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Sunday, 1 February 2015

Greece offers olive branch as search for allies begins

Greece sought to repair relations with its international creditors on Saturday (Jan 31) as the new anti-austerity government began a charm offensive in European capitals, even as Germany insisted it would not support any debt relief...

Just hours before Finance Minister Yanis Varoufakis headed to Paris to seek support for a renegotiation Greece's massive loans, Prime Minister Alexis Tsipras said he believed a deal could be reached with the European Union (EU) and International Monetary Fund (IMF).

"No side is seeking conflict and it has never been our intention to act unilaterally on Greek debt," Tsipras said in a statement issued to the Bloomberg news agency.

In its first meeting with creditors since it took office, the Greek government clashed with the head of the Eurozone finance ministers on Friday over its plans to rethink its rescue package and to halve Greece's debt.

Tsipras, who will himself visit Italian Prime Minister Matteo Renzi and French President Francois Hollande next week, said Greece had no intention of reneging on its commitments to the European Union and International Monetary Fund.

"My obligation to respect the clear mandate of the Greek people with respect to ending the policies of austerity and returning to a growth agenda, in no way entails that we will not fulfil our loan obligations to the ECB (European Central Bank) or the IMF," he said. "On the contrary, it means that we need time to breathe and create our own medium-term recovery programme."

This includes aiming to balance the budget - excluding debt repayments - and clamping down on tax evasion, corruption and policies which favour only a wealthy few, he said.

"I am absolutely confident that we will soon manage to reach a mutually beneficial agreement, both for Greece and for Europe as a whole," Tsipras said.

GERMANY HOLDS FIRM

Varoufakis was to leave for Paris on Saturday night with talks scheduled with French finance minister Michel Sapin and economy minister Emmanuel Macron on Sunday. Neither he nor Tsipras are intending to visit Germany, which has shouldered the bulk of Greece's loans and which strongly objects to Athens' plans.

Merkel on Saturday ruled out fresh debt relief for Greece, telling the Hamburger Abendblatt daily: "There has already been voluntary debt forgiveness by private creditors, banks have already slashed billions from Greece's debt."

"I do not envisage fresh debt cancellation," she said, as a new poll for broadcaster ZDF found 76 per cent of Germans oppose any reduction in debt.

Portuguese Prime Minister Pedro Passos Coelho also opposes any renegotiation of Greece's debt, saying it would "go against the interests of Portugal and the Portugese people".

Despite a restructuring in 2012, Greece is still lumbered with a debt pile of more than 315 billion euros, upwards of 175 per cent of gross domestic product (GDP) - an EU record.

But in its first week in power, the government scrapped the privatisation of Greece's two main ports and the state power company and announced a major raise in the minimum wage.

Varoufakis also raised the stakes by saying that Greece wanted direct access to its EU-IMF creditors and would no longer work with their widely hated fiscal audit staff team, known as the "troika".

Martin Schulz, the German head of the European Parliament, told the Frankfurter Allgemeine on Saturday that this position was "irresponsible".

GREEK BANK FEARS

Varoufakis's comments followed a strained meeting on Friday with Jeroen Dijsselbloem, who represents finance ministers from the 19-nation Eurozone. Dijsselbloem warned Athens that "taking unilateral steps or ignoring previous arrangements is not the way forward".

Greece has been promised another 7.2 billion euros (US$8.1 billion, S$10.9 billion) in funds from the EU, IMF and European Central Bank (ECB), but this is dependent on the completion of a review of reforms at the end of February.

  • Varoufakis has said his government does not want the loans, but there are concerns Greece cannot survive without them. These concerns are focused on Greece's banks, which are helping the state stay afloat by purchasing its treasury bills - and which are being supported by the ECB.
  • "If the ECB turns the tap off, it's over," Alexandre Delaigue, economics professor at the elite French military academy Saint-Cyr, told AFP.
The stunning success of Syriza in last Sunday's polls sent shockwaves through Europe and gave encouragement to other anti-austerity parties.

Tens of thousands of people, meanwhile, took to the streets of Madrid on Saturday in support of the Spanish party Podemos, which has been surging in polls ahead of elections later this year. Like Syriza, Podemos has found popular support by targeting corruption and rejecting austerity programmes aimed at lifting the countries out of deep economic crisis.

- AFP/fl

[channelnewsasia.com]
31/1/15 --1/2/15

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