Main opposition New Democracy (ND) leader Antonis Samaras met with visiting US Secretary of State Hillary Clinton on Monday in Athens, where he again reiterated his absolute disagreement with what he claimed were government ideas for a "selective default" to deal with the ongoing debt crisis.
"As I said to Ms Hillary Clinton, ND does not agree with the so-called participation of the private sector in state bond risk," Samaras said.
The meeting with Clinton focused mainly on international economic developments and the handling of Greece's debt problem.
Outlining the reasons for his objections to any such plan, Samaras noted that a selective default would make it more difficult for the European Central Bank to supply liquidity to Greek banks using Greek state bonds as collateral.
He also noted that a selective default will be a psychological blow to Greece, with uncontrollable repercussions for the real economy, while it would trigger a debt restructuring that would have a negative impact on the banking system and insurance funds.
Samaras accused the government of trying to "dress-up" a dire situation, which would actually make the recession even deeper. The main opposition noted that his objections were backed up by the ECB's refusal to agree to a selective default and its warnings that it will not accept the bonds of a state that has proceeded to either a partial or general cessation of payments.
The ND leader said repercussions of a selective default in the Eurozone were unknown, since it had never been done before, and that there were no guarantees that its duration would be short.
He pointed out that a reduction in the interest on Greek loans in March had not helped improve the state of the Greek economy but had instead made it worse.
Samaras agreed that an improvement in the terms of the loans to Greece was essential but stressed that these terms must not lead the country into a deeper recession. "Such an improvement could arise in the short term with the right to buy back bonds from the secondary market and chiefly in the longterm with the issue of eurobonds," he added.
"It is clear that the government did not negotiate on anything and condemned the country to a recession without precedent through the Memorandum," he asserted.
He also pointed out that the government had passed the Medium-Term Fiscal Strategy as a 'necessary evil' in order to avoid default and was now saying that 'selective default' was unavoidable, in spite of passing the Medium-term programme to make the debt sustainable.
FinMin derides use of term 'selective default'
In a later reaction, Finance Minister Evangelos Venizelos subsequently accused Samaras of committing “three major improprieties in one strike”, commenting on the latter’s statements made after meeting with the US Secretary of State.
Venizelos stressed that the ND president put Clinton in a difficult spot when he outlined his position as regards the negotiations currently in progress in the Eurozone while, at the same time, insisting in using the term “selective default” in an attempt to "panic the people". He also accused Samaras of presenting the private sector involvement in the long-term debt sustainability programme as being Greece’s proposal or choice.
The finance minister accused Samaras of engaging in “unproductive and old-fashioned demagogy” and called on him to “help in the national effort by joining the negotiations with our partners, creditors and the international banking system in the name of the Greek people and for the benefit of the country.”
Meanwhile, the ministry of infrastructures, transport and networks accused the main opposition New Democracy (ND) party of rank “populism” in response to statements made by the ND spokesman on the taxi owners’ strike action.
In a written statement, the ministry accused ND leader Samaras of opting for irresponsible populism by fighting to prevent the taxi sector deregulation measure from being implemented.