Greece on tour to renegotiate bailout

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Greece plays hardball, saying it will not take new loans nor work with the troika

Alarm bells rang in Brussels over the weekend as Greece’s new left-wing government said it would not take any new loans nor work with the troika. However, Greek government leaders, currently on tour in Europe to renegotiate the terms of the country’s bailout, got support from Paris and from US President Barack Obama.

Greece’s new prime minister, Alexis Tsipras, and finance minister, Yanis Varoufakis, are on tour to European capitals in order to calm down concerned governments and at the same time raise support for a new deal on the country’s bailout package.

Varoufakis has declared that Greece will not ask for more loans under the current bailout programme and will neither work with the troika, which the Greeks see as insulting. Instead the government is aiming for a new debt contract to be negotiated the coming months.

Support from Paris and Washington

To raise backing for these ideas, prime minister Tsipras will go to Paris, Rome and Brussels this week while Varoufakis went to the French capital already this weekend. There, he was met by a supportive Michel Sapin.

The French finance minister said it was legitimate to discuss ways to decrease the weight of Greece’s debt burden, for instance through increasing the maturity of the loans.

The new Greek government also got support from overseas, where the American president, Barack Obama, in an interview with CNN argued that the best tool for reducing deficits and to become fiscally sound is growth.

“You cannot keep on squeezing countries that are in the midst of depression. At some point there has to be a growth strategy in order for them to pay off their debts to eliminate some of their deficits,” said President Obama.

The American president also thought that both sides, the EU and Greece, will have to negotiate and compromise in order to reach a new deal.

According to the German Handelsblatt, the EU Commission is already considering to end the troika mission in Greece in order to establish more general economic targets for the Greek government.

Still no debt cut

Despite growing support for a new deal for Greece, no one has admitted to cut any of the Greek debt, amounting to around 175 percent of GDP.

And there is still major resistance in Germany, where Angela Merkel has repeated previous statements, saying that the EU stands ready to show solidarity with all countries as long as they reform.

Moreover, there is continuous pressure on Greece to keep up with the austerity measures as the country still depends on EU money to pay for administration, schools and hospitals. And with the current bailout expiring in the end of February, there is a growing need to reach a rapid solution.

Finance minister Yanis Varoufakis said he aimed for a new agreement by the end of May and that the European Central Bank (ECB) could cover for the Greek expenses in the meantime.

So far, the ECB has not showed any support for such a commitment.

• Author: Andreas Liljeheden, Euranet Plus News Agency

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