Wednesday, May 9, 2012

Greek left attacks ‘barbarous’ austerity (Financial Times)

Alexis Tsipras©Getty
Alexis Tsipras, head of the leftwing coalition Syriza
Greece is heading for a clash with international lenders as the radical leftwing party that came second in the weekend’s election called for the ripping up of a “barbarous” austerity programme underpinning its bailout and questions mounted about the country’s future inside the euro.
Alexis Tsipras, the 38-year-old leader of the Syriza party that surged in popularity in Sunday’s poll, outlined on Tuesday a five-point plan to be put to party leaders as he attempts to build a coalition, demanding the reversal of fiscal and structural measures that have enabled Greece to slash its budget deficit.
Analysts expect both leaders to reject Mr Tsipras’s plan out of hand, a move that is likely to lead to another election in June, although Mr Venizelos will symbolically be given the opportunity to try and form a coalition first.
One conservative official called Syriza’s position “irresponsible”.
In an unusually blunt intervention on Tuesday, Jörg Asmussen, a European Central Bank executive board member, for the first time raised the possibility of a Greek exit from the euro – an option the ECB had previously refused to acknowledge in public.
“Greece needs to be aware that there is no alternative to the agreed reform programme if it wants to remain a member of the eurozone,” Mr Asmussen told Handelsblatt , the German business newspaper.
Fears of a Greek exit hit financial markets, with stock markets across Europe falling, the US S&P 500 hitting a two-month low by midday in New York and investors buying safe US treasuries, German bunds and UK gilts.
Syriza overtook Pasok in Sunday’s poll, winning 16.78 per cent of the vote to Pasok’s 13.18 per cent thanks to large gains in Athens and Piraeus, Greece’s largest constituencies.
“Voters rejected the barbarous policies in the bailout deal; they abandoned the parties that support it, effectively abolishing plans for sackings [of public sector workers] and additional spending cuts,” Mr Tsipras said.

His plan would involve ripping up Greece’s second €174bn bailout agreement, putting the banking sector “under state control”, reversing labour reforms, calling a moratorium on national debt repayments and moving to proportional representation.
Greek stocks fell to 20-year lows while in Paris the CAC 40 slid 2.8 per cent and Germany’s Xetra Dax closed down 1.9 per cent. The euro slipped 0.3 per cent against the dollar to $1.3022.
“Greece in itself isn’t a big issue, but what does matter of course is the knock-on effects and contagion fears and what that would mean for the wider market,” said Adrian Cattley, European equity strategist at Citi.

In depth

Fear’s mount over Greece’s potential exit from the eurozone and the implications for the wider bloc
Analysts said Syriza wanted to win first place at the next election by taking a hardline stance against reforms backed by the EU and the International Monetary Fund aimed at rescuing Greece from bankruptcy and an exit from the eurozone.
Young, unemployed Greeks flocked to vote for Syriza at the election, along with self-employed professionals opposed to the liberalisation of their closed shops and older leftwingers facing further pension cuts under an €11.5bn package due to be approved by the incoming parliament.
“Some people interpreted the election result as a vote of anger,” Mr Tsipras said. “They are making a mistake. It was a mature and conscious choice.”

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