Greeks bear no gifts for debt talks


Published: Wednesday 11th February 2015 by The News Editor

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Greece’s new prime minister has struck a defiant tone as high-stakes negotiations with sceptical European creditors looms, saying there is “no way back” for his radical left-led government in its quest to rewrite the barely-solvent country’s rescue conditions.

Alexis Tsipras said Greece was seeking a new deal with its bail-out creditors that would not condemn people battered by five bitter years of income cuts, tax increases and record job losses “to a lifetime of misery”.

He spoke just before a vote of confidence, which his two week-old government won easily by 162-137 votes.

Mr Tsipras’ radical left Syriza party was backed by MPs from its unlikely coalition partner – a small populist right-wing party that says Greece could turn to Russia, the US or China for help if talks with creditors fail.

Eurozone finance ministers will hold an emergency meeting in Brussels today on Greece, which will be grilled for details on its proposed new deal to replace the frozen bail-out agreements.

Athens is under intense pressure to stick to its commitments – with potentially softer terms – that enabled it to draw about 240 billion euros (£178bn) in rescue loans since it nearly went bankrupt in 2010. Greece argues that it needs a transitional agreement for continued support, but no new loans, until a final deal can be crafted by the end of the summer.

“How much of the bailout deal do we accept? Zero per cent. What percentage of the (cost-cutting) measures do we accept? About 30% of that agreement is toxic and we reject it,” finance minister Yanis Varoufakis said.

“If you are not willing to even contemplate a rift, then you are not negotiating.”

But Germany, the main European contributor to Greece’s rescue loans and a champion of fiscal discipline, took a tough line, tempering market hopes that a compromise was in the works.

Finance minister Wolfgang Schaeuble warned that the negotiations would be dead if Athens pulled out of the current bail-out programme. He also said there was no chance of reaching a final deal in Brussels.

“The public statements (by Greece) are more confusing than helpful,” he said in Istanbul, Turkey, after a meeting of Group of 20 finance ministers.

The current bail-out programme ends after February 28, so both sides are under pressure to reach a deal.

Greece needs money to avoid bankruptcy, which could ultimately push it out of the eurozone and force it to adopt a new currency – a development that would cause massive financial damage for the country, at least in the short term. For the eurozone, an exit from the euro by Greece would bring huge market uncertainty.

Greek opposition leader Antonis Samaras, a conservative, warned during the debate in parliament that the government would be negotiating in Brussels “from a position of absolute weakness”.

“Do you think it’s impossible to leave the eurozone?” the former prime minister said. “That’s a mistake. There may be no legal provision but you can be forced out.

“There is no magic button for the money to start flowing in the streets.”

Expectations that Greece could be granted extra time to hold new negotiations buoyed markets, with shares on the Athens Stock Exchange shooting up nearly 8%, while the European Stoxx 50 index was up 1.06%.

“There are several reasons to be optimistic, starting with Europe’s track record over the past few years of finding a solution to the rolling eurozone crisis, often in the final moments,” said Garrick Hileman, an economic historian at the London School of Economics.

But EU officials also suggested a final deal would take time and would probably not be reached at this week’s meetings.

EU Commission spokeswoman Mina Andreeva said today’s meetings would be a first opportunity for the ministers to hear from the new government. That meeting will be followed by an EU leaders’ summit tomorrow.

The finance ministers convene again next Monday in Brussels, hoping to find a breakthrough at that stage.

Published: Wednesday 11th February 2015 by The News Editor

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