Greece insists on end to austerity

Greece's new left-led anti-bailout government insisted on its plan Thursday to put an end to austerity, dismissing mounting political and financial pressures for an U-turn to reach a compromise with international lenders on the resolution of the sovereign debt load.

Ten days after the government of Prime Minister Alexis Tsipras, which emerged from the Jan. 25 national elections, was sworn in, the new parliament was sworn in and the ruling Radical Left SYRIZA party's parliamentary group convened for the first time.

"We will respect the EU rules, but austerity was not a founding rule of Europe," Tsipras said when addressing the party gathering.

He stressed that Greece will present its own road map for an exit from the debt crisis and "will have its own voice."

This was after all the key request of about 6,000 demonstrators who were mobilized through social media to rally outside the parliament in support of the government on Thursday evening. "We will not give in to blackmails again," they chanted.

Tsipras was expected to outline this road map during his policy statement in the parliament during the weekend.

"The policy statement allows the opportunity to create the framework for an honest compromise," Antonis Karakoussis, Managing Editor of "To Vima" (The Tribute) newspaper commented.

"Mr. Tsipras knows first-hand the intentions of our partners, he is aware of the obligations stemming from the previous agreements, he knows the dangers threatening the country and its economy and we assume he has the necessary flexibility to adapt his claim accordingly," he stressed.

On Wednesday night as he was returning to Athens after a fruitless, according to analysts, week-long tour across Europe in a bid to win over allies to his plan, the Greek leader and his government received one clear message from the European Central Bank (ECB), the strongest message by creditors so far, that the path ahead will be rocky if they do not show flexibility.

ECB added pressure on Athens by announcing that as of Feb. 11, the Greek government bonds will no longer be accepted as collateral for liquidity to Greek lenders.

According to the ECB, the decision was made based on the estimate that the successful completion of the current Greek program which expires on Feb. 28 seemed impossible.

Tsipras' government has rejected any cooperation with troika auditors for the final review of the four-year program.

ECB's move means that Greek banks will now be relying on the more expensive solution of the Emergency Liquidity Assistance (ELA) mechanism from the central Bank of Greece.

The Greek government rushed to assure that Greece's banking system was shielded and interpret the step as an effort to put political pressure on all parties, not just Greece, "to move quickly to seal a new mutually beneficial deal for Greece and its partners," according to a Finance Ministry press release.

"Greece does not blackmail nor can it be blackmailed," government spokesman Gavriil Sakellaridis said.

He repeated that Athens sought to clinch a bridge agreement with lenders to maintain a financial lifeline until the summer, as it will be negotiating a new deal for the sustainability of the debt burden.

But the signals from the marathon talks Tsipras and Finance Minister Yanis Varoufakis held with European officials in London, Paris, Rome, Brussels, Frankfurt and Berlin since the weekend were not promising, analysts noted.

Even his fellow socialists, the French President Francois Hollande and Italian Prime Minister Matteo Renzi, did not seem to give Tsipras the strong support he hoped for a debt renegotiation.

They did call for an easing of austerity policies introduced under the bailout, but stressed the necessity to stick to the core of the commitments undertaken by previous governments.

Varoufakis' meeting with German Finance Minister Wolfgang Schaeuble on Thursday noon ended with the latter's clear statement that a discussion on further debt relief was not on the table.

Against this backdrop the Athens Stock Exchange was again under major pressure on Thursday. The general price index closed at 819.5 points, down by 3.37 percent, after three days of stabilization and gains from last week's plunge.

"Bankers warn that the clock was ticking against Greece. The longer the economy continues to sink under the burden of uncertainty, the greater the cost of reverting to normality will be," according to financial analyst Yannis Papadoyannis of Kathimerini daily.

In the meantime, the Greek government widens the circle of its interlocutors. U.S. Treasury Department officials started a two-day visit to Athens on Thursday afternoon, a few hours after Tsipras received an invitation by Russian President Vladimir Putin during a telephone communication to visit Moscow in May.

In particular, Athens' approach to Russia over the past few days has hit nerves among European partners, increasing tensions.

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