UK Treasury chief: Greek impasse risk to world economy

AP News
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Posted: Feb 02, 2015 10:24 AM
UK Treasury chief: Greek impasse risk to world economy

LONDON (AP) — Britain's Treasury chief warned that the standoff between Greece and the eurozone over the country's bailout is endangering the global economy, urging the new government in Athens to act responsibly.

George Osborne characterized his talks with Greece's new Finance Minister Yanis Varoufakis as "constructive," but cautioned that now was the time to "choose competence over chaos." He urged the eurozone countries to come up with a better plan for jobs and growth in Greece.

"It's clear that the standoff between Greece and the eurozone is fast becoming the biggest risk to the global economy, and it's a rising threat to our economy at home," Osborne said.

Greece's radical left Syriza party won parliamentary elections last week, alarming investors and eurozone governments. Party leader and new Prime Minister Alexis Tsipras has said he wants to end years of budget austerity that eurozone countries and the International Monetary Fund had required in exchange for 240 billion-euro ($270 billion) in rescue loans. He also wants to renegotiate payment of the bailout debt.

Greece's finance minister will meet with investors and fund managers in London on Monday as he continues his tour of European capitals to drum up support for his government's demands.

Though Britain is not part of the euro, Varoufakis sought to build rapport with Osborne with face-to-face talks. Downing Street said Britain's position is one of continuity — and that Greece should honor the terms of its bailout.

Tsipras struck a more conciliatory tone, meanwhile. He dismissed what he called scaremongering over his government's position on bailout negotiations and said that while the Greek people expect him to carry out tough negotiations with eurozone creditors, that would happen "within a European framework."

Tsipras said he was surprised many "powerful European forces" back his government's call to focus policies on economic growth and not just debt reduction.

"Europe needs to take a breath, certainly through mutual understanding and common steps," said Tsipras. "But there's no need to further constrict those breaths that people and economies need in order to move toward growth."

Tsipras ruled out suggestions that his government may reach out to Russia for a loan, saying his government's primary objective is to conclude a deal with Greece's European partners and "all those who have loaned to our country and to whom our country has obligations."

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Hadjicostis reported from Nicosia, Cyprus.