Greece’s new government was to hold its first talks with a foreign dignitary yesterday, hosting the head of the European Parliament a day after announcing moves to roll back austerity measures.
In sweeping announcements two days after taking power, Greek Prime Minister Alexis Tsipras on Wednesday began reversing many of the unpopular measures that underpin Greece’s 240 billion euro (US$269 billion) bailout program.
His “national salvation” government said it was putting on hold plans to sell a majority stake in the ports of Piraeus and Thessaloniki, and would also halt the privatization of the top electricity and petroleum companies.
The announcements sent the Athens stock market diving by more than 9 percent on Wednesday, with major banks tumbling by a quarter.
Chinese media warned Tsipras over halting the privatization of the Piraeus port, for which China’s COSCO group has bid, saying he was in a similar position to the Greek mythological figure of Phaeton, who was given the reins of the sun only to lose control and nearly destroy the Earth.
European Parliament President Martin Schulz visited Athens yesterday to hold talks with its new leaders, followed by Jeroen Dijsselbloem, the president of the Eurogroup club of eurozone finance ministers.
Ahead of the dignitaries’ visits, European Commission President Jean-Claude Juncker reiterated that canceling Greece’s huge debt was not an option, urging Athens to “respect ... the rest of Europe.”
“Greece must comply with Europe,” Juncker said in an interview with French newspaper Le Figaro published yesterday, stressing that “there is no question of canceling the debt.”
“We respect the popular vote in Greece, but Greece must also respect others, public opinion and parliamentarians from the rest of Europe,” Juncker said. “Arrangements are possible, but they will not fundamentally alter what is in place.”
“Tsipras promises that Greece will not accept austerity anymore. The euro countries respond that there will be no more credit if Greece abandons its commitments,” he said.
Following Wednesday’s announcements, yields on Greek 10-year bonds rose above the symbolic 10 percent barrier, and ratings agency Standard & Poor’s put the country’s “B” credit rating on watch for a possible downgrade, warning that the government was heading for a confrontation with its international creditors.
US President Barack Obama telephoned Tsipras on Wednesday to congratulate him on his election victory — which puts Greece on a potential collision course with Washington, as well as its European neighbors.
“The president noted that the United States, as a longstanding friend and ally, looks forward to working closely with the new Greek government to help Greece return to a path of long-term prosperity,” a White House statement said.
Tsipras, whose SYRIZA party swept to power on Sunday pledging to end painful austerity after six years of recession, told his first Cabinet meeting that Greece was no longer willing to bow to the “politics of submission,” in a clear swipe at creditors the EU and the IMF.
“Our people are suffering and demand respect... We must bleed to defend their dignity,” Tsipras told his ministers, largely a collection of academics who have never served in government.
He said he wanted a “fair, mutually beneficial solution” with Brussels on the bailout.
New Greek Minister of Finance Yanis Varoufakis, an economist, insisted there would be no “showdown” between Greece and the EU, but also called the austerity cuts a “toxic mistake” that ultimately benefited no-one in Europe.
He said the SYRIZA-led government wanted “a pan-European new deal” to encourage growth and help the continent contend with Greece’s crisis.
The party has made frequent references to a “new deal,” harking back to the stimulus program that pulled the US out of the Great Depression in the 1930s.
In another measure, new Greek Minister of Labor Panos Skourletis said the minimum monthly wage be would be restored to 751 euros — it had been cut to 589 euros in one of the key reforms demanded in exchange for the bailout.
Following Wednesday’s drubbing of banks on the stock market, Greek Deputy Prime Minister Giannis Dragasakis said that any decision on the Greek banking sector would be taken in consultation with private shareholders.
“We are open to ideas and proposals from private shareholders, with the aim of strengthening the banks ... and more generally developing our economy,” Dragasakis said at the end of an interdepartmental meeting with Tsipras.
Germany, seen in Greece as taking the hardest line over its massive debts, said European solidarity worked both ways and reminded Athens that other EU nations had helped bail out the crisis-hit country.
The new coalition must address a deadline set for the end of next month by the EU for Greece to carry out more reforms in return for a 7 billion euro tranche of financial aid from the bloc and the IMF.
Tsipras must decide in the near future whether to delay the deadline.
Time is short. Outgoing Greek minister of finance Gikas Hardouvelis said the nation faced “quite acute” financing needs in March and could not afford for negotiations to drag on until the summer.
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