Austria backs Greek debt plan ahead of crunch talks

Chris Papadopoullos
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Greek PM Alexis Tsipras was yesterday backed by Austrian chancellor Werner Faymann
GREECE’S firebrand finance minister is set for vital discussions with his European counterparts tomorrow as tensions flare up between the country and Germany.

Meanwhile, new Prime Minister Alexis Tsipras met with Austrian chancellor Werner Faymann in Vienna yesterday, where he received support for his debt renegotiation plans.

“It’s a European obligation to seriously consider the proposals of the new Greek government,” Faymann said. “It is an issue of respect.”

Tsipras will not have eased tensions when he said in a parliamentary speech on Sunday that he would request reparations from Germany for damaged caused during World War II.

Germany’s economy minister yesterday said “the probability [of Germany paying reparations] is zero,”

Tsipras also laid out plans to reverse the country’s austerity measures. He said he would go through with election pledges to reverse privatisation and end the current bailout agreements.

The Eurozone’s face of austerity Wolfgang Schauble – Germany’s finance minister – said he was concerned about the financial market fallout that would result if Tsipras lived up to his promises. “I wouldn’t know how financial markets will handle it, without a programme – but maybe he knows better,” Schauble said after yesterday’s G20 meeting in Istanbul.

Finance minister Yanis Varoufakis is set to ask for a bridging loan during emergency talks of Eurozone finance ministers to be held tomorrow. As well as receiving support from Austria yesterday, Greece’s renegotiation plans have received backing from Italy and France. Economists believe a deal will be struck due to the potential cost of a Greek default and exit from the euro – termed “Grexit”.

“A Grexit scenario is unlikely to be orderly and would trigger a deep recession and potential political unrest in Greece. For the euro area, the upfront losses would be significant,” said economist Michala Marcussen from banking giant Societe Generale.

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