Greece scraps key privatisations, stocks hammered

GMT 21:57 2015 Wednesday ,28 January

Arab Today, arab today Greece scraps key privatisations, stocks hammered

Alexis Tsipras (L)
Athens - AFP

Greece's new hard-left government on Wednesday scrapped key privatisation tenders and pressed home its demand for debt relief, causing sharp falls on the Athens stock market as investors fretted over the risk of a default.
Prime Minister Alexis Tsipras said his "national salvation" government would not sell a majority stake in the main ports of Piraeus and Thessaloniki, and would also halt the privatisation of the top electricity and petroleum companies.
The news sent Greek stocks tumbling, with the main index losing over 9.0 percent and banks falling by a quarter.
Yields on Greek 10-year bonds also rose above the symbolic barrier of 10 percent.
Tsipras, comfortably elected on Sunday on a pledge of ending painful austerity in a country worn down by six years of recession, said he wanted a "fair" renegotiation with Brussels of the country's 240 billion euro ($269 billion) bailout.
His finance minister, Yanis Varoufakis, insisted there would be no "showdown" between Greece and the European Union, while calling the austerity cuts a "toxic mistake" that ultimately benefited no one in Europe.
In a speech to the cabinet -- his first since taking office -- 40-year-old premier Tsipras however insisted that Greece's new leaders were no longer willing to bow to the "politics of submission", in a clear swipe at Brussels and the International Monetary Fund.
The new government had already on Tuesday taken the EU to task for threatening to impose further sanctions on Russia over the war in the Ukraine without consulting Athens about the warning.
"Our people are suffering and demand respect... We must bleed to defend their dignity," Tsipras said on Wednesday.
The new government's radical anti-austerity agenda has alarmed financial markets, reviving fears that Greece could crash out of the eurozone.
After his Syriza party stormed to power on Sunday, Tsipras forged a coalition with the nationalist Independent Greeks (ANEL), who are equally opposed to the fiscal cuts imposed over the past five years in return for bailout loans.
The ruling Syriza party has made frequent references to a "New Deal", harking back to the stimulus programme that pulled the United States out of the Great Depression in the 1930s.
The new coalition -- which has 162 seats in the 300-member parliament -- must address an end-of-February deadline set by the EU for Greece to carry out more reforms in return for a seven billion euro tranche of financial aid from the bloc and the IMF.
Tsipras, who has vowed to reverse many of the severe spending cuts and other measures that Greece's creditors insist on, must soon decide whether to delay the deadline.
Outgoing finance minister Gikas Hardouvelis said Greece had "quite acute" financing needs in March and could not afford to have negotiations drag on until the summer.
- EU 'flexible' -
Greece's European partners have been quick to stymie the prospect of debt forgiveness, with German Chancellor Angela Merkel's spokesman saying that Greek membership of the eurozone "means... sticking to its previous commitments."
However the EU's governing body indicated Wednesday that it was willing to show flexibility with the new Greek leaders to keep the debt-stricken nation in the eurozone.
European Parliament chief Martin Schulz will be in Athens on Thursday, the first foreign dignitary to hold talks with the new government.
The European commissioner for economic and financial affairs, France's Pierre Moscovici, said he ruled out any "break" between the European Commission and the new Greek administration, the French daily Le Parisien reported Wednesday.
The Commission and the European Union are willing to seek "less intrusive, more flexible forms of cooperation" with Athens, the paper quoted him as saying.
The head of the eurozone finance ministers, Jeroen Dijsselbloem, will also visit Athens on Friday "to get to know" Greece's new leaders, his spokeswoman said.
But in a newspaper interview Wednesday, a member of Germany's Bundesbank central bank warned Athens of "fatal consequences" if it rejected the bailout terms.
"If the continuation of the programme of aid for Greece is called into question... Greek banks would lose access to central bank funds," Joachim Nagel told the German business daily Handelsblatt. "It would have fatal consequences for the Greek financial system."
- 'Humanitarian disaster' -
Tsipras' Syriza party claims the stringent conditions attached to the bailout -- including wage and pension cuts and widespread privatisations -- have caused a "humanitarian disaster" in Greece.
It wants to spend 1.2 billion euros to immediately increase the minimum wage and pensions for the poorest.
However, the IMF extended an olive branch to the new government, saying it was prepared to continue its support to the country.
Greece's economy is set to emerge from recession after shrinking by a quarter in five years, a slump that has left one in four out of work.
Many Greeks say that even if Tsipras can deliver on a fraction of what he has promised, their lives will improve.
Tsipras stands alone as Europe's first anti-austerity leader for the moment, but Syriza's victory could inspire other movements born out of the crisis, including Spain's Podemos, which is aiming for an absolute majority in the Spanish election in November.


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