Greek PM Tsipras promises radical change, markets tumble

Greek PM Tsipras promises radical change, markets tumble
# 28 January 2015 20:16 (UTC +04:00)

Baku-APA. Leftwing Greek Prime Minister Alexis Tsipras threw down an open challenge to international creditors on Wednesday by halting privatization plans agreed under the country's bailout deal, prompting a third day of heavy losses on financial markets, APA reports quoting Reuters.

A swift series of announcements signaled the newly installed government would stand by its anti-austerity pledges, setting it on course for a clash with European partners, led by Germany, which has said it will not renegotiate the aid package needed to help Greece pay its debts.

Tsipras told the first meeting of his cabinet members that they could not afford to disappoint the voters who gave them a mandate in Sunday's election, which his Syriza party won decisively.

After announcing a halt to the privatization of the port of Piraeus on Tuesday, for which China's Cosco Group [COSCO.UL] and four other suitors had been shortlisted, the government said on Wednesday it would block the sale of a stake in the Public Power Corporation of Greece (PPC).

It also plans to reinstate public sector employees judged to have been laid off without proper justification and announced rises in pension payments for retired people on low incomes.

Uncertainty over the new government's relations with the European Union went beyond economic policy. A day before the EU is expected to extend sanctions against Russia for six months, it was unclear if Athens would back its European partners on this move, after dissenting over a joint statement from the bloc on Ukraine on Tuesday.

Tsipras, who met Russia's ambassador to Athens on Monday and the Chinese envoy the next day, told ministers that the government would not seek "a mutually destructive clash" with creditors. But he warned Greece would not back down from demanding a renegotiation of debt.

"We are coming in to radically change the way that policies and administration are conducted in this country," he said.

Financial markets have taken fright. Greek bank stocks <.FTATBNK> plunged more than 22 percent on Wednesday, taking their cumulative losses since the election to 40 percent.

The overall Athens stock market fell almost 8 percent <.ATG>, while Greek five-year government bond yields hit around 13.5 percent. This marked their highest level since a 2012 restructuring which wrote off a large proportion of Greek debt held by private investors.

Newly-appointed Finance Minister Yanis Varoufakis, who meets Jeroen Dijsselbloem, head of the euro zone finance ministers' group on Friday, said negotiations would not be easy but he expected they would find common ground.

"There won't be a duel between Greece and Europe," he said, in his first meeting with reporters since taking office.

Varoufakis said he would meet the finance ministers of France and Italy - both countries which have pressed for a change of course in Europe from rigid budget orthodoxy - in the coming days.

France has ruled out straight cancellation of Greece's debt, about 80 percent of which is held by other euro zone governments and multinational organizations such as the IMF. However, Paris has said it would be open to talks on making Greece's debt burden more sustainable and Tsipras is expected to meet President Francois Hollande before an EU summit on Feb. 12.

The response from Germany was frosty. Economy Minister Sigmar Gabriel said Athens should have discussed the halt to privatizations with its partners before making an announcement.

"Citizens of other euro states have a right to see that the deals linked to their acts of solidarity are upheld," he said, adding that it would be the "wrong solution" for Greece to quit the euro but that it was up to Athens to decide.

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