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14th Aug 2022

Germany warns Greece to stick to reforms after elections

  • Elections are set for 25 January (Photo: YoungJ523)

German finance minister Wolfgang Schaeuble has warned Greece that it needs to stick to reform promises no matter who comes to power after snap elections, set to be held on 25 January.

"The tough reforms are bearing fruit and there is no alternative to them," said Schaeuble on Monday (29 December) after the Greek parliament earlier the same day failed for a third time to elect a new president, triggering the general election.

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"We will continue to help Greece help itself on its path of reform. If Greece takes another path, it will be difficult," Schaeuble said.

He also noted that any new government would have to stick to pledges made by the outgoing conservative government of Antonis Samaras.

"New elections will not change the agreements we have struck with the Greek government," the German minister noted.

The strong reaction from Berlin reflects uncertainty about what January's vote will mean for Greece's committments under its bailout programme, as it may sweep the anti-austerity, debt-restructuring Syriza to power.

Syriza, led by Alexis Tsipras and currently topping the polls, has said it wants to renegotiate its bailout terms with Greece's creditors - the European Commission, European Central Bank (ECB) and International Monetary Fund (IMF) - including a major write-off of eurozone-held debt.

EU officials have viewed the prospect of a Syriza-led government with increasing nervousness.

EU economics commissioner Pierre Moscovici reacted to the news by saying that a "growth-friendly reform process" is "essential for Greece to thrive again".

However, earlier this month in an interview with the Financial Times, the top official spoke more frankly.

"The idea of contemplating not reimbursing debt, is, in my view suicidal, with a risk of default," said Moscovici.

The ECB reacted to the political situation by saying it would "wait for the views and suggestions of the Greek authorities on how to best proceed with the review" while the IMF said financial aid to the country would be suspended until a new government is formed.

Meanwhile, inside the country, political parties are already staking out their positions ahead of the vote.

“I am here to ensure that we do not allow anyone to put in danger or doubt Greece’s position in Europe,” said prime minister Samaras, according to Greek daily ekathimerini

He called the elections "the most crucial" of the last decades.

Tsipras, for his part, said the main centre-right and centre-left parties would seek to discredit his party.

“They will use lies, monstrous lies about Syriza, its intentions and its policies,” he noted.

Greece has had two bailout programmes, worth €240bn, but has been required to carry out major reforms and spending cuts in return.

It currently has an unemployment rate of 25.5 percent and its economy is only just beginning to recover after six years of contraction.

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