Greece takes hard line on ‘mistake’ of EU bailout

Finance minister Yanis Varoufakis signalled Greece would backtrack on measures its eurozone creditor nations had demanded. Picture: AP
Finance minister Yanis Varoufakis signalled Greece would backtrack on measures its eurozone creditor nations had demanded. Picture: AP
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GREECE’S new leftist prime minister has said his government’s top priorities are negotiating with creditors to resolve the country’s debt problems and dealing with what he describes as a humanitarian crisis.

Speaking in the new government’s first Cabinet meeting yesterday, Alexis Tsipras said he was ready with a four-year fiscal plan that would balance the budget, when not counting for the costs of servicing debt.

However, he said Greece would not meet a bailout requirement to produce surpluses.

The plan also aims to find “realistic proposals” on how to make Greece’s huge rescue loans easier to manage.

The move fuelled market concerns of a tough confrontation with eurozone countries, whose loans are keeping Greece from bankruptcy.

Stock and bond markets in Greece plummeted.

Mr Tsipras described the country’s bailout budget commitments as “crushing and unobtainable,” while his finance minister called the bailout agreement a “toxic mistake”.

Previous governments in 
Athens had committed to achieving high primary budget surpluses – that is, surpluses that do not count the cost of servicing debt – in order to make the country’s national borrowings more sustainable.

But Mr Tsipras’ left-wing 
Syriza party, which won a sweeping general election victory on Sunday with a promise it would overhaul those earlier commitments, says that target is unrealistic.

Mr Tsipras said his government would instead seek to 
balance the primary budget. Instead of using the money to pay down debt, the money would be used to help the economy, he said.

“This is a government of societal salvation and it has a very difficult task,” Mr Tsipras told his cabinet. “We want to negotiate the reduction of the debt and an end to conditions of choking austerity.”

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In Brussels, Jyrki Katainen, the vice president of the European Union’s executive Commission, said Greek authorities are expected “to fulfil everything that they have promised to fulfil.”

“The Commission must treat all the governments similarly. We don’t change our policy 
according to elections,” Mr Katainen said.

The new Greek government, Mr Tsipras said, was seeking “realistic proposals” on how to make Greece’s huge rescue loans easier to manage and ways of dealing with the “humanitarian crisis” of mass unemployment and rising poverty.

The comments sent share prices plummeting as investors expected tough negotiations with eurozone creditors, who have insisted Greece stick to its promised reforms.

The Athens Stock Exchange’s main index fell more than 7.5 per cent, while the government’s borrowing rates climbed, a sign investors are more worried that Greece might default. The rate on Greek 10-year bonds rose by a percentage point to around 10.5 per cent.

As government ministers officially took up their positions on Tuesday and yesterday, they pledged to reverse key aims set out under the previous conservative government, including major privatisation plans for the port of Piraeus and the Public Power Corp utility.

New finance minister Yanis Varoufakis said: “Today we are turning the page on that mistake that cost human lives, that were lost or undermined.” He argued that the main problem was not that Greece received rescue loans, but that the required reforms focused on reducing debt rather than investing in growth.

As a result, the money had been thrown “into a black hole”, he said.

Syriza teamed up with a small right-wing anti-bailout party to form a government after Sunday’s election victory. The move has raised concerns that Greece will clash with international creditors.