Wednesday

7th Dec 2022

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

Become an expert on Europe

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

... or subscribe 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.

Stakeholders' Highlights

  1. Nordic Council of MinistersLarge Nordic youth delegation at COP15 biodiversity summit in Montreal
  2. Nordic Council of MinistersCOP27: Food systems transformation for climate action
  3. Nordic Council of MinistersThe Nordic Region and the African Union urge the COP27 to talk about gender equality
  4. International Sustainable Finance CentreJoin CEE Sustainable Finance Summit, 15 – 19 May 2023, high-level event for finance & business
  5. Friedrich Naumann Foundation European DialogueGender x Geopolitics: Shaping an Inclusive Foreign Security Policy for Europe
  6. Obama FoundationThe Obama Foundation Opens Applications for its Leaders Program in Europe

Latest News

  1. EU delays Hungary funds decision, as Budapest vetoes Ukraine aid
  2. Borrell gets pension from MEP fund set for taxpayer bailout
  3. Autocrats make us all less secure
  4. Big Agri's lies: green EU farming not to blame for food insecurity
  5. German top court declares €800bn EU recovery fund 'legal'
  6. EU countries struggle to crack Hungary's vetos
  7. Frontex expanding migrant route-busting mission in Balkans
  8. EU ministers in fresh battle on joint debt, after Biden subsidies

Stakeholders' Highlights

  1. EFBWW – EFBH – FETBBA lot more needs to be done to better protect construction workers from asbestos
  2. European Committee of the RegionsRe-Watch EURegions Week 2022
  3. UNESDA - Soft Drinks EuropeCall for EU action – SMEs in the beverage industry call for fairer access to recycled material
  4. Nordic Council of MinistersNordic prime ministers: “We will deepen co-operation on defence”
  5. EFBWW – EFBH – FETBBConstruction workers can check wages and working conditions in 36 countries
  6. Nordic Council of MinistersNordic and Canadian ministers join forces to combat harmful content online

Join EUobserver

Support quality EU news

Join us