The head of the Eurogroup warned on Friday that Greece could not ignore its international obligations, after a first meeting with the new anti-austerity government which wants to renegotiate its multi-billion-euro bailout.
“Taking unilateral steps or ignoring previous arrangements is not the way forward,” Jeroen Dijsselbloem, representing Greece’s eurozone creditors, told a news conference after talks with the leftist government of Prime Minister Alexis Tsipras.
For his part, new Finance Minister Yanis Varoufakis said Greece was willing to broker a deal, but not through the detested “troika” of fiscal auditors representing the country’s international lenders.
Varoufakis, a maverick economist, said the government would seek “maximum cooperation” with the EU, the eurozone and the IMF and had already begun talks but would not cooperate with “a committee built on rotten foundations.”
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 Greeces case, meeting his British, French and Italian counterparts on Monday and Tuesday.
In a New York Times interview 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 meeting, Greek stocks lost another 1.59 percent a day after after plunging 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, the first visiting foreign dignitary to meet Tsipras’ government, on Thursday said the prime minister had assured him that Greece would seek “common ground” with its EU peers.
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 theres a majority in the Eurogroup… for a reduction of the debt,” he told Germany’s ARD television, referring to the eurozones 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 privatization 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.
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 Greeces crisis. [AFP]