Sunday

23rd Feb 2020

Greek leftist vows to cancel bail-out, renationalise economy

  • Radical left leader Tsipras claims that the bail-out equals a return to the drachma (Photo: PIAZZA del POPOLO)

Greek leftist leader Alexis Tsipras on Friday (1 June) unveiled his economic programme if he is elected later this month, pledging to cancel the EU-sponsored bail-out and renationalise banks and companies.

But economists say his plans are unfeasible and mere electoral posturing.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or join as a group

With polls indicating a close race between his radical-left Syriza party and the former ruling New Democracy party, Tsipras has presented the 17 June vote as a choice between the austerity programme attached to the €130 billion bail-out and his radical plan for Greece.

"You either implement the bail-out or you cancel it. There is no such thing as a more or less evil bail-out, a more or less inappropriate medicine. New Democracy or Pasok did not want to cancel its implementation. We will," he said in Athens.

The 37-year old politician, whose party came in second in 6 May elections, said the austerity measures prescribed by international lenders since 2010, when Greece first asked for a bail-out, have not worked and should be abrogated, as the country is struggling with the worst recession since World War II.

He vowed to keep Greece in the eurozone however, calling threats of a Greek euro-exit a bluff.

Instead, he claimed that the bail-out itself "a mechanism of definitive bankruptcy and propelling the country into a voluntary departure from the euro area, the only exit that is institutionally viable."

"This false dilemma of 'bail-out or drachma' hides the real equation that the bail-out leads to the return of the drachma," Tsipras said.

According to his plan, if he is elected Prime Minister, all austerity measures would be revoked, restoring all social benefits. To pay for this, Tsipras would seek a moratorium on his country's debt payments until the economy comes back on track.

Banks would be re-nationalised, energy, transport, telecommunication and other strategic companies would also be taken over by the state. Price controls for basic items such as milk and bread would be put in place.

Tsipras pledged to suspend all defence acquisitions - an area untouched by the austerity drive, which saw billions of euros go to French and German companies for submarines and aircraft. Greece's is one of Europe's highest spenders in defence matters, with cuts so far taken rather on the personnel side than on equipment.

Another move likely to strike a sensitive chord among Greek taxpayers is his promise to go after rich shipowners, who currently are not obliged to pay any tax in Greece, as well as other high earners.

Yet despite the appeal a young politician vowing to take on "rotten, corrupt and discredited elites" may have with the electorate, his economic plans raised eyebrows among experts, as a cancellation of the bail-out would de facto leave Greece with no money and force it to exit the euro.

"Most of it is posturing ahead of the elections. He cannot do things like that, there would be convictions, fines imposed by the European Court of Justice and the EU commission," Peter De Keyzer, chief economist at BNP Paribas Fortis, a Belgian bank, told this website.

This vote-seeking strategy "is holding the rest of Europe for ransom," the Belgian economist said, since the uncertainty about Greece's future in the eurozone has driven up borrowing costs in Italy and Spain.

"If countries get the feeling that they can blackmail the rest to get money, it's the end of the eurozone," he added, labelling the bail-out-scrapping threats as "suicidal."

Even if "some relaxation" of the austerity programme could be negotiated with the next Greek government, De Keyzer says it is a matter of credibility for the whole eurozone that the rules are respected.

Were Syriza to form a government that insisted on scrapping the programme altogether, the Belgian economist sees an "even speedier" move by the rest of the eurozone to become a fiscal union and avoid a total meltdown.

Spain hit by downgrades amid Greek contagion fears

Spain's economic woes deepened on Thursday as 16 of its banks and four regions were downgraded by Moody's, while statistics confirmed the country is still in recession, just as fears about a Greek euro-exit are running high.

Euro fears rise as Greeks withdraw money from banks

Greeks have withdrawn billions of euros from their banks in recent days, with the country's president warning of "panic" at the prospect of the country leaving the eurozone. Markets are equally jittery, pushing Spain closer to a bail-out.

International spotlight on Greek elections

Europe is in wait-and-see mode as Greeks head to the ballot boxes for a vote that is set to determine the future of their country in the eurozone.

No breakthrough at EU budget summit

EU leaders failed to reach agreement on the EU's long-term budget, as richer states and poorer 'cohesion countries' locked horns. The impasse continues over how to fund the Brexit gap.

EU leaders struggling to break budget deadlock

Cuts to innovation, space, neighbourhood and other programme-spending push down the latest budget proposal on the table of EU leaders. Rebates could stay on, to win the support of the net-payers for a deal.

News in Brief

  1. Bulgarian PM investigated over 'money laundering'
  2. Greenpeace breaks into French nuclear plant
  3. Germany increases police presence after shootings
  4. NGO: US and EU 'watering-down' tax reform prior to G20
  5. Iran: parliamentary elections, conservatives likely to win
  6. Belgian CEOs raise alarm on political crisis
  7. Germans voice anger on rise of far-right terrorism
  8. EU leaders' budget summit drags on overnight

Vietnam sent champagne to MEPs ahead of trade vote

A trade deal with Vietnam sailed through the European Parliament's international trade committee and after its embassy sent MEPs bottles of Moet & Chandon Imperial champagne over Christmas.

Feature

Promises and doubts: Africa's free-trade adventure

The EU is hoping that a continent-wide free trade agreement in Africa will help lift millions out of poverty and help solve issues of security and migration. But its message of values and equal partnership do not resonate with everyone.

Stakeholders' Highlights

  1. Nordic Council of MinistersScottish parliament seeks closer collaboration with the Nordic Council
  2. UNESDAFrom Linear to Circular – check out UNESDA's new blog
  3. Nordic Council of Ministers40 years of experience have proven its point: Sustainable financing actually works
  4. Nordic Council of MinistersNordic and Baltic ministers paving the way for 5G in the region
  5. Nordic Council of MinistersEarmarked paternity leave – an effective way to change norms
  6. Nordic Council of MinistersNordic Climate Action Weeks in December

Latest News

  1. No breakthrough at EU budget summit
  2. EU leaders struggling to break budget deadlock
  3. German ex-commissioner Oettinger lands Orban job
  4. How big is Germany's far-right problem?
  5. Plastic and carbon proposals to help plug Brexit budget gap
  6. Sassoli repeats EU budget rejection warning
  7. Why Miroslav Lajčák is the wrong choice for EU envoy
  8. Unhappy EU leaders begin budget haggle

Join EUobserver

Support quality EU news

Join us