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21st May 2022

Tsipras secures Italian backing ahead of EU meeting

  • Tsipras said he will wear Renzi's tie when Greece gets a deal with its creditors (Photo: Palazzo Chigi)

Greek PM Alexis Tsipras has secured Italy's backing ahead of a key meeting in Brussels on Wednesday (4 February) seeking a deal on Greece's debt.

“I strongly believe that the conditions exist for Greece and European institutions to find common ground,” Italian prime minister Matteo Renzi said at a joint press conference with Tsipras in Rome, reassuring him of Italy's "strongest possible support."

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However, he added that all countries “must make their own reforms”, and said that there had been “differences of opinion on some themes”.

Renzi said the election result in Greece - bringing the left-wing Syriza party into government - needs to be interpreted as a "message of hope from a generation who wants more attention for the victims of the crisis."

He also gave Tsipras - who so far hasn't worn a tie in any of his public appearances - a silk tie from the Italian EU presidency which ended in December.

"I will wear it when we find a sustainable solution for Greece," Tsipras joked.

Renzi, who shares Tsipras' dismissive stance towards German-driven austerity policies, also quipped he is pleased not to be considered the "most dangerous leftie in Europe" any more.

New deal?

Instead of pleading for debt forgiveness, the new Greek government has now indicated it is seeking a debt swap deal.

Tsipras is due to meet European Commission chief Jean-Claude Juncker and EU council chair Donald Tusk on Wednesday to discuss the idea.

Greek finance minister Yanis Varoufakis will at the same time meet with European Central Bank (ECB) chief Mario Draghi, whose approval is essential.

Both the EU commission and the ECB are part of the 'troika' of international creditors that have overseen Greece's consecutive bailouts totalling €240 billion.

Italy itself holds around €40 billion in Greek debt.

Syriza's initial plan was to get another write-off, as Greece did in 2012, when private creditors agreed to slash €120 billion off Greece's debt.

But none of the other eurozone countries agree to this proposal, as it might trigger similar demands from other bailed-out states.

Meanwhile, Greece's current programme of loans ends on 28 February, with a final tranche of €7.2 billion still up in the air, depending on the reforms adopted in Athens.

Varoufakis plan

Varoufakis last week said Greece will no longer need this money, as it will clamp down on tax evasion.

But the minister has since toned down his rhetoric, recently telling British media he is now considering a plan to swap the current debt with bonds whose repayments are linked to economic growth.

The Varoufakis plan, which was outlined to bankers in the City of London on Monday, also includes a reduction in the budgetary surplus target which Greece needs to reach next year, from 4.5 percent of GDP to one or two percent.

After meeting Draghi on Wednesday, Varoufakis will seek to convince German finance minister Wolfgang Schaeuble in Berlin on Thursday.

"What is needed is a bridge agreement that gives us some time--for example a month or six weeks starting from late February--to find an agreement that we would then put in place starting from June 1," Varoufakis said Tuesday in Rome.

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