Tsipras Presses Rehn on Debt Relief

It wasn’t a receptive audience, but Greece’s major opposition party Coalition of the Radical Left (SYRIZA) leader Alexis Tsipras, meeting in Strasbourg, France with European Economic and Monetary Affairs Commissioner Olli Rehn, told him that Greece can’t afford to pay back its bailout loans of $325 billion to international lenders.
Rehn and Tsipras are ideological opposites on the question of the bailouts and pay cuts, tax hikes and slashed pensions that came with them – Rehn supports them – and a photo of the two of them shaking hands like they were holding cold fish reminded some observers of U.S. President Barack Obama shaking with Cuban leader Raul Castro at the memorial service for the late South African leader Nelson Mandela.
Tsipras, whose party wants the rescue monies but not the attached austerity measures, said besides a partial write-off of the loans – he didn’t describe how much but a previous government stiffed private investors with 74 percent losses – Greece should have a moratorium on the balance and set aside payments, effectively negating any payments.
That would require the taxpayers in the other 16 Eurozone countries to pick up the bill for decades of wild overspending by the ruling coalition parties of Prime Minister Antonis Samaras’ New Democracy Conservatives and his partner, the PASOK Socialists.
The government is negotiating with the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) for the balance due of a second bailout of $173 billion. A first for $152 billion was spent without making a dent in the country’s debt, still hovering at a staggering $430 billion.
Samaras said recovery is on the horizon next year but Tsipiras said a number of analysts believe the Greek debt is unsustainable as tax revenues are off projections and the government hasn’t been successful in luring significant private investment to bring in new monies.
The 2011 debt write-off, when current Deputy Premier/Foreign Minister Evangelos Venizelos was finance minister, destroyed the Cypriot banking industry and nearly wipe out many in the Diaspora who had bought Greek bonds to help their homeland.
German Chancellor Angela Merkel, whose country foots much of the bailout costs, has backed the loans but only on the condition of unrelenting austerity and said he won’t go along with letting Greek stiff its public investors too. IMF Managing Director Christine Lagarde said the EU and ECB should absorb losses but said her agency shouldn’t.
Tsipras cited to Rehn estimates by international organizations according to which Greece’s debt would remain at around 160 percent of Gross Domestic Product, (GDP) only slightly lower than the current level, unless there is some kind of write-off.
Rehn countered that the economic program currently being implemented in Greece is designed to boost sustainable development and address deep-rooted structural problems that triggered the country’s debt crisis.
Critics said that was the result of the ruling coalition parties of New Democracy’s Conservatives and the PASOK Socialists packing public payrolls with hundreds of thousands of needless workers for generations in return for votes.
Rehn reportedly questioned Tsipras on how the SYRIZA leader sees Greece’s position in Europe with Tsipras telling Rehn he already knew. SYRIZA is opposed to the austerity measures attached to the bailouts and wants the money but not the conditions and doesn’t want to pay back the loans.
Tsipras told Rehn that if the Troika asks for more austerity that Greece, in the sixth year of a deep recession with Greeks buried by pay cuts, tax hikes and slashed pensions, wouldn’t take any more.