The head of Greece’s radical leftist Syriza party, Alexis Tsipras, warned Tuesday that Europe could not afford to let the country crash out of the euro zone, warning that the risk of financial contagion could engulf the rest of the bloc.
Speaking at a news conference just days before Greece’s national elections on June 17, Tsipras renewed his objections to the country’s latest 130 billion euro ($164 billion) bailout and, pointing to last weekend’s European Union-led rescue plan for Spanish banks, said Europe’s austerity policies had failed to stem the spread of the crisis.
“If one of the 17 countries [in the euro zone] is brought to collapse… the fire will become uncontrollable and will not be limited to Greece and the southern countries… it will break up the euro zone and that will not be in anyone’s interest,” Tsipras said.
Syriza, which emerged as a political force during last month’s inconclusive elections, rejects the country’s bailout with its international creditors. Its main opponent, the conservative New Democracy party, is pledging to stick to the bailout terms which include harsh austerity measures that have pushed the economy deep into recession.
Asked what will happen if the European Union cuts funding to Greece, Tsipras said he is optimistic, but prepared for the worst.
“We are obliged to have prepared for every possibility but we are optimistic; we are not going to the battle to lose,” he said, adding that he wants to keep Greece inside the euro and accused speculators of growing talk about an eventual Greek exit.
Pointing to Spain, Tsipras said that the Spanish had negotiated a better deal than Greece, ensuring an up to EUR100 billion bank rescue plan without the onerous terms imposed on Athens for its respective aid package.
“Spain managed to receive financing, without a loan agreement,” Tsipras said. But he also took aim at the government of Spanish premier Mariano Rajoy, a conservative, who has pledged tough cutbacks even before asking for European aid.
“The harsh austerity policy that Rajoy’s government follows–even without a [loan] memorandum–deepens the crisis,” he said.
In his remarks, Tsipras also repeated his intention to nationalize the Greek banking system, which has been hit by steep losses stemming from Greece’s recent EUR200 billion debt restructuring.
“It’s a national need to keep the financial system alive through a nationalization process,” he said. “If we are elected, we will move swiftly to recapitalize banks with common voting shares–what we call socialization of the banking system–put them under public control so that Greek depositors feel safe.”
The Syriza leader said that there are about EUR25 billion of bank deposits stashed by Greek depositors at home–“in mattresses”–and that those funds, if returned, could provide a boost for Greece’s liquidity starved banks.
(source: Dow Jones)
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