Wednesday

17th Jul 2019

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 18 year's of archives. 30 days 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.

EU hesitates to back France over US tariff threat

France has passed a new tax on tech companies that will affect US global giants like Facebook. Donald Trump has threatened retaliatory tariffs over it. The EU commission says it will "coordinate closely with French" on the next steps.

EU banks more vulnerable to shocks than feared

Eurozone banks, such as Deutsche Bank, might be much more vulnerable to a repeat of the 2008 financial crisis than EU "stress-tests" have said, according to a new audit.

Feature

Romania enlists priests to promote euro switchover plan

Romania is due to join the single currency in 2024 - despite currently only meeting one of the four criteria. Now the government in Bucharest is enlisting an unlikely ally to promote the euro to the public: the clergy.

Trump and Kurz: not best friends, after all

The visit of Austrian chancellor Sebastian Kurz to the White House on Wednesday showed that the current rift in transatlantic relations is deepening by the day.

Stakeholders' Highlights

  1. UNESDAUNESDA reduces added sugars 11.9% between 2015-2017
  2. International Partnership for Human RightsEU-Uzbekistan Human Rights Dialogue: EU to raise key fundamental rights issues
  3. Nordic Council of MinistersNo evidence that social media are harmful to young people
  4. Nordic Council of MinistersCanada to host the joint Nordic cultural initiative 2021
  5. Vote for the EU Sutainable Energy AwardsCast your vote for your favourite EUSEW Award finalist. You choose the winner of 2019 Citizen’s Award.
  6. Nordic Council of MinistersEducation gets refugees into work
  7. Counter BalanceSign the petition to help reform the EU’s Bank
  8. UNICEFChild rights organisations encourage candidates for EU elections to become Child Rights Champions
  9. UNESDAUNESDA Outlines 2019-2024 Aspirations: Sustainability, Responsibility, Competitiveness
  10. Counter BalanceRecord citizens’ input to EU bank’s consultation calls on EIB to abandon fossil fuels
  11. International Partnership for Human RightsAnnual EU-Turkmenistan Human Rights Dialogue takes place in Ashgabat
  12. Nordic Council of MinistersNew campaign: spot, capture and share Traces of North

Latest News

  1. Von der Leyen faces gender battle for commission posts
  2. EU proposes yearly rule-of-law 'reviews'
  3. Poland 'optimistic' despite new EU law checks
  4. What did we learn from the von der Leyen vote?
  5. Is Golden Dawn's MEP head of a criminal organisation?
  6. Finland rejects call to end sponsorship of EU presidency
  7. MH17 five years on: when will Russia be punished?
  8. EU commission has first-ever woman president

Stakeholders' Highlights

  1. Nordic Council of MinistersLeading Nordic candidates go head-to-head in EU election debate
  2. Nordic Council of MinistersNew Secretary General: Nordic co-operation must benefit everybody
  3. Platform for Peace and JusticeMEP Kati Piri: “Our red line on Turkey has been crossed”
  4. UNICEF2018 deadliest year yet for children in Syria as war enters 9th year
  5. Nordic Council of MinistersNordic commitment to driving global gender equality
  6. International Partnership for Human RightsMeet your defender: Rasul Jafarov leading human rights defender from Azerbaijan
  7. UNICEFUNICEF Hosts MEPs in Jordan Ahead of Brussels Conference on the Future of Syria
  8. Nordic Council of MinistersNordic talks on parental leave at the UN
  9. International Partnership for Human RightsTrial of Chechen prisoner of conscience and human rights activist Oyub Titiev continues.
  10. Nordic Council of MinistersNordic food policy inspires India to be a sustainable superpower
  11. Nordic Council of MinistersMilestone for Nordic-Baltic e-ID
  12. Counter BalanceEU bank urged to free itself from fossil fuels and take climate leadership

Join EUobserver

Support quality EU news

Join us