A week in and Greece's new leftist PM sticks to tough line, for now

A week in and Greece's new leftist PM sticks to tough line, for now
Greek Prime Minister Alexis Tsipras

ATHENS - Judging from Prime Minister Alexis Tsipras' first week in office, Greece's new leftist government is determined to take the hard-line, anti-bailout stance that international investors and European leaders had feared.

In fewer than seven days, the new administration in Athens has halted several planned privatisations, started talks with European partners over debt forgiveness and held a tough line with the first euro zone official to visit the country after last Sunday's elections.

Athens has also taken European partners to task over sanctions against Russia.

Rattled by the leftist government's first moves, investors pushed stocks in Greek banks down 40 per cent in just three days.

A first, more concrete test, of how Greece wants to position itself within the European Union, including the countries that have been paying for its 240 billion euro ($270 billion) bailout, comes in the next few days, however.

Finance Minister Yanis Varoufakis travels to Paris later on Sunday then on to London on Monday and Rome on Tuesday. Tsipras will join his finance minister in Rome, and meets French President Francois Hollande on Wednesday.

The reception in other European capitals may end up being cooler than back home where Tsipras' left-wing party Syriza clocked up a resounding win in a Jan 25 snap election.

In Paris and Rome, in particular, intrigued anticipation for a government that might help push a growth agenda in Europe has over the past few days turned to near indignation.

"It's okay to talk about Greek debt, to lighten its burden. It is not okay to cancel Greek debt, because that would mean passing on the burden to French taxpayers," French Finance Minister Michel Sapin, who is due to meet Varoufakis on Sunday, said on Thursday.

Analysts say the government's hard rhetoric may yet change when the administration is confronted with the country's financial situation.

Syriza says cash reserves are enough to meet obligations of 3.5 billion euros over the February-March period but a further total of 1.5 billion euros in principal and interest fall due in June with further payments of 4.7 billion euros in July and 3.6 billion in August.

"On whatever incurs a cost to the public finances, I expect to see moderation," said Dimitri Spiropoulos, associate professor of politics at the University of Athens.

SIGNS OF MODERATION

In the past week, Greek cabinet members have promised to reinstate collective bargaining for workers, reverse pension cuts and raise the minimum wage.

Those measures had been taken by the previous government as a way to save money.

The new government said it was also scrapping the privatisation of power grid ADMIE, the country's largest port Piraeus OLP and planned sale of its stake in the biggest refinery Hellenic Petroleum..

Yet even the freeze on privatisation may be temporary, said Spiropoulos, who expected Tsipras to "re-examine all the privatisations again with new terms." Indeed, despite the bold announcements, there have also been some signs of moderation.

On Friday, for example, Varoufakis batted away Eurogroup Jeroen Dijsselbloem, saying Athens would not extend its bailout past the planned end date of February 28, and would not cooperate with a mission from the lending "troika" of the EU, European Central Bank and International Monetary Fund.

Yet in other quarters, Varoufakis has struck a much softer tone, seeking foreign investment and saying Greece will not overspend.

"We favour a frugal life. We don't believe that growth comes from having so many Porsche Cayennes on our narrow city streets," said Varoufakis, a Yamaha motorcycle-riding economist who for years wrote prolific blogs against the economic sacrifices Greece has imposed as part of its bailout plan.

In a tweet on Saturday, he urged "journalists scurrilously portraying me as anti-German" to read a 2013 post titled 'Europe Needs a Hegemonic Germany' in which he said Germany should play a bigger role in creating demand for other countries' products.

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