Alexis Tsipras, Greece’s new prime minister, came to power two weeks ago. But, already, some are questioning his ability to rewrite the bailout agreement that has kept the country afloat for nearly five years.
That’s because it’s essential for the other European countries that contributed to the €240-billion (US$272-billion) bailout to go along with his plan.
So, the big question is how many election promises can Alexis Tsipras keep without risking a Greek exit from the euro?
On Sunday, Tsipras presented his government’s policy plan in parliament. A three-day debate is now occurring and that will culminate in a confidence vote late Tuesday.
During his presentation, reports The Guardian, Tsipras pledged to stick to his plan to roll back austerity. He also said he’s “rejecting an international bailout extension” and that “Greece, unable to service its debt, would instead seek a bridge loan.”
In his first major speech since becoming elected, adds the outlet, Tsipras stated, “The new government is not justified in asking for an extension […] because it cannot ask for an extension of mistakes […] After five years of bailout barbarity, our people cannot take any more.”
Associated Press says Tsipras and his finance minister, Yanis Varoufakis, have crisscrossed Europe over the past week to drum up support for their plan to reach a new agreement with European countries. Their argument is that after nearly five years, it’s obvious the current system of austerity-linked reforms isn’t working, and the level of debt is so high it can never be repaid.
Still, after all of the painful spending cuts, structural reforms and tax hikes, there has been some improvement. Greece posted its first primary surplus last year, for example.
But despite billions in cheap loans and the world’s largest debt write-down in 2012, Greece’s economy has shrunk by a quarter and its debt stands at more than 170% of gross domestic product.
Tsipras and Varoufakis have received warm receptions during some stops, but not in Germany. This may be a problem since Greece’s current bailout agreement expires at the end of February, and the ECB announced this week it can’t accept junk-rated Greek bonds as collateral for loans to the country’s banks after February 11, 2015.
During a press conference, Varoufakis noted, “It’s not that the current reform program is to be discarded altogether,” but that the new government does want to make some changes since the structure of the bailout was incorrect.
As such, the government says it needs time to negotiate a mutually acceptable new agreement, and that it wants a bridging program to ensure it has enough cash to function until then. Its main creditors, however, are adamant Greece must stick to its pledges.