Tsipras Vows to Keep Promises After German Rebuff

by Antonis GalanopoulosChristos ZiotisNikolaos Chrysoloras

Alexis Tsipras, Greece's prime minister, sits and waits ahead of the swearing-in ceremony for the new government held at the Greek Parliament building in Athens, on Feb. 5, 2015.

Photographer: Yannis Behrakis/Pool via Bloomberg

(Bloomberg) -- Prime Minister Alexis Tsipras is preparing to set out the most detailed account yet of his plans to revive the Greek economy after a diplomatic push for debt relief and easing on austerity ended with a rebuff from Germany and a warning shot from the European Central Bank.
Tsipras, 40, was greeted by the rare sight of a pro-government demonstration in downtown Athens on Thursday night after he vowed to stick to his anti-bailout campaign pledges, despite their rejection by German Finance Minister Wolfgang Schaeuble. The prime minister will lay out his policy plans to parliament on Sunday, opening a three-day debate leading up to a confidence vote to confirm his government.
He is certain to win the vote on Tuesday night because his coalition commands the support of 162 lawmakers in the country’s 300 seat chamber. The task of
winning the support of euro-region finance ministers and European Union leaders, who meet in Brussels on Feb. 11-12 will be more daunting.

The government in Athens will assess Finance Minister Yanis Varoufakis’s feedback from his meeting with Schaeuble in Berlin, before putting its policy agenda to the confidence vote. The first direct talks between Greece and Germany since Tsipras took power yielded no agreement on how to bridge differences over Tsipras’s determination to end the German-led austerity.
“We agreed to disagree” Schaeuble said after meeting Varoufakis on Thursday. “We didn’t even agree to disagree from where I’m standing,” the Greek responded.

Markets Fall

The standoff risks leaving Europe’s most indebted state without sources of funding. Greek stocks extended their decline on Friday, with the benchmark index losing 0.8 percent as of 11:45 a.m. in Athens. Yields on three-year government bonds rose 43 basis points to 17.2 percent.
A few hours before the Berlin encounter, the ECB heaped pressure on Tsipras by restricting Greek access to its direct liquidity lines, citing concerns about the country’s commitment to existing bailout pledges.
The Greek government opted to “stop cooperating with the troika,” ECB Governing Council member Jens Weidmann said in a speech in Venice on Thursday.
The move leaves Greek banks reliant on 59.5 billion euros ($68.2 billion) of Emergency Liquidity Assistance, extended by the Bank of Greece, which is subject to review by the ECB Governing Council every two weeks.

Hard Ball

Undeterred by the ECB reaction, which triggered a sell-off in Greek bank shares, Tsipras told lawmakers from his party, Syriza, that he intends to stick to his campaign promises.
“The government will negotiate hard for the first time in years, and will put a final end to the troika and its policies,” Tsipras said.
After Tsipras spoke, hundreds gathered outside the parliament building to protest against the ECB’s decision, labeling it “blackmail.” Unlike the riots that rocked the Greek capital in 2011 and 2012, the march was peaceful and evening news bulletins dedicated more time to the fact that Syriza lawmakers opt not to wear ties than to the market declines, which saw bank stocks lose 10 percent.
Government spokesman Gabriel Sakellaridis said that Tsipras’s visits to Nicosia, Rome, Paris and Brussels this week had yielded results and the government isn’t alarmed about the potential impact of the ECB decision. Central bank Governor Yannis Stournaras said the ECB decision “can be reversed” and the outflow of banking deposits is “under control.”
“It was a very quiet day today,” he said, after meeting Deputy Prime Minister Yannis Dragasakis.

Russian Invitation

While seeking alliances in western Europe, the government is also looking further afield. Tsipras has been invited to visit Russian President Vladimir Putin in Moscow after a phone conversation between the two leaders on Thursday. Varoufakis will meet U.S. Treasury Department Assistant Secretary Daleep Singh on Friday.
“The result of these elections have to be respected,” European Union Economic Commissioner Pierre Moscovici told reporters yesterday in Brussels. “On the other hand, it’s also true that commitments have been made by the previous government not only on its own behalf but in the name of the country itself and of the state itself.”
He added that “it is absolutely normal that other partners in Europe, especially creditors, stick to those commitments,” highlighting the balance that policy makers will have to strike in coming weeks on a revamped Greek aid program after Syriza’s Jan. 25 election victory.
“We can’t be blackmailed, we won’t succumb, we are not afraid, we won’t back down,” the organizers of the Athens rally wrote on their Facebook page, echoing the words of the prime minister.