Greece election: Eurozone strikes conciliatory note over Greek debt

Several leaders in the 19-country eurozone have suggested they are open to discussing how to lighten Greece’s debt burden.

The conciliatory words from leaders such as Finnish prime minister Alexander Stubb and the Netherlands’ Jeroen Dijsselbloem, chair of the eurozone finance ministers' meetings, comes after election of an anti-austerity government in Greece.

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The election of the left-wing Syriza party in Greece has increased pressure on the eurozone to overhaul the country’s bailout program.

New Prime Minister Alex Tsipras has called for concessions from European lenders after tough spending cuts and tax hikes pushed many Greeks into poverty.

Greece has had loans of 240 billion euros ($336 billion Cdn) over the last five years and Syriza promised voters it would renegotiate the debt.

Markets calm in face of vote

"The new Greek government will be ready to co-operate and negotiate for the first time with our peers a just, mutually beneficial and viable solution," Tsipras said, striking a conciliatory note that calmed markets.

The election result forced Greek stocks down by as much as four per cent Monday morning, but at the close the losses were at about 3.2 per cent.

Financial markets in other parts of Europe showed no signs of panic over the threat to the eurozone. Stocks in Germany, France and London all were higher.

“The fact that Greece has voted against austerity is of little surprise, and European equity markets have managed to hold their own," said Alastair McCaig, market analyst at IG. "It is what Syriza does next that will impact whether the last couple of weeks' gains can be held or not."

The euro is near 11-year lows against the strengthening U.S. dollar, but climbed Monday to above $1.12, in another sign that traders don't foresee a chaotic Greek exit from the euro.

Compromise might be necessary

Germany is on the record as sternly opposed to concessions, but its partners in the eurozone may force a compromise.

Dijsselbloem warned Greece there “is very little support for debt write-offs," and said Greece must stick to the rules of its bailout. But he also said the eurozone would talk “if necessary” about Greece’s “debt sustainability issues."

Finnish prime minister Stubb said he would be prepared to discuss extending loan repayments and Belgium's finance minister also indicated he would be open to discussions.

The danger is that other eurozone members with high debt levels will also demand concessions.

Greece fell into recession during the 2008 financial crisis and its economy has shrunk a further 19 per cent since 2010, in part due to austerity measures.

Nor has austerity improved Greece’s debt situation, with its share of debt to GDP soaring from 127 per cent in 2009 to 176 per cent of GDP in 2014.