Syriza Must Agree to Bailout to Form Coalition: Greek Politician

The Greek politician who is a potential kingmaker in the upcoming election has told CNBC he will form a government with left-wing Syriza only if it agrees to work with the bailout.

The Greek national flag is seen flying above the parliament building on Syntagma Square in Athens, Greece, on Thursday, Feb. 16, 2012.
The Greek national flag is seen flying above the parliament building on Syntagma Square in Athens, Greece, on Thursday, Feb. 16, 2012.

Fotis Kouvelis, leader of the Democratic Left party, was in negotiations to form a coalition government after Syriza’s shock emergence as the party with the biggest vote in the last Greek election. Discussions foundered over Syriza’s wish to annul the conditions of Greece’s bailout by the troika of the International Monetary Fund, European Central Bankand European Commission.

Syriza, led by Alexi Tsipras, is likely to need at least one coalition partner to get a majority, and Democratic Left would be a logical choice as it is also left-wing.

Syriza’s anti-bailout stance and growing popularity were one of the main factors that sent European marketsdownhill in May, as worries grew that Greece would exit the euro disruptively if the party came to power. Greeks go to the polls again on Sunday.

“We call for Syriza to redefine its position,” Kouvelis said. “Our proposal for a specific program agreement, is for there to be a re-negotiation, a re-examination of some memorandum terms that should not be there anymore. But we want this process to take place through a deal with the EU. It’s obvious that we cannot renege on this proposal. Syriza should tell us very specifically what it thinks about the possibility of an eventual exit from the euro zone because of a termination of the memorandum.”

Kouvelis added that the Greek people “could not stand” more austerity measures.Youth unemployment is now above 50 percent, and the population is increasingly restless, which has led to growing support for more extreme parties, including the extreme right-wing Golden Dawn.

“Industries are being locked down. Austerity measures have suffocated the society and the market and have multiplied unemployment rates,” he said.

“Therefore austerity measures not only destroy the livelihood of people but at the same time create huge problems with the recession and the market. What is interesting is the fact that this severe austerity does not provide revenue and incomings to the Greek state. The person who doesn’t have any money to live, how is he supposed to pay taxes to the Greek government?”

The well-publicised problem of tax evasion in Greece has led to international figures like Christine Lagarde, head of the IMF , saying that Greeks “need to pay their taxes.”

More economists are calling for policies which promote growth in Greece, which is currently sunk in the mire of a recession with little prospect of being lifted out in the short term.

The rest of the European Union should allow Greece to renegotiate some of the austerity measures imposed as part of the bailout deal, Kouvelis argued.

“Things are not static and immovable for the Europeans. Besides, we can see that the political environment throughout Europe is changing as we speak. You can detect the difference between Hollande’s policy and Sarkozy’s policy—which formed the big Franco-German axis. The situation in Europe is beginning to acquire general negative characteristics and I think that this point will lead to a revision of basic terms of the memorandum,” he said.