Greece refuses to pay debt ... then cosies up to Putin
GREEK Prime Minister Alexis Tsipras turned to Russia for support yesterday – as he attacked Western creditors for trying to impose ‘absurd’ austerity conditions on his crippled nation.
In an emotional address to the Greek parliament last night, the hard-Left leader said he would never accept conditions proposed by the EU and International Monetary Fund, which include a big hike in VAT and cuts to the pensions of the poor.
‘The proposals submitted by lenders are unrealistic. The Greek government cannot consent to absurd proposals,’ Mr Tsipras said. He had already stunned the IMF on Thursday by announcing a £220million debt repayment would not be made on time.
Failure to make a repayment to the IMF is almost unprecedented, and sparked new fears that Greece could be pushed into bankruptcy – and out of the euro – in the coming weeks.
The country said it would bundle up its June payments into a single £1.1billion sum – giving Athens until the end of the month to find the money.
The international rescue package offered to Greece amounts to around £ 175billion. But i n an apparent warning to the West, Mr Tsipras yesterday made a public show of looking to Russia for support. He held lengthy phone dis- cussions with President Vladimir Putin, and agreed to travel to St Petersburg for further talks later this month.
Sources said the men did not discuss the idea of Russia supplying direct financial aid to Greece if it leaves the euro. Talks focused instead on plans for a new pipeline to supply Russian gas to Europe.
But the sight of Mr Tsipras cosying up to Moscow at a time when Mr Putin is viewed as a pariah by most EU leaders will prompt alarm in other European capitals.
Addressing the Greek parliament later, Mr Tsipras said an acceptable deal with Greece’s creditors was still possible, but warned: ‘Time is not only running out for us, it is running out for everyone.’ He also challenged the opposition parties to say whether they would back the austerity measures on offer.
There is mounting speculation that he could now order a referendum – or even a snap election – to secure a specific mandate to oppose the deal.
His comments mean that the stand- off with Greece’s creditors now looks set to extend until the end of the month, when the IMF money is due.
Failure to make the payment is likely to lead to the cancellation of £ 5.2billion in bailout funds for Greece, bankrupting the country overnight.
The move rattled investors, with the Athens stock exchange falling by 5 per cent. However patience with Greece is running out in EU capitals, particularly Berlin.
The former head of the German CBI Hans- Olaf Henkel yesterday said that Greece should be forgiven its debts, which he believes it could never pay, on condition that it leaves the euro.
He told the BBC: ‘ There is only one way out – let the Greeks go. We should be willing to forgive the debt on one condition – that the Greeks leave the currency union.
‘For the German finance minister it makes no difference because every economist in Europe knows the money is gone.’