David Davis calls for serious debate on European future after Greek elections

As reported in the Daily Mail:
After the party, now the hangover: Greece faces run on its banks after investors withdrew £6 Billion in run-up to election

Fears of a run on Greek banks grew last night as it emerged investors withdrew £6billion from the country in the run-up to the election of the far-left Syriza party.

Alexis Tsipras, the fiercely anti-austerity prime minister, has pledged to renegotiate the terms of Greece’s £185billion bailout from the EU and IMF, claiming the repayments are crippling.

He wants longer to pay – and a ‘haircut’ the writing-off of a chunk of the debt.

German chancellor Angela Merkel has ruled out the latter option, jeopardising Greek banks that heavily rely on funds from the European Central Bank.

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That uncertainty explained the recent withdrawal of the £6billion.

There is also concern that Syriza’s success could signal victories for anti-austerity parties elsewhere. In Spain, Podemos is threatening a similar breakthrough in an election later this year.

The party’s leader, Pablo Iglesias, said: ‘The Greeks are going to have a true Greek president and not a delegate of German chancellor Angela Merkel, who will put the interests of his country and his people first. Hope is coming, fear is fleeing. We are hoping we will hear the same thing in Spain soon.’

But Spain’s conservative prime minister, Mariano Rajoy, warned voters against following Greece’s example: ‘We cannot bet our future and that of our children in a frivolous game of Russian roulette.’

Chancellor George Osborne said Mr Tsipras’s demands appeared ‘incompatible’ with membership of the European single currency.

He and David Cameron backed Mrs Merkel’s insistence that there was no prospect of cancelling Greece’s debts.

But Vince Cable opened up another coalition rift – and risked infuriating allies in Germany and Brussels – by insisting a deal must be done with Mr Tsipras.

‘There is no reason for the situation in Greece to lead to another eurozone crisis, said the Lib Dem business secretary. ‘Several European countries have enjoyed substantial debt relief in the past and many emerging economies have done so in more recent times.

‘And whilst we can’t expect government creditors to sign a blank cheque, I hope European leaders will sit down urgently for discussions with the new Greek government.

‘We need a sensible outcome coupled with much needed economic reforms to provide eurozone growth. The revival of growth and success in the eurozone is in Britain’s best interests, for the success of the many millions of British jobs linked to trade with Europe.’

Syriza fell just short of an outright majority in Greece’s parliamentary election, winning 149 of 300 seats. But Mr Tsipras was sworn in as prime minister with the support of the right-wing Independent Greeks, who won 13 seats. They are also violently anti-austerity.

Mr Tsipras, a 40-year-old former communist, is demanding a European debt conference that would abolish or restructure large amounts of Greek debt, as was done for post-war Germany in 1953.

In a provocative move, apparently designed to tap into a growing anti-German sentiment in Greece, his first act as prime minister yesterday was to lay a rose at a memorial to Greek victims of the Nazis.

A German finance ministry spokesman reiterated Berlin’s opposition to debt forgiveness, saying: ‘You know our attitude to a debt cut. That remains unchanged.’

However, an extension of Greek debt was a ‘possibility’.

Mr Cameron said the failures of previous economic plans in Greece had led to the rise of Syriza.

‘What the Greek elections show is that you need to have an economic plan that works,’ added the Prime Minister. ‘The Greek voters were revolting against failure, economic failure; a country whose economy had shrunk, whose unemployment was unacceptably high and they couldn’t see a secure future.

‘There are some warning signs, some danger signs in the global economy – instability in the eurozone, less rapid growth from the developing economies – these warning signs point even more to the importance of sticking to our long-term economic plan that is delivering rather than taking a risk with the people who got us into this mess.’

Ukip leader Nigel Farage said: ‘This is a desperate cry for help from the Greek people, millions of whom have been impoverished by the euro experiment.

‘An extraordinary game of poker will now begin with Chancellor Merkel. For too long the Greeks have been the sacrificial lamb on the altar of a failed federalist project – the euro.

‘Being in the wrong currency union has imposed a financial and social nightmare on the Greek people, from which they are now waking up.’

David Davis, a former Tory frontbencher, said last night: ‘The foreign imposition of punitive fiscal constraints on a sovereign state often has the effect of undermining both democracy and stability, as shown most dramatically after the Versailles Treaty.

‘This may be the opportunity to start a serious debate in Europe on the future of the EU.’

The man who is tipped to become Greece’s next finance minister used poetry to make a point on BBC Radio 4 yesterday. Yanis Varoufakis said: ‘The light came yesterday when the Greek democracy chose, to quote your very own Dylan Thomas, to stop going gently into the night, and to rage against the dying of the light.’