Syriza leader Alexis Tsipras says only viable solution to debt crisis is ‘a haircut for Greece and entire southern periphery’
Helena Smith in Athens
The Guardian, Sunday 9 December 2012 18.33 GMT
Only weeks after the EU and IMF announced a third plan in as many years to rescue Greece from insolvency, the country’s most popular party – its radical left opposition – has called for a European debt conference to “finally” settle a crisis it claims is no nearer to being solved.
In an exclusive interview, Alexis Tsipras, who heads the stridently anti-austerity Syriza, insisted that with the debt drama spreading it was vital that foreign lenders take a leaf out of the history books by dealing with the eurozone’s crisis-hit southern periphery in much the same way that Germany had been treated after the second world war.
“It is quite clear that the latest agreement was a compromise that will only perpetuate the uncertainty … Merkel has to say to her people before [the 2013 German] elections that the programme is not working,” he told the Guardian.
“The only viable solution is a haircut not only for Greece but the entire southern periphery,” said the leader, emphasising that the longer creditors postponed writing off a significant portion of Athens’ staggering debt the greater the cost both socially and economically.
“That is why we are proposing a conference along the lines of the one that took place in London in 1953, which relieved Germany of around 60% of its debt. We want to agree with our lenders on a credible solution. It doesn’t matter where it takes place but it should happen as soon as possible.”
As an allied power, Greece, ironically, had been present at the conference whose debt agreement would go on to lay the foundations for Germany’s post-war economic miracle. The pact had allowed Hitler’s destroyed country to not only repay its debt over a 30-year period but had also stipulated that its financial obligations would also be dependent on Germany’s economic performance.
If Greece’s shattered economy was ever to recover, Tsipras said it was crucial that it, too, was also given “a growth clause” that would likewise tie the repayment of Athens’ debt load to its ability to pay. “We are also asking for time, a moratorium, of servicing the debt so that we can redirect that money to growth,” he said, adding that the suspended interest payments, projected to amount to about €13bn every year, would be used to kick-start the moribund Greek economy. “It would be a win-win solution.”
The charismatic politician, catapulted into the spotlight when his party received a fivefold rise in support in elections in June, insisted that the piecemeal approach of international creditors to resolving the crisis would not only destroy Greece but the entire continent.
“There are two pillars to Europe’s economic problem, the first being the debt which has to be made viable and the second being austerity which has to finish. If we continue with such measures it is like putting oil on the fire,” he said.
Tsipras’s economic policies have often been ridiculed by the prime minister, Antonis Samaras, as “dangerous and half-baked”. But the 38-year-old left-winger has also been vindicated. Greece’s pursuit of austerity in the name of brutal fiscal adjustment has created record levels of poverty and unemployment, trapped it in recession and repeatedly resulted in missed budget targets that have plunged the country into an ever-deeper death spiral. It had opened up bottomless pits in Europe’s south that taxpayers in the north were then called to fund.
Although the latest rescue includes a complex bond buyback scheme, which will shave about €30bn from the country’s €340.6bn debt pile, it was, he argued, still a case of creditors “buying time” and, as such, was far from adequate.
“When the crisis began in 2009 our debt stood at 120% of our GDP. This year it is projected officially to be 175.6 %. And now they [EU-IMF] say that to make the debt viable we must hit 124% of GDP by 2020,” he said, shaking his head in disbelief.
“Let’s suppose they are right – but how do they want to get there? After 12 years of catastrophic austerity and measures totalling €19bn Greece will have become a no-man’s land.”
Correction: This article was updated on 10 December to correct a reference to Greece’s suspended interest payments being €13/year.