ATHENS (Reuters) - Greece’s new leftist government opened talks on its bailout with European partners on Friday by flatly refusing to extend the programme or to cooperate with the international inspectors overseeing it.
Prime Minister Alexis Tsipras’ government also sacked the heads of the state privatisation agency after halting a series of state asset sales.
The politically unpopular policy of privatisation to help cut debt is one of the conditions of Greece’s 240-billion-euro bailout that has imposed years of harsh austerity on Greece.
Finance Minister Yanis Varoufakis met Jeroen Dijsselbloem, head of the euro zone finance ministers’ group, for what both men described as “constructive” talks. But Greek media seized on signs of frosty body language between them and the hour-long meeting appeared to do nothing to bridge the gap between them.
The meeting marks the start of Athens’ drive to persuade its creditors to ease the strict terms of the bailout. It precedes planned visits by Tsipras and Varoufakis to London, Paris and Rome next week.
Although neither France nor Italy has shown any sign of accepting the new Greek government’s demand to write off part of its 320 billion-euro debt, they have both previously called for a change of course from German-style budget austerity.
Tsipras has repeatedly said he wants to keep Greece in the euro but he has also made clear he will not back away from election campaign pledges to roll back the terms of the bailout.
His government, winner of last Sunday’s election, has raced ahead with a series of anti-bailout moves including reinstating thousands of public servants laid off by the previous government as well as cancelling privatisations.
But Germany, Europe’s paymaster, is also digging in.
Finance Minister Wolfgang Schaeuble said Berlin was open for talks with the new government about its debt, but he also made clear that Athens had to do its part.
“We need solidarity in Europe, and besides we cannot be blackmailed,” Schaeuble said.
After a volatile week in which banking stocks fell by as much as 40 percent, financial markets fell back after recouping some ground on Thursday. The main Athens stock market index was down 1.6 percent .ATG. Greek 10-year yields GT10YT=TWEB were down 22 basis points at 10.37 percent but still well above levels seen before Sunday's election.
Varoufakis said Greece had no intention of cooperating with a mission from the lending “troika” of the European Union, European Central Bank and International Monetary Fund, which had been due to return to Athens. He said Greece would not seek an extension to a Feb. 28 deadline with euro zone lenders.
“This platform enabled us to win the confidence of the Greek people,” he told reporters after meeting Dijsselbloem. “Our first action as a government will not be to reject the rationale of questioning this programme through a request to extend it.”
He gave no indication of what Greece would do if it cannot reach an agreement by the deadline. The centre-right New Democracy party, which lost power in Sunday’s election, said the new government “does not understand what it is about to do.”
Without the EU/IMF bailout programme, Greece’s banks would lose their access to ECB funding.
Dijsselbloem said a decision on the bailout deadline would be reached before the end of February but he rejected Greece’s push for a special conference on debt, saying such a forum already existed in the shape of the Eurogroup of euro zone finance ministers.
Athens is waiting on a final bailout tranche of 7.2 billion euros ($8.13 billion) and has been shut out of international bond markets. It faces around 10 billion euros in debt repayments this summer.
Like Germany, France has rejected suggestions that part of the Greek debt could be written off, but Paris has been more open to the possibility of offering other forms of relief such as pushing back debt maturity or cutting interest rates.
Varoufakis said he had assured Dijsselbloem that Athens planned to implement reforms to make the economy more competitive and stick to balanced budgets, but it would not accept a “self-fed crisis” of deflation and non-viable debt.
In turn, Dijsselbloem said he had told the new government to respect the terms of the existing agreement between Greece and the euro zone and warned against taking unilateral steps, saying it was important not to reverse progress made so far.
He said euro zone partners were ready to continue supporting Athens until it can begin borrowing on the markets again “provided that Greece fully complies with the requirements and objectives of the programme”.
Earlier on Friday Energy Minister Panagiotis Lafazanis said the government was examining its options on a Canadian-run gold mine, one of the biggest foreign investment projects in Greece.
Privatisation had been meant to raise billions for Greece’s depleted state coffers but proceeds have been disappointing so far, amounting to no more than around 3 billion euros, a fraction of an initially targeted 22 billion euros.
($1 = 0.8858 euros)
Additional reporting by Renee Maltezou and George Georgiopoulos; Writing by James Mackenzie; Editing by Gareth Jones