Germany warns Syriza to stick with debt reduction and structural reform

 
Guy Bentley
Follow Guy
Berlin fires shot across the bow (Source: Getty)

Germany has warned Greece's new government that it must abide by the country's commitments to its creditors.

Radical left wing party Syriza triumphed in last night's election standing on a platform of writing off a large part of Greece's debt and reversing many structural reforms.

Steffan Seibert, a spokesman for the German government, said Greece needed to "take measures so that the economic recovery continues". The President of the Eurogroup, Jeroen Dijsselbloem added "there is very little support for a write-off in Europe" and that members of the single currency needed to "abide by the rules and commitments".

Following his party's success Syriza's leader Alexis Tsipras attempted calm fears of a major clash between Greece and the European establishment. "There will neither be a catastrophic clash nor will kowtowing continue. We are fully aware that the Greek people haven’t given us carte blanche", he said. However, Tsipras has also said "the Troika for Greece is the thing of the past".

Syriza's ability to deliver on its programme of tax cuts and spending hikes will be severely hampered come the end of February when Greece runs out of money. It is likely another will be in need of another tranche of bail-out money.

The rest of the Eurozone will find it extremely difficult to accommodate Syriza's demands. The fear is that if Greece is given sufficient leeway other radical anti-austerity parties could be elected across the Eurozone and undermine efforts for deficit and debt reduction as well as structural reform. If no common ground or compromise is reached, Greece could be forced to leave the Euro.

Related articles