Greece’s new Prime Minister Alexis Tsipras has urged France to help drive European growth with "a change of policy" and a shift away from austerity at talks in Paris as he seeks to drum up support for easing Greece’s debt burden.
"We need a new accord in Europe for the return of growth and social cohesion, and in this effort we certainly need France playing a role of guarantor, a protagonist for this political change," said Tsipras, 40, after a meeting with French President François Hollande on Wednesday.
ECB stops banks using Greek debt as loan collateral
The European Central Bank on Wednesday announced it was suspending a waiver allowing Greek banks to use government debt as collateral for loans, depriving the banks of a key avenue to much-needed cash.
"Suspension is in line with existing Eurosystem rules, since it is currently not possible to assume a successful conclusion of the programme review," the Frankfurt-based ECB said in a statement, referring to ongoing talks between the new Greek government and its international creditors.
"France is a force for stability in Europe, and I think the stability of the European Union requires a change of policy – a determined turn towards growth," he added.
Greece’s leftist leader is looking for allies across Europe as he seeks a negotiated solution to write off part of the country’s €310 billion debt and relax the austerity measures imposed on his predecessors by the country's main creditors – the International Monetary Fund, the European Central Bank (ECB) and the European Commission, collectively known as the "troika".
Tsipras received a relatively sympathetic hearing in France, where the Socialist government has frequently railed against austerity policies in Europe.
Following the talks at the Elysée Palace, the French president said he agreed that Europe needed to do more to spur economic growth – although he cautioned that Greece had to abide by EU rules and its existing commitments.
Hollande said the priority should be to have more open discussions among continental leaders. "This dialogue should take place in transparency and calm, and with a willingness to find a solution," he said.
Race against time
Tsipras’s radical-left Syriza party swept to power last month on a promise to ditch many of the unpopular austerity measures that underpin Greece’s bailout programme.
Debt relief and Germany's economic miracle
It is now in a race against time to secure greater leeway from its European partners as it seeks to deliver on its campaign pledge while avoiding insolvency.
In return for two bailouts worth €240 billion, successive Greek governments have been forced to impose drastic spending cuts and tax rises that, Syriza says, effectively killed off any chance of economic recovery.
After a six-year depression, GDP has shrunk by a quarter, industrial output has fallen by a third and millions have been pushed into poverty. One in two Greek youths is now out of work.
Tsipras’s “national salvation” government has already begun taking steps to reverse public sector layoffs, raise the minimum wage and freeze planned privatisations.
But it desperately needs an easing of austerity policies to finance these measures.
Tsipras, who met EU leaders in Brussels earlier in the day, is hoping to win support from governments critical of austerity before a showdown with Europe’s guardian of budgetary orthodoxy, Germany.
The only explicit backing so far has come from across the Atlantic, with US President Barack Obama urging Europe this week not to “keep on squeezing countries that are in the midst of depression”.
Greek Finance Minister Yanis Varoufakis will get a first taste of the challenge ahead when he meets his German counterpart, Wolfgang Schauble, in Berlin on Thursday.
Varoufakis has travelled to Paris, London and Rome this week to drum up support for plans to relax the austerity measures its creditors have imposed on Greece. He was in Frankfurt on Wednesday for talks with the head of the ECB, Mario Draghi.
Varoufakis, who has described the belt-tightening imposed on Greece as “fiscal waterboarding”, said he and Draghi had “a very fruitful discussion” about the rules and constraints of monetary union.
Varoufakis said he believed Athens could count on the eurozone's central bank to keep Greek banks afloat while the government continues talks with its international lenders.
"The ECB is the central bank of Greece,” he told Reuters news agency soon after the talks. “The ECB will do whatever it takes to support the member states in the eurozone."
"We are not a threat to Europe", says Greece's Alexis Tsipras
Date created : 2015-02-04