Tsipras – fear mongering will end with austerity and renegotiated debt

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Greek opposition leader Alexis Tsipras told Reuters he will cancel austerity policies and seek to write off a big chunk of the national debt if his leftwing Syriza party wins elections that may have to be called early next year.

“The fear-mongering of 2012 and the fear today that if Syriza comes to power in Greece Europe will be destroyed, in reality works as a self-fulfilling prophecy,” said Tsipras.

“A Syriza victory will break the bad spell and liberate markets. It will create a feeling of security.”

Highlights from the interview:

DEBT WRITE-OFF

“The IMF holds part of the debt which must be paid off, the debt owned by the ECB .”

“On the institutional debt to the ESM and the”‘Negotiation’ means that we want an agreed solution,” he said, adding that he would not move “unilaterally” unless forced to, which was unlikely. “We are prepared for a substantial and tough negotiation. And therefore, we are aware that European partners are likely to have a tough stance in the initial phase, although we won’t demand something unrealistic.”

“On the institutional debt to the ESM and the euro zone, a debt of about 200 billion euros: we must find a way for it to be restructured, a big part of it to be cut or erased, as it happened with Germany in 1953, in a moment of solidarity.”

“The private debt has already been cut and therefore Greececannot be a risk for markets, given that no one seeks a new private debt haircut.”

With part of the debt written off, Tsipras said he would revise Greece’s mid-term budget plan and seek to reduce debt servicing costs significantly while maintaining a primary budget balance (in other words, net of interest repayments).

Under the current bailout plan, Greece is committed to a much tougher target of achieving a primary budget surplus of 4.5 percent of GDP by 2016.

He said he would seek to bring debt servicing costs to below 2 percent of GDP. By comparison, last year Greece spent 5.7 billion euros, equivalent to 3.2 percent of GDP on interest rate payments.

REFORMS

As well as restructuring the debt, Tsipras promised a “national plan of growth and reconstruction”, reversing cuts to the minimum wage, freezing state layoffs and halting state asset sales, while maintaining budget discipline.

“We will implement our programme irrespective of the progress of the negotiations.”

He pledged to keep Greece in the euro: “This is not only my commitment. It should be a commitment of all governments and leaders on a eurozone level.”

“‘Negotiation’ means that we want an agreed solution,” he said, adding that he would not move “unilaterally” unless forced to, which was unlikely. “We are prepared for a substantial and tough negotiation. And therefore, we are aware that European partners are likely to have a tough stance in the initial phase, although we won’t demand something unrealistic.”

He said Europe had a moral obligation to negotiate with Syriza if it was elected: “I think the dilemma of European partners will not be only economic dilemma, it will be an ethical dilemma.”

“If they will not cooperate with the next government of Greece, this will be a strong message that they don’t accept democracy. So I think that they will not take this decision, they will be obliged, even though they have other intentions, to cooperate with the next government.”

Full report here

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