owes to everybody else but no one can pay.”

“Our young people learned to live on 400 euros a month or look to emigrate. We will not repatriate them with debt relief alone as (the creditors) are promising us,” he said. “Once your human capital has left, you are bereft.”

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RESTRUCTURING

Varoufakis, the “communist in a Burberry scarf” as EU officials once called him, said his party’s plan would involve a debt restructuring - swapping outstanding Greek government bonds with new ones where yields will be linked to economic growth.

It would also cut the budget’s primary surplus target to not more than 1.5 percent of GDP from an agreed 3.5 percent until 2022.

The recipe would also include a public company to manage bad loans along with a moratorium on property foreclosures, cuts in VAT tax to 18 from 24 percent and lowering corporate tax to 20-26 percent from 29 percent currently.

Varoufakis deflected questions from reporters about whether his combative stance during the debt crisis had cost Greece billions of euros.

“In 2015 creditors strangled Greece, refusing to negotiate in good faith and engineered a bank run,” he said, adding that in August, when the country is set to exit its latest bailout, its debt colony status risks becoming permanent.

MeRA25 is a play on the Greek word for ‘day’ - echoing the name of his EU reform campaign group DiEM25, which evoked the Latin phrase “carpe diem” or “seize the day”.