Greece, Europe dig in on Bailout Terms after Syriza Victory

Greece and its creditors veered toward confrontation as its new, leftist government pledged to make good on promises to reverse years of public-spending cuts despite warnings from Berlin and other European capitals that doing so could plunge the country, and Europe, into deeper crisis.

Europe’s political establishment sought to show respect for the will of the Greek people on Monday while also swiftly moving to douse hopes in Athens that it would substantially relax the country’s bailout terms, which many Greeks blame for their economy’s deep malaise.

“There are rules, there are agreements,“ German Finance Minister Wolfgang Schäuble said of the framework for Greece’s financial rescue. “Whoever understands these things knows the numbers, knows the situation.”

Europe’s resolute response is driven in part by concern that such a step would invite other bailout recipients, including Portugal and Ireland to demand similar concessions and further erode the eurozone’s credibility.

Alexis Tsipras, the leftist firebrand who was sworn in as Greece’s new prime minister on Monday, said he would give his all “to protect the interests of the Greek people.”

The rhetorical jockeying underscores the challenges facing European and Greek leaders in the weeks ahead. The gulf between the new governing coalition and the country’s European creditors is so wide that some policy makers see a Greek exit from the euro as a possibility in the coming months.

Syriza surged to victory on Sunday by promising Greeks that it would reverse many of spending cuts and labor-market reforms that Athens’s creditors have demanded of it in return for aid. Mr. Tsipras also has also called for Greece’s creditors — a group that includes the European Central Bank, other European Union countries and the International Monetary Fund — to forgive about one-third of the country’s more than €300 billion ($338 billion) in debt.

Source: MarketWatch