The European Union Knows That Greek Debt Will Not Be Paid Back




Greece debt repayment in full is ‘unrealistic’, says Syriza


Alexis Tsipras, Syriza leaderSyriza leader Alexis Tsipras says he wants negotiation – not confrontation – with Greece’s lenders

It is unrealistic to expect Greece to repay its huge debt in full, the chief economics spokesman for the victorious Syriza party has told the BBC.

“Nobody believes that the Greek debt is sustainable,” Euclid Tsakalotos said.

The far-left Syriza, which won Sunday’s general election, wants to renegotiate Greece’s €240bn (£179bn; $270bn) bailout by international lenders.

EU leaders have warned the new Greek government that it must live up to its commitments to the creditors.

Syriza leader Alexis Tsipras – who was sworn in as prime minister on Monday – is expected to unveil his new cabinet later on Tuesday.

“I haven’t met an economist in their heart of hearts that will tell you that Greece will pay back all of that debt. It can’t be done,” Mr Tsakalotos said.

Graphic showing how much Greece owes to whom
Supporters of Syriza celebrate the party's victorySyriza supporters – like the majority of Greeks – want an end to tough budget cuts
A pedestrian passes a euro dollar currency exchange rate screen in LondonThe euro briefly touched an 11-year low against the dollar on Monday, before recovering

He said that EU leaders needed now to show that they were willing to work with Syriza.

“It’s going to be a very funny and a very dangerous Europe with very strong centrifugal political forces if they signal that after a democratic vote they’re not interested in talking to a new government.

“It will be a final signal that this is a Europe that can’t incorporate democratic change and it can’t incorporate social change.”

But Mr Tsakalotos stressed that it would be “my worst nightmare if the eurozone collapses because Greece falls”.

“And if Greece falls and is removed from the eurozone – the eurozone will collapse. We said from the beginning the eurozone is in danger, the euro is in danger, but it isn’t in danger from Syriza… it is in danger from the very policies of austerity”.


Analysis: Robert Peston, BBC economics editor

If Syriza were to win its negotiations with the rest of the eurozone, other anti-austerity parties would look more credible to voters. The victory of protectionist Marine le Pen in France’s presidential election would be an interesting test of markets’ sangfroid.

And if Syriza were to lose in talks with Brussels and Berlin, and the final rupture of Greece from the euro were to take place, investors might well pull their savings from any eurozone country where nationalists are in the ascendant.

So why are investors not in a state of frenzied panic? Why have the euro and stock markets bounced a bit? One slightly implausible explanation is that investors believe the eurozone would actually be stronger without Greece, so long as no other big country followed it out the door.

More likely is that they believe reason will prevail, and Berlin will sanction a write-off of Greece’s excessive debts.


Mr Tsipras earlier stressed that he wanted negotiation – not confrontation – with international lenders.

“The new Greek government will be ready to co-operate and negotiate for the first time with our peers a just, mutually beneficial and viable solution,” he said.

The troika of lenders that bailed out Greece – the European Union, European Central Bank, and International Monetary Fund – imposed big budgetary cuts and restructuring in return for the money.

‘Little support’

Former EU finance commissioner Olli Rehn: “We expect Greece to pay back its debt”

Meanwhile, EU Commission President Jean-Claude Juncker warned that Greece cannot expect any reduction of its debt commitments.

He said it “is not on the radar” of the commission.

German government spokesman Steffan Seibert stressed it was important for Greece to “take measures so that the economic recovery continues”.

Jeroen Dijsselbloem, president of the Eurogroup, said on Monday: “There is very little support for a write-off in Europe.”

Syriza’s victory has caused some concern in the financial markets.

In a volatile start to the week the euro briefly touched an 11-year lowagainst the dollar early on Monday, before recovering to trade almost 0.7% higher against the US currency.


Key dates

  • 26 January: Pre-scheduled meeting in Brussels of Eurogroup finance ministers expected to discuss Greece
  • 12 February: EU leaders’ summit in Brussels, which newly-elected Greek prime minister Alexis Tsipras is due to attend
  • 16 February: Another Eurogroup meeting due to discuss “state of play” in Greece
  • 28 February: Current programme of loans to Greece under the European Financial Stability Facility ends. There is still €1.8bn of loans that could be disbursed to Greece if it meets the conditions imposed by the troika
  • First quarter of 2015: Economists estimate that Greece needs to raise about €4.3bn to help pay its way, with Athens possibly having to ask the IMF and eurozone countries
  • 19 March: Another EU leaders’ summit