Stefan Wagstyl, Financial Times
The Greek government has hired investment bank Lazard to advise it on managing sovereign debt in a sign that Syriza is serious about honouring its election pledge to restructure its debt pile—despite EU officials warning against it.
Tensions have been high since the country’s newly-elected far-left party came to power after winning elections a week ago, with German chancellor Angela Merkel on Saturday reiterating that Greece’s European creditors would not consider forgiving part of the debt-ridden country’s rescue loans. “I don’t see a further debt haircut,” she said in an interview in Berliner Morgenpost.
News of the move to hire Lazard came as Erkki Liikanen, an ECB governing council member, warned that Greek banks would be cut off from ECB lending if no deal was reached by the end of February when Greece’s support programme expires, according to Reuters.
“We (the ECB) have our own legislation and we will act according to that. . . Now, Greece’s programme extension will expire at the end of February so some kind of solution must be found, otherwise we can’t continue lending,” Mr Liikanen said.
Meanwhile, prime minister Alexis Tsipras on Friday called ECB president Mario Draghi to reassure him that his new government wanted to reach a “mutually beneficial” solution with international partners over the renegotiation of Greece’s bailout.
A Greek official, who spoke to Bloomberg on condition of anonymity, said Mr Tsipras called Mr Draghi following a tense meeting between his new finance minister Yanis Varoufakis and Jeroen Dijsselbloem, the head of the eurozone group of finance ministers.
Mr Varoufakis had said that Greece would no longer co-operate with the troika of international lenders and would not accept an extension of its EU bailout. “This position enabled us to win the trust of the Greek people,” he said.
Mr Dijsselbloem in return rejected the new Greek government’s call for an international conference that would consider writing off part of Greece’s debt, which last year amounted to 175 per cent of national output.
The exchange, along with tough words from Berlin, captured an adversarial mood as the new Greek government and its eurozone partners made their first formal contact and set the stage for tense negotiations that could decide Greece’s future in the European bloc.
The Greek government has hired investment bank Lazard to advise it on managing sovereign debt in a sign that Syriza is serious about honouring its election pledge to restructure its debt pile—despite EU officials warning against it.
Tensions have been high since the country’s newly-elected far-left party came to power after winning elections a week ago, with German chancellor Angela Merkel on Saturday reiterating that Greece’s European creditors would not consider forgiving part of the debt-ridden country’s rescue loans. “I don’t see a further debt haircut,” she said in an interview in Berliner Morgenpost.
News of the move to hire Lazard came as Erkki Liikanen, an ECB governing council member, warned that Greek banks would be cut off from ECB lending if no deal was reached by the end of February when Greece’s support programme expires, according to Reuters.
“We (the ECB) have our own legislation and we will act according to that. . . Now, Greece’s programme extension will expire at the end of February so some kind of solution must be found, otherwise we can’t continue lending,” Mr Liikanen said.
Read MoreNo lending to Greek banks if no deal by February
Meanwhile, prime minister Alexis Tsipras on Friday called ECB president Mario Draghi to reassure him that his new government wanted to reach a “mutually beneficial” solution with international partners over the renegotiation of Greece’s bailout.
A Greek official, who spoke to Bloomberg on condition of anonymity, said Mr Tsipras called Mr Draghi following a tense meeting between his new finance minister Yanis Varoufakis and Jeroen Dijsselbloem, the head of the eurozone group of finance ministers.
Mr Varoufakis had said that Greece would no longer co-operate with the troika of international lenders and would not accept an extension of its EU bailout. “This position enabled us to win the trust of the Greek people,” he said.
Mr Dijsselbloem in return rejected the new Greek government’s call for an international conference that would consider writing off part of Greece’s debt, which last year amounted to 175 per cent of national output.
The exchange, along with tough words from Berlin, captured an adversarial mood as the new Greek government and its eurozone partners made their first formal contact and set the stage for tense negotiations that could decide Greece’s future in the European bloc.
Speaking to the Financial Times in London on Friday, Pierre Moscovici, the EU economics commissioner, urged calm, saying: “We all need to be careful about the economic situation in Greece. Our common goal is to enhance growth. For that we need pragmatism and respect for commitments, from both sides.”
But Greece’s new government has alarmed creditors and investors with pledges to freeze privatisations, rehire state workers and otherwise roll back reforms adopted by previous administrations as part of the bailout.
Mr Varoufakis, emboldened by his far-left Syriza party’s success, said Greece was “working from the standpoint of the best possible co-operation with its institutional partners and the International Monetary Fund but not with a [bailout] programme that we think is anti-European.”
He also blasted the deeply unpopular bailout monitors from the European Commission, IMF and ECB, also known as the troika, saying: “We are not going to co-operate with a rottenly constructed committee.”
Mr Varoufakis and Mr Tsipras will embark on a round of visits next week to London, Paris and Rome to seek backing for Greece’s position.
Mr Varoufakis will meet his French counterpart Michel Sapin on Sunday before flying to the UK for a meeting with chancellor George Osborne. He may also meet investors in London, where Merrill Lynch and Deutsche Bank are trying to fix meetings.
Mr Dijsselbloem warned the new government against taking unilateral steps or ignoring arrangements with lenders, saying “the problems of the Greek economy have not disappeared overnight with the elections”.
Patience for Greece is running particularly thin in Germany. Ms Merkel said Europe would continue to show solidarity with Greece and other nations hit by Europe’s debt crisis as long as they undertook their own reform and austerity programmes. “We – Germany and the other European partners – will now wait and see what concept the new Greek government comes to us with,” she said
