Greece’s Prime Minister Alexis Tsipras has named a cabinet of anti-austerity veterans and halted privatisation of the country’s biggest port, indicating he aims to stick to election pledges despite warnings from the eurozone and financial markets.
Greek markets endured a second day of turmoil on Tuesday, with bank shares diving and investors fearing the anti-bailout government might be set on a collision course with the country’s European Union and IMF creditors.
Promising to reverse budget cuts and renegotiate Greece’s huge debts, Tsipras’ leftist Syriza party rose to power after winning a landmark election on Sunday on a wave of anger against the German-backed austerity policies that have driven up poverty and left one in four Greek workers out of a job.
Tsipras named Yanis Varoufakis, an academic economist and outspoken bailout critic, as his finance minister. The defence portfolio went to Panos Kammenos, leader of the right-wing Independent Greeks party which is the junior partner in the Tsipras coalition.
One of the first decisions announced by the new government was stopping the planned sale of a 67 percent stake in the Piraeus Port Authority, agreed under its international bailout deal for which China’s Cosco Group and four other suitors had been shortlisted.
“The Cosco deal will be reviewed to the benefit of the Greek people,” Thodoris Dritsas, the deputy minister in charge of the shipping portfolio, told the Reuters news agency.
Halting sale of state assets
Syriza had announced before the election it would halt the sale of state assets, a plank of the 240 billion-euro ($273bn) bailout agreement. Stakes in the port of Thessaloniki, the country’s second biggest, along with railway operator Trainose and rolling stock operator ROSCO are also slated to be sold.
Varoufakis has railed against the bailouts of struggling eurozone states as “fiscal waterboarding”. But after being sworn in, he said the government would be constructive.
“We are about to begin negotiating with our partners,” he told reporters. “It is a great challenge, but the challenge is how to minimise social costs that were unnecessary throughout Europe,” he said.
The government’s plan to negotiate a new debt deal has already run into resistance from its eurozone peers, which fear allowing Athens to write off some of its obligations would encourage other troubled countries to seek similar relief.
Europe has shown a willingness to give Athens more time to pay its debts, but has stressed it will not yield to the demands for debt write-offs.
On Monday, the head of the Eurogroup of eurozone finance ministers, Jeroen Dijsselbloem, warned Greeks against excessive expectations following their emphatic vote against austerity. “We all have to realise and the Greek people have to realise that the major problems in the Greek economy have not disappeared and haven’t even changed overnight because of the simple fact that an election took place,” he said.
Social welfare policies
Greece’s new cabinet includes a number of lawyers, professors and some former journalists. Former Communist politician Yannis Dragasakis – who in the run-up to the vote demanded an investigation into the bailout – took the deputy prime minister’s role that is expected to oversee economic issues.
The government, installed within 48 hours of Sunday’s win, is expected to pursue social welfare policies such as handing out free electricity and food stamps to the poor and cutting heating oil prices, alongside a crackdown on tax evasion.
On the labour front, Tsipras is expected to reverse a cut to the minimum wage and restore collective bargaining agreements abolished under the bailout deal, as well as instituting a $5bn plan of incentives for firms to hire workers.
As well as reviewing privatisation plans, Syriza officials have also promised to take on business tycoons, though in the run-up to the vote they said little about whether they will implement earlier pledges to slap new taxes on big Greek shipowners.
Tsipras has also promised that he will scrap unpopular crisis-era taxes, prompting critics to question how he will be able to afford his lavish social spending while battling depleting cash coffers and exasperated foreign lenders.
Syriza is also expected to freeze public sector layoffs as demanded under the bailout, and stop an unpopular evaluation process for civil servants.