Unveiling of Greek Anti-Austerity Cabinet Triggers Euro Backlash Fears

Unveiling of Greek Anti-Austerity Cabinet Triggers Euro Backlash Fears

Athens, January 29, 2015/ Independent Balkan News Agency

By Lefteris Yallouros

As Greece’s new SYRIZA-led coalition government was sworn in on Tuesday, the Athens Stock Exchange endured a second day of turmoil while 3-year borrowing costs rose above 14%, giving up over 4 percentage points since Sunday’s vote.

Bank stocks collapsed, hauling down Athens’ main index 3,69% to 783 points. Investors did not take well to the announcement of the new cabinet as anti-austerity hard-liners took key posts in the new government.

Outspoken bailout critic Yannis Varoufakis was unveiled as the new Finance minister, signaling the new Prime Minister’s desire to put up a fight in upcoming debt negotiations with Greece’s international creditors.

“What happens here today is the beginning of a new hope for the whole of Europe,” Varoufakis said after his swearing-in. The euro “was not designed to sustain financial crisis.” In a taste of what lies ahead, Yanis Varoufakis said negotiations would not continue with the hated troika, the technocrats that represent the EU, ECB and IMF.

Giorgos Stathakis, a 62-year-old academic who also has roots in Greece’s Communist party, was named as head of a newly merged economics super-ministry. Panagiotis Lafazanis – an outspoken euro-sceptic and leader of the far-left platform within SYRIZA – was placed in charge of Industrial Policy, Energy and the Environment. Shares in the Energy Corporation (DEI) fell 11.17 pct Tuesday on fears its privatization will be canceled.

Before even undertaking his portfolio, the new government’s alternate minister for shipping, Theodoros Dritsas, announced the cancellation of the privatization of Piraeus Port Authority (OLP). On his way to the swearing-in of the new government, Dritsas stated that “the public character of the port will be maintained. The OLP sell-off stops here.” He added that the state privatization fund (TAIPED) or its new form will suspend the process for the sale of the majority stake in OLP.

News from abroad were not very encouraging for the new government’s plans, however. German Chancellor Angela Merkel said Tuesday she was against any potential request from new PM Alexis Tsipras for a reduction in the country’s debt, and was surprised by it.

The German Finance Minister warned that without a bailout program Alexis Tsipras would have to find ‘another way’ to resolve the country’s problems. Wolfgang Schauble added that the new government would be held to prior pledges.

The head of the eurozone finance ministers, Jeroen Dijsselbloem, will visit Athens on Friday for talks with Alexis Tsipras while European Parliament President Martin Schulz is expected in Athens on Thursday.

The first priority for the EU is to negotiate the end of Greece’s current bailout program that was set to end Dec. 31, but was extended two months. With the new government reluctant to invite the troika to Athens and wishing to begin debt – relief negotiations at EU level instead, talks between Greece and its partners could quickly become about leaving or staying in the euro.

Athens’s rescue funds expire at the end of February.