Greek government braces for first talks with eurozone partners

AFP , Friday 30 Jan 2015

Greek Prime Minister Alexis Tsipras (R) and European Parliament President Martin Schulz hold a joint statement to media in the Greek Premier's office in Athens January 29, 2015 (Photo: Reuters)

Greece's new anti-austerity government was to hold its first talks with its eurozone partners Friday in what promises to be a bitter confrontation over its 240-billion-euro ($269 billion) international bailout.

Prime Minister Alexis Tsipras is due to meet Jeroen Dijsselbloem, the current head of the eurozone group of finance ministers in an encounter that Athens said would mark the start of Greece's negotiations on revising the conditions of the massive bailout.

Dijsselbloem warned before arriving in Athens that the new Greek government is already setting itself an impossible task, raising expectations it cannot meet.

"If you add up all the promises (made in the election campaign), then the Greek budget will very quickly run totally off course," he said in Amsterdam.

Friday's talks come on the heels of warnings by the European Union and Germany that there was little support for reducing the debt, which the radical new government is hoping to cut in half.

New maverick Finance Minister Yanis Varoufakis will begin a tour of European capitals next week to press home Greece's case, meeting his British, French and Italian counterparts on Monday and Tuesday.

In a New York Times intervew on Friday, Varoufakis said Greece "didn't want" the money in its next EU-IMF bailout loan tranche.

"We don't want the 7 billion euros.... We want to sit down and rethink the whole program," he said.

Debt rating agency Fitch said Greece was still likely to reach a deal with its creditors but only after protracted talks damaging to the economy.

"There is a high risk that protracted and difficult negotiations will sap confidence and liquidity from the Greek economy," it said in a note.

Ahead of the Friday meeting, Greek bank stocks rebounded Thursday after plunging the day before on concerns about the first moves of Tsipras's radical new administration to roll back several reforms underpinning the bailout.

European Parliament chief Martin Schulz on Thursday became the first visiting foreign dignitary to meet Tsipras' government, and said the prime minister had assured him that Greece would seek "common ground" with its EU peers.

Schulz added that Tsipras had stressed Athens would not seek a "unilateral solution" to the renegotiation of its multi-billion-euro bailout.

But in an interview late on Thursday, Schulz said Tsipras' coalition alliance with the Independent Greeks, a hardline nationalist party, was "not something good for the country."

"This government will enter into confrontation with the European Union at a time when dialogue is needed," he told SKAI TV.

Elected on Sunday, the new government has already begun to roll back years of austerity measures demanded by the EU and the International Monetary Fund in return for the huge bailout granted to avoid a financial meltdown in 2010, and says it will negotiate to halve the debt.

But European Commission chief Jean-Claude Juncker said a reduction of the 315-billion-euro debt linked to the bailout "is not on the radar".

"I don't think there's a majority in the Eurogroup... for a reduction of the debt," he told Germany's ARD television, referring to the eurozone's finance ministers.

Sigmar Gabriel, Germany's vice-chancellor and also its economy minister, said he expected Greece to "stick to its commitments" for fiscal and economic reform made in exchange for the bailout.

He was critical of a decision by the new government to scrap the privatisation of the two main ports of Piraeus and Thessaloniki, and the biggest Greek power company, decisions which have also drawn a rebuke from China that has a major investment in Piraeus.

Greek bank stocks rebounded by nearly 13 percent on Thursday after plunging by more than a quarter a day before.

The Athens market closed 3.16 percent higher on Thursday, driven by the banks' partial recovery. It was up 0.93 percent in Friday's midday trade.

The Greek central bank said 4.0 billion euros in private deposits had been withdrawn from banks in December.

But Daniele Nouy, head of the European Central Bank's Supervisory Board, said despite the post-election turbulence, Greek lenders were "pretty strong".

Tsipras' government managed to have its first foreign policy row this week after it complained to Brussels over allegedly not being consulted when the EU threatened new sanctions against Russia over the war in Ukraine.

EU foreign ministers eventually overcame Greece's reluctance and agreed Thursday to extend the sanctions against Russia.

Tsipras' Syriza party has been seen as pro-Russian, with Moscow's ambassador becoming the first foreign official to be received by the prime minister after his election victory. Many party members are former Communists.

Tsipras, who ousted the conservatives of former prime minister Antonis Samaras, has said Greece is no longer prepared to bow to the "politics of submission", in a clear swipe at its international creditors.

Varoufakis has said the government wants "a pan-European New Deal" to encourage growth and help the continent deal with Greece's crisis.

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