Athens // Greece’s new anti-austerity government on Wednesday called for a “pan-European New Deal” for bloc-wide growth and denied seeking a “showdown” with Europe over controversial plans to redraft its multibillion bailout.
“There will be no showdown between our government and the European Union. There will be no threats, it’s not about who climbs down first,” said the finance minister, Yanis Varoufakis.
Prime minister Alexis Tsipras earlier told the first meeting of his cabinet that Greece would seek a “fair, mutually beneficial solution” with its EU peers to renegotiate its 240 billion euro (Dh1 trillion) EU-IMF bailout and make its huge debt socially manageable.
Mr Tsipras, 40, however insisted that Greece’s new leaders were no longer willing to bow to the “politics of submission”, in a clear swipe at Brussels and the International Monetary Fund.
“Our people are suffering and demand respect ... We must bleed to defend their dignity,” he said.
But his government’s radical anti-austerity agenda has alarmed financial markets, reviving fears that Greece could crash out of the euro zone.
Greek stocks lost more than 8 per cent in afternoon trade -- after losing 3 per cent on Tuesday – and yields on 10-year bonds rose above the symbolic barrier of 10 per cent.
In another move that spooked markets, the government halted the privatisation of Greece’s main port, Piraeus, which the Chinese shipping giant Cosco had planned to turn into its new European hub.
After his Syriza party stormed to power on Sunday, Mr Tsipras forged a coalition with the nationalist Independent Greeks (Anel), who are equally opposed to the fiscal cuts imposed over the past five years in return for bailout loans.
Mr Varoufakis, a fierce critic of the conditions imposed by creditors, on Wednesday called the cuts “a toxic mistake ... that took a toll in human lives, either lost or undermined”.
The ruling Syriza party has made frequent references to a “New Deal”, harking back to the stimulus programme that pulled the United States out of the Great Depression in the 1930s.
The new coalition – which has 162 seats in the 300-member parliament – must address an end-of-February deadline set by the EU for Greece to carry out more reforms in return for a €7bn tranche of financial aid from the bloc and the IMF.
Mr Tsipras, who has vowed to reverse many of the severe spending cuts and other measures that Greece’s creditors insist on, must soon decide whether to delay the deadline.
Greece’s European partners have been quick to oppose the prospect of debt forgiveness, with the German chancellor Angela Merkel’s spokesman saying that Greek membership of the euro zone “means ... sticking to its previous commitments”.
However the EU’s governing body indicated on Wednesday that it was willing to show flexibility with the new Greek leaders to keep the debt-stricken nation in the euro zone.
The European commissioner for economic and financial affairs, France’s Pierre Moscovici, said he ruled out any “break” between the European Commission and the new Greek administration, the French daily Le Parisien reported.
The European Commission and the EU are willing to seek “less intrusive, more flexible forms of cooperation” with Athens, the paper quoted him as saying.
Mr Tsipras’ Syriza party claims the stringent conditions attached to the bailout – including wage and pension cuts and widespread privatisations – have caused a “humanitarian disaster” in Greece.
It wants to spend €1.2bn to immediately increase the minimum wage and pensions for the poorest.
However, the IMF extended an olive branch to the new government, saying it was prepared to continue its support to the country.
Greece’s economy is set to emerge from recession after shrinking by a quarter in five years, a slump that has left one in four out of work.
Many Greeks say that even if Mr Tsipras can deliver on a fraction of what he has promised, their lives will improve.
Mr Tsipras stands alone as Europe’s first anti-austerity leader for the moment, but Syriza’s victory could inspire other movements born out of the crisis, including Spain’s Podemos, which is aiming for an absolute majority in the Spanish election in November.
* Agence France-Presse
