Austerity will send Greece to hell, warns Alexis Tsipras

Helena Smith in Athens guardian.co.uk, Thursday 17 May 2012 21.10 BST

Syriza leader's claims countered by Antonis Samaras, who says Greek government must not abandon reforms or quit euro

Alexis Tsipras, the leader of Syriza, continues to reject the Greek government's EU-mandated austerity deal. Photograph: Martin Godwin for the Guardian

The two main figures in what promises to be Greece's most electric election in living memory were on a collision course on Thursday, with one predicting "hell" if Athens adheres to EU-mandated austerity and the other forecasting a "nightmare" if the nation abandons reforms and gives up the euro.

Emboldened by yet another poll showing his party's wide appeal, the leftwing Syriza leader, Alexis Tsipras, said the international accord that Greece had signed up to in return for rescue loans was catastrophic for the country. Instead of a rescue, the debt-stricken nation has been thrown into its worst recession since the second world war.

"With this policy [bailout agreement] we are going directly to hell," he told CNN. "To save Europe we need to change direction," insisted the politician who has pledged to "tear up" the €130bn (£104bn) "memorandum of understanding" that Athens reached with the EU and IMF earlier this year.

The 38-year-old, who has sent shockwaves through EU capitals with his fiery anti-austerity rhetoric, made the remarks as Syriza announced that he would be visiting Berlin and Paris next week for talks. It was unclear whom Tsipras would be meeting, although aides said the German chancellor, Angela Merkel, would not be among those lined up.

Within hours, the leading credit agency Fitch had downgraded Greece's sovereign rating to CCC from B-, citing "the risk of a Greek exit from European Monetary Union … in the near term".

Earlier in the day, Antonis Samaras, who heads the conservative New Democracy party, painted a very different picture in a speech that conjured images of a living hell if Athens quit the EU.

In the event of the debt-stricken country reneging on the pledges it had made, the road ahead would be a "nightmarish" one, he said.

Reversion to the drachma would mean wages, deposits and property values all being "cut in half", and the price of imported commodities, such as food and fuel, skyrocketing, he predicted. "This is the nightmare that those who speak of a unilateral condemnation [of the loan agreement] will bring," he told his parliamentary group at its last meeting before the 300-seat house is dissolved and the election campaign officially announced .

"The battle that begins the day after tomorrow for the new elections is not about any single party or its electoral influence," said the 61-year-old politician, ashen-faced as he delivered the speech. "It's about whether Greece will remain in Europe, a Europe which is itself changing. Or if Greece will be found to leave Europe, losing much and risking even more."

New Democracy, he said, would form the core of the "front of resistance against catastrophe".

After handing over to his successor, Panagiotis Pikramenos, a high court judge whose caretaker government will lead Greece to elections on 17 June, the outgoing prime minister, Lucas Papademos, also stepped into the fray.

The former central banker, who headed an emergency left-right "salvation government" that secured the EU-IMF sponsored deal, said he feared that sacrifices Greeks had made in the form of tax increases and pay and pension cuts would be lost if voters decided to back anti-austerity parties at the ballot box next month.

Greeks had endured the punitive cutbacks to put the economy back on track through fiscal consolidation, he said.

"The Greek people's sacrifices were not an 'empty shirt'," said Papademos in an open letter to the nation, his last act before leaving office.

"Unilaterally renouncing the country's loan agreement would be disastrous for Greece, as it would inevitably lead the country out of the euro, and possibly out of the European Union," he wrote. "There are those who are waiting to benefit from the chaos that will follow the humbling exit of the country from the common currency."

Next month's poll follows an inconclusive election on 6 May which ushered in the rise of "anti-bailout" groups such as Syriza – the vote's surprise runner-up – and decimated "pro-bailout" parties such as New Democracy and the socialist Pasok.

Speaking to the Guardian, senior Syriza officials insisted that the party, which polls suggest is poised to emerge as the biggest political force, had "no intention" of unilaterally revoking the accord.

"Austerity is over in this country and it's the end of the memorandum of understanding," said Takis Pavlopoulos, one of Tsipras's top aides, referring to the accord. "You have to be a neo-liberal fanatic not to see that it [austerity] has failed," he added, pointing out the record levels of unemployment and deepening poverty engulfing Greece. "But we will not proceed with any unilateral action that might question Greece's membership of the eurozone."

Greece, he said, had been among the original member states to sign up to the then EEC. As such, Athens was also a "co-owner" of the project and could not be ejected from a union it had participated in for over 30 years.

"Destructive austerity was not part of the deal for any member state to enter the eurozone. No one has the right to say 'either you accept austerity or leave'," added the US-trained economist.

Policymakers have claimed that renouncing the loan agreement will lead not only to a disorderly default – with ensuing chaos taking hold of a country whose economy is already on its knees – but possibly to the breakup of the 17-nation bloc.

Syriza argues that such claims are a high-stakes bluff aimed at safeguarding the status quo. Euro–exit fears were not reverberating around the corridors of the European parliament, insisted Nikolaos Chountis, the party's sole Euro-MP.

"There are other voices that you hear that are very ambivalent about the policies being pursued in the name of resolving this crisis," the MEP said. "And there are other countries that are in a very difficult position like Portugal and Ireland. All this scaremongering that is peddled here about Greece facing a living hell just doesn't exist in Brussels."

Fears that Greece would not have enough money to even pay public sector pay and pensions in the event of loans drying up were simply not true, said Panaghiotis Lafazanis, another Syriza MP. "The loans basically cover interest payments," he said.

"They [the Europeans] can't kick us out. The memorandum is not part of the eurozone institutional framework. It is a political choice that has been deligitimised by popular vote."

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