The new Greek government seems to back down from its aim of cancelling debt, after Yanis Varoufakis, the new Greek finance minister, revealed his new plan of swapping the 315 billion euros of public debt for growth-linked bonds. But in Berlin, German Finance Minister Wolfgang Schäuble stressed that there won’t be any changes to Greece’s debt programme.
Yanis Varoufakis revealed proposals for a debt swap while he met the UK chancellor, George Osborne, in London. He explained Greece would be ready to renounce a write-off of its debt in exchange for reimbursements based on growth. This statement came two days before an important meeting between the new Greek Prime Minister, Alexis Tsipras, and the European Commission president, Jean-Claude Juncker, on Wednesday (February 4) in Brussels.
Varoufakis told the Financial Times that his new plan wouldn’t be considered a debt “haircut”, but more as “smart debt engineering”, by sparing privately held bonds from losses.
In other words, this means Athens would no longer call for a write-off of its 315 billion euros of foreign debt.
“What I’ll say to our partners is that we are putting together a combination of a primary budget surplus and a reform agenda,” Varoufakis told the newspaper.
After a dramatic week with its creditors, Varoufakis seems to ease the existing tension to reassure private investors that the new Greek government was not searching for a clash with Brussels over a new debt agreement.
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The visit of Varoufakis in London was part of the new Greek government leaders’ European tour to re-negotiate the country’s bailout terms and also try to gain support from its EU partners.
However, Varoufakis’ revelation is different to the words spread by the new Greek Prime minister Tsipras in Athens last week. After his election victory, Tsipras kept his promise to end the tough austerity conditions imposed under Greece’s existing bailout.
This week, it appears that the new “left and right wing coalition” is stressing that a new deal is still possible. “We are in substantial negotiations with our partners in Europe and those that have lent to us. We have obligations towards them,” Tsipras said Monday (January 2) at a press conference in Cyprus during his first foreign visit as prime minister.
“The troika must remain involved in Greece’s bailout,” said German Finance Minister Wolfgang Schäuble.
On Monday, Schäuble said that Berlin would not accept any unilateral changes to Greece’s debt program.
“We want Greece to continue going down this successful path in the interests of Greece and the Greeks, but we will not accept one-sided changes to the programme,” Schäuble said.
Schäuble also stressed that the troika, consisting of the International Monetary Fund, the European Central Bank /ECB) and the European Commission, must remain involved in supervising the bailout. This was agreed under EU treaties and according to Schäuble, “you can’t change them.”
Varoufakis will meet Schäuble in Berlin on January 5. However, before this meeting, he will go to Frankfurt to visit Mario Draghi, the chair of the ECB.
Juncker ready to replace troika?
For months now, European Commission president Juncker has been underlining, as he did in a speech in July at the European Parliament in Strasbourg, that the troika should be modified because of its lack of democracy.
Asked by journalists during a press conference early this week, Commission chief spokesperson Margaritis Schinas reminded of Juncker’s quote about the troika in that speech at Parliament: “In the future, we should be able to replace the ‘troika’ with a more democratically legitimate and more accountable structure, based around European institutions with enhanced parliamentary control both at European and at national level.”
However, according to Reuters, Juncker, when meeting with Tsipras, is not ready to accept any direct write-off of Greece’s public debt.
Greek voices from Italy
Before flying to Brussels to meet Juncker, Tsipras was in Rome on January 3, where he met the Italian Prime Minister, Matteo Renzi, as he highlighted on Twitter when he arrived in Rome.
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According to the Greek news agency ANA/MPA , Tsipras will tell Renzi that the “turn towards growth and investments cannot come through the troika, which blocks them” and that Europe “must finally trust its institutions and its bodies.”
Varoufakis was also in Rome and according to the Wall Street Journal Europe, he said Greece needs an agreement on its debt situation that could lead to an agreement in June.
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- Author: Laeticia Markakis, Euranet Plus News Agency
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