Greek leftist seeks negotiated debt write-off

Reuters News
Posted: Feb 04, 2014 9:55 AM

By Paul Taylor

PARIS (Reuters) - Greece would seek to negotiate an international write-off of about one-third of its debt if the leftist Syriza opposition party won a general election, its leader said on Tuesday.

Alexis Tsipras, who is leading a Communist-backed pan-European leftist list in European Parliament elections in May, said his country's problems could not be solved by more loans, which just went to service past debts and shore up the banks.

"The solution isn't more loans. The solution is fewer loans and less debt," Tsipras, whose party leads Prime Minister Antonis Samaras' conservative New Democracy in opinion polls, told the Europresse association on a visit to Paris.

Greece, which has already been bailed out twice with 240 billion euros ($324.44 billion) in euro zone and IMF funds, is due to hold its next general election in 2016, but voting may be brought forward if Samaras' fragile right-left coalition were to lose its narrow parliamentary majority.

Tsipras called for an international conference modeled on a 1953 London agreement among Western powers that cut the debts of West Germany by 50 percent after World War Two.

Such a negotiation should cancel part of the debts of Greece and other peripheral euro zone governments and launch a "new deal" investment drive to revive growth and enable them to meet their remaining obligations, he said.

Tsipras said German Chancellor Angela Merkel would come to realize that an organized debt write-off was a more sustainable solution for Germany than continuing to pour loans into countries that could never repay them because austerity policies were causing endless recession.

Asked whether a Syriza-led government would unilaterally default if other powers refused to negotiate a debt write-off, Tsipras said he would prefer to avoid unilateral action but Athens might have to declare a moratorium on interest payments.

"One weapon we could use if our partners are very, very violent (tough) is to stop repaying interest in order to finance the Greek economy. But this is not our intention," he said, speaking in English.

"Our position is to try to find a consensus solution."

Greece is scheduled to hold elections in 2016 if the present government serves its full term.

Tsipras said he respected the taxpayers of other euro zone countries which had lent Greece more than 100 billion euros, but they did not realize only a tiny fraction of that money had gone to the Greek people to promote economic development.

Asked what proportion of its debt Athens needed to write off, he said about 60 percentage points of gross domestic product - the difference between a current debt level of about 175 percent of GDP and the euro zone average of around 110 percent of GDP.

"Greek creditors want at least part of their money back. That's not possible in the current situation," he said.

Samaras formed a left-right coalition with the crumbling center-left PASOK party in 2012 after narrowly defeating Syriza in a rerun general election in which Tsipras said Merkel had blackmailed Greek voters.

He predicted that the center-right New Democracy would be wiped out in the next general election as PASOK had been because they had lost their connection with a middle class that was being wiped out by austerity policies.

(Writing by Paul Taylor; Editing by Louise Heavens)