EU official expects clashes but no rash actions from Athens

AP News
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Posted: Jan 29, 2015 1:58 PM
EU official expects clashes but no rash actions from Athens

ATHENS, Greece (AP) — The first European official to visit Greece since the country elected a new left-wing government said Thursday that he expects clashes over how to lighten the country's bailout — not rash actions from Athens.

European Parliament president Martin Schulz said he had concluded after discussions with 40-year-old Prime Minister Alexis Tsipras that Greece is open to talks.

Tsipras, whose radical left Syriza party won elections Sunday, has called on Greece's eurozone creditors to forgive most of its bailout loans and soften the budget measures it has been asked to make. Some investors fear that Greece, faced with resistance from the eurozone, might decide to act unilaterally and stop repaying its bailout loans.

"You know that in many open discussions in Europe there is a concern, some concern that Tsipras will follow his own course. What I have concluded today is that is not the case," Schulz said, according to a translation of his comments in German.

Schulz's visit comes a day after Greece's new Cabinet alarmed creditors and rattled the stock market in Athens with promises to renege on key budget commitments made by previous administrations in exchange for 240 billion euros in loans from the eurozone and International Monetary Fund.

Tsipras said his government was in talks for "an overall European and mutually beneficial solution on matters of common interest," but that "it is obvious that for these consultations to be effective and conclude in a mutually beneficial manner, time is needed."

A government official said Tsipras told Schulz that Greece insists on seeking forgiveness for most of the country's debt — a key Syriza electoral pledge. Tsipras also said he aims to achieve balanced primary budgets, which exclude debt servicing costs, but will revise downwards the previous government's "unrealistic" targets for primary surpluses until 2020, the official said.

He spoke on condition of anonymity, because he wasn't authorized to brief the media on the record.

Schulz's visit to Athens will be followed Friday by that of Jeroen Dijsselbloem, chairman of eurozone finance meetings. The Greek finance ministry said Dijsselbloem's visit will effectively mark the start of negotiations with creditors.

Tsipras' government has said it will no longer negotiate with the debt inspectors from the International Monetary Fund, European Commission and European Central Bank, known as the troika, but only directly with high-level state officials.

In the coming days, the ministry said, Finance Minister Yanis Varoufakis would meet his counterparts from Britain, France and Italy, among others.

On Wednesday, Greece's incoming ministers announced they would scrap major privatization plans, restore the minimum wage to previous levels and rehire some suspended public workers.

The statements prompted a quick warning from EU officials and sent local investors into panic on the prospect that Greece might be cut off from its financial lifeline. The Athens stock exchange fell by more than 9 percent Wednesday.

European officials had also been alarmed by a public rebuke sent by Tsipras' office Tuesday, before his government had even been sworn in, to the EU over a joint statement threatening further European sanctions against Russia over developments in Ukraine.

Tsipras' office said Greece had not been consulted on the declaration, and didn't consent to its content.

Although Greece wasn't the only EU member state annoyed by how the statement was issued — Cypriot officials have also said publicly they were not given enough time to comment on the document — it was the only one to issue an official complaint.

Late Thursday however, EU foreign ministers, including new Greek Foreign Minister Nikos Kotzias, unanimously agreed to extend by six months a first set of sanctions against Russian and pro-Russia separatist officials

European Union foreign affairs chief Federica Mogherini said Kotzias had stuck to his position, but displayed an "extremely constructive" attitude which allowed a consensual decision.

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Derek Gatopoulos in Athens, and Raf Casert in Brussels, contributed to this report..

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