Louisa Gouliamaki / AFP / Getty Images

Greece’s new leaders seek end to austerity debt-repayment terms

Tsipras and Varoufakis seek to renegotiate massive debt, warning that austerity terms are shrinking Greek economy

After persuading Greece's voters to elect them as the new ruling party last week, the leaders of the leftist Syriza have embarked on a campaign to get European leaders to renegotiate the debilitating terms of a multibillion-dollar economic bailout package.

Prime Minister Alexis Tsipras visited Cyprus on Monday in his first international trip since sweeping into power on Jan. 25, and Finance Minister Yanis Varoufakis flew to London. They want to end years of fiscal austerity and budget cuts imposed by eurozone countries and the International Monetary Fund (IMF) in exchange for $270 billion in rescue loans and to renegotiate payment of the bailout debt. Their argument is simple: The austerity program has  plunged Greece even further into penury, limiting its prospects for long-term recovery. 

Greece currently has public debt equivalent to 177 percent of its gross domestic product (GDP). Its unemployment rate stands near 25 percent overall, and more than half of young adults have no jobs and few prospects. The austerity measures have gutted many of the country's most vital social programs. The economy has shrunk by more than 23 percent since the 2008 global financial crisis, a contraction comparable to the U.S. economy's during the Great Depression

After a tumultuous first week in power, during which Syriza made it clear that it intends to keep campaign promises to ditch the tough austerity terms, the emphasis this week appears to be on maintaining that a new deal is possible. The argument being presented to creditors is that rekindling domestic economic demand is vital to restoring economic health.

"We are in substantial negotiations with our partners in Europe and those that have lent to us. We have obligations toward them," Tsipras said at a news conference in Cyprus.

On Tuesday he is set to meet with Italian Prime Minister Matteo Renzi, a young center-left leader thought to be among those most sympathetic to Greek calls for leniency. Tsipras is planning to meet with European Commission President Jean-Claude Juncker and French President François Hollande on Wednesday.

Though no date has been set for a one-on-one meeting with German Chancellor Angela Merkel — the leader of Europe's most powerful economy and a staunch advocate of austerity — the two are expected to cross paths at a European summit on Feb. 12. Germany has so far held firm to the terms of Greece’s bailout deal, arguing that Athens should not be allowed to renege on commitments agreed by the previous government.

Despite German resistance to renegotiation, Tsipras said discussions surrounding the terms of Greece’s bailout deal have so far been encouraging.

"I never expected that there would be such strong forces helping the new government create a new framework and set a new course, not only about Greece but Europe as a whole, because Europe is in a crisis," he said.

For his part, Varoufakis held talks in London with a number of international investors, including representatives from about 100 banks. In his effort to attract more European allies, he also met with British Finance Minister George Osborne, although the United Kingdom is not a eurozone member.

After their meeting, Osborne said the standoff between Greece and the rest of the eurozone over Greek debt was fast becoming the “greatest risk to the global economy.”

"I urge the Greek finance minister to act responsibly, but it's also important that the eurozone has a better plan for jobs and growth," he said.

Varoufakis began his charm campaign over the weekend in Paris, where the center-left government is thought to be sympathetic to the new Greek leadership's argument. He said he was not in "a kind of Wild West showdown" with Europe but aimed to strike a mutually beneficial deal to minimize the cost of the crisis for the average European.

After meeting Varoufakis, French Finance Minister Michel Sapin said Greece could not expect a straight debt write-off, but he left the door open to other options, such as giving Athens more time for repayment.

When asked whether Greece would seek aid from Russia, which has suggested it could be willing to listen to a request for support from Athens, Tsipras said, "Right now, there are no other thoughts on the table."

Greece, unable to borrow on the markets and facing pressure to extend the current bailout agreement when it expires on Feb. 28, is looking for a bridging deal to provide breathing space to propose a new debt arrangement.

It has so far met a tough line from European partners, above all Germany, whose Finance Minister Wolfgang Schaeuble told Reuters in an interview on Monday that Berlin would not accept any unilateral changes to Greece's debt program.

"We want Greece to continue going down this successful path in the interests of Greece and the Greeks, but we will not accept one-sided changes to the program," he said.

Syriza's stunning election success has sent shockwaves through Europe and bolstered other anti-austerity parties, including ones in Spain and Ireland.

Al Jazeera and wire services

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