Tensions with Germany over 'greedy' Greece's debt

Tensions with Germany over 'greedy' Greece's debt
Greek Prime Minister Alexis Tsipras arrives ahead of the European Council Summit at the European Union (EU) Headquarters.

ATHENS - Fresh tensions emerged Thursday between Greece and Germany as attention turned to Athens's huge debt pile two days after the stricken eurozone country secured an extension of its bailout.

Greece, whose economy has shrunk by a quarter in six years, owes 320 billion euros ($365 billion), equal to 175 per cent of its annual economic output.

Prime Minister Alexis Tsipras, who swept to power last month on a wave of anger at years of austerity cuts, wants to use a four-month bailout extension secured on Tuesday to renegotiate this debt mountain.

Finance Minister Yanis Varoufakis, the frank-talking economics professor hired by Tsipras to reach a better deal with Greece's creditors, called Wednesday to "begin immediately" a discussion on this.

But with Greece having already secured a 100-billion-euro write-down of its debt to private creditors and two bailouts of 240 billion euros, German Finance Minister Wolfgang Schaeuble expressed Thursday his "disbelief" at any such suggestion.

"I can't see anything in what Varoufakis is doing that makes life easier for us," the veteran German minister was quoted as telling a parliamentary group meeting.

"No more billions for the greedy Greeks!" screamed mass daily Bild Thursday under a huge "Nein!" ("No!") headline.

Green shoots

The extension to Greece's lifeline still needs approval from the German parliament and possibly Greece's, but this should be a formality despite unease among some lawmakers in both countries.

To secure the lifeline, Tsipras's new hard-left government published a six-page list of proposed reforms focused on boosting tax receipts and cutting spending through improved efficiencies.

But Tsipras, 40, had to temper campaign promises to hike the minimum wage, reinstate laid-off civil servants and alleviate poverty by vowing that this would be done only in consultation with Greece's creditors.

Varoufakis meanwhile told Bloomberg TV in an interview that 700 million euros was deposited at Greek banks on Tuesday.

That is a fraction of the 20 billion euros withdrawn in panic when elections were called and Greece lurched into a new crisis in December, but Varoufakis said this showed confidence was returning.

"There was a deposit flight back into the Greek banking sector," the fluent English-speaker told Bloomberg. "It's a question of direction. Once you turn the tide, you hope."

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