Greek finance minister in London seeking support for debt deal

[LONDON] Greek Finance Minister Yanis Varoufakis was Monday set for talks with his British counterpart as he seeks to build support for a renegotiation of his country's 240-billion-euro (US$270-billion) bailout in the face of German opposition.

The latest stop on his European charm offensive comes as US President Barack Obama warned that imposing tough austerity programmes on Greece could backfire on its creditors.

"You cannot keep on squeezing countries that are in the midst of depression," Obama told CNN's "Fareed Zakaria GPS".

"At some point, there has to be a growth strategy in order for them to pay off their debts to eliminate some of their deficits." Greece's new anti-austerity government has refused to work with the so-called troika of international bailout inspectors charged with overseeing its painful fiscal reforms.

Instead, Varoufakis wants direct access to Greece's trio of creditors, the International Monetary Fund, European Union and European Central Bank (ECB).

His meeting in London with George Osborne comes after a stop in Paris Sunday, where he said he wanted to reach a new debt deal within months to end his country's loan "addiction".

Varoufakis also said Greece did not want the next promised loan tranche of 7.2 billion euros from the trio.

"It's not that we don't need the money; we're desperate," he said at a joint press conference with his French counterpart Michel Sapin. "What this government is all about is ending this addiction." He said Greece would have to go "cold turkey" and stop living for the next loan tranche.

Setting out a timetable for a revised debt agreement, which has met with strong German opposition, Varoufakis said if Athens had until the end of the month to come up with detailed proposals, it envisaged reaching an agreement with international partners some six weeks later.

Looking farther ahead, he added: "It will be very sensible to have a new contract for Greece and all nations in place by the end of May." Varoufakis' plea for time to come up with a realistic solution will be seen as another olive branch to Europe after Prime Minister Alexis Tsipras earlier tried to calm nerves and spooked markets by saying he did not intend to renege on commitments to the EU and IMF.

"It has never been our intention to act unilaterally on Greek debt," Tsipras said in a statement to Bloomberg News.

But he said Greece needed greater leeway to tackle root problems in its economy, such as tax evasion, corruption and policies that favour only a wealthy few.

"We need time to breathe and create our own medium-term recovery programme," said Tsipras, who was due to travel to fellow bailed out EU member Cyprus Monday on his first foreign trip since his election victory.

Greece's flurry of diplomacy saw Tsipras phone ECB chief Mario Draghi late Saturday and book meetings with Italian Prime Minister Matteo Renzi, French President Francois Hollande and European Commission President Jean-Claude Juncker this week.

Varoufakis told reporters in Paris that he also wanted to visit Germany, which has shouldered the bulk of Greece's loans and which strongly objects to Athens' plans.

"It is essential that we meet," Varoufakis said, referring to German Finance Minister Wolfgang Schaeuble. "Germany is the powerhouse of Europe." But the German finance ministry said it had not yet received an "official request" from Greece for such a visit.

German Chancellor Angela Merkel on Saturday ruled out fresh debt relief, telling the Hamburger Abendblatt daily: "There has already been voluntary debt forgiveness by private creditors, banks have already slashed billions from Greece's debt." "I do not envisage fresh debt cancellation," she said. Portugal and Finland also oppose debt relief.

Despite a restructuring in 2012, Greece is still lumbered with debts of more than 315 billion euros, upwards of 175 per cent of gross domestic product (GDP) - an EU record.

But in its first week in power, the government scrapped the privatisation of Greece's two main ports and the state power company and announced a major increase in the minimum wage.

A renowned left-wing blogger, Varoufakis has argued that the bailout merely throws good money after bad - piling more debt on Greece to pay off old borrowing, rather than fixing the economy.

"We are calling (the bailout) into question not just because it is not good for Greece, but we consider that it is very bad for all of Europe," he has said.

The stunning success of Tsipras' hard-left Syriza party in polls a week ago sent shockwaves through the continent and has encouraged other anti-austerity parties.

At least 100,000 people took to the streets of Madrid on Saturday in support of the Spanish party Podemos, which has surged in polls ahead of elections late this year. AFP