ATHENS (Reuters) - Greece's radical leftist Syriza party will cancel austerity and ask Europe to erase a big chunk of Greek debt to free the country from the dark spell it has fallen under, leader Alexis Tsipras told Reuters on Thursday.
In an interview at his party headquarters in a gritty Athens district, Tsipras sought to reassure markets wary of Syriza sweeping into power, saying he was committed to keeping Greece in the euro and keeping the budget balanced before debt costs.
"The fear-mongering of 2012 and the fear today that if Syriza comes to power in Greece Europe will be destroyed, in reality works as a self-fulfilling prophecy," said Tsipras.
"A Syriza victory will break the bad spell and liberate markets. It will create a feeling of security."
Fears among investors that Greece is heading for an early national election that will bring Syriza to power have sent Greek stocks and bonds crashing in recent weeks. Markets have been spooked by Syriza's hard line on demanding a debt write-off and plans to cancel an EU/IMF bailout that is keeping Greece afloat.
But Tsipras struck a more conciliatory note on Thursday as he discussed Syriza's plan at his office, which features a newly installed Greek painting of two bulls against a blood red backdrop, which he said represented both force and optimism.
"'Negotiation' means that we want an agreed solution," he said, adding that he would not move "unilaterally" unless forced to, which was unlikely. "We are prepared for a substantial and tough negotiation. And therefore, we are aware that European partners are likely to have a tough stance in the initial phase, although we won't demand something unrealistic."
He said that Europe should "cut or erase" a big chunk of Greek debt as a sign of solidarity with Greece, as international lenders did with Germany's war debt in 1953. But he also added that loans from the IMF must be paid and that he would seek an extension to maturities on bonds held by the ECB. He also ruled out writedowns on bonds held by private bondholders.
The comments were the first time Tsipras has clearly spelled out the party's plan for debt renegotiation and helped push the Athens stock exchange to close up 1.5 percent.
Austerity will be abandoned irrespective of how the debt negotiations with lenders go, Tsipras said.
"We will cancel austerity through the Greek parliament, we will cancel the bailout," Tsipras said. "Greece with a Syriza government will exit the bailout, without new austerity measures. This for us is not negotiable."
Described by a German magazine as among Europe's most dangerous men just two years ago, Tsipras today is closer than ever to clinching power as the government struggles to secure support needed to win a presidential vote and avert snap elections.
He ruled out cooperating with the conservative and centre-left parties in Prime Minister Antonis Samaras' ruling coalition to avoid elections, saying a wider political consensus would be achieved after a national election is held.
Speculation that Greece's government could try to cobble together a broad national coalition to avert snap elections have risen after Samaras lost the first round of the presidential vote on Wednesday by a larger-than-expected margin.
"Our view is that there is no room, that we cannot wait, not because we are in hurry to come to power, but because day after day the wounds of the bailout are becoming deeper and deeper," he said.
A fan of leftist revolutionary Che Guevara -- whose portrait hangs in the party's headquarters -- Tsipras said he believed Greece would play a key role in countering what he said was an attempt to take away democratic rights in Europe.
"I believe in the force and the power of the people, he said. "And everything that happened in Greece last year -- the goal was to take the power from the people."
Reporting by Renee Maltezou and Deepa Babington, editing by James Mackenzie and Giles Elgood