(Bloomberg) -- Greek Prime Minister Alexis Tsipras vowed to stick with the financial commitments he agreed with European leaders this month and said there would be no return to the spending habits that ultimately triggered one of the biggest financial meltdowns in the continent’s history.
Speaking in an interview less than a week after Greece struck a deal with the euro region to exit its rescue program, Tsipras said his government would meet budget targets, but it’s now up to Greece rather than international creditors to say how it will do so.
“The important thing about the end of this program is that the Greek government commits to these goals and now the responsibility comes to the Greeks, ourselves, or any elected government,” Tsipras, 43, said at Bloomberg’s European headquarters in London. “I will do whatever I can for Greece not to go back to that tragic period.”
There’s been a remarkable turnaround for Greece, and indeed Tsipras. Three years ago, he was playing chicken with European leaders over the conditions of the Greek bailout. He capitulated, but not before Greece stood on the brink of exiting the currency union. Now he’s on a three-day trip to London to court investors as the country eases its way back into financial markets.
Greek 10-year bonds yield 4.1 percent, half of what they did when Tsipras was first elected in January 2015 and compared with 19 percent in July that year as his government locked horns with euro-area finance ministers over debt relief and further budget cuts.
“I’m very optimistic that the international investment community will respond positively,” said Tsipras, who also met with British counterpart Theresa May to discuss the European response to migrants and the prospects of a political settlement on the divided island of Cyprus.
But winning friends abroad has proved easier than keeping them at home for Tsipras. While bond investors have lauded Greece’s renewed stability, his standoff with creditors snuffed out a nascent economic recovery and it took another year to get back on track.
Greeks lost 23 percent of their economic output between 2009 and 2016. Per-capita gross domestic product is now less than Estonia after being more than double the former Soviet nation’s before the crisis, according to European Union statistics. Pension cuts are still planned, unemployment is above 20 percent and Greece still has the continent’s biggest debt burden as a proportion of GDP.
The main opposition party, New Democracy, has been widening its lead in the polls over Tsipras’s Coalition of the Radical Left, or Syriza. New Democracy got 26.4 percent in the most recent survey of voting intentions carried out by Marc for newspaper Proto Thema while Syriza got 14 percent.
Tsipras’s majority in the Greek Parliament in Athens, meanwhile, has thinned to only two lawmakers in the country’s 300-seat chamber after a controversial deal with the Republic of Macedonia to resolve a 27-year-long dispute over the former Yugoslav state’s name. Two deputies from his coalition partner, Independent Greeks, jumped ship since the agreement was signed on June 17.
Elections aren’t scheduled until September 2019, when Tsipras’s term ends, but the slim majority means there’s a risk of a snap vote. No Greek prime minister has lasted a full four-year term without losing his job or calling an early election since Konstantinos Simitis in the early 2000s.
Tsipras is unfazed. “Maybe this development could even be good for us,” he said. “We got here having a very thin majority, so I’d like to reassure you that we will get to the end.”
It leaves him a little over a year to reap any dividend from the agreement with international creditors and a return to a degree of economic and financial sovereignty.
Under the plan, maturities on 96.6 billion euros ($112 billion) of loans Greece received from the second of three bailout packages would be pushed out by 10 years. The extension will be accompanied by a 10-year grace period in interest and amortization payments on the same loans. Following the agreement, S&P Global Ratings upgraded the country’s rating to B+ on Monday, albeit still short of investment grade.
And with the European Union occupied by a new nationalist government in Italy, increasingly rogue states in the east and Britain’s Brexit negotiations, Tsipras no longer represents the “bad boy” among European leaders.
“It is interesting to see how things have changed,” Tsipras said. “Greece, from being part of the problem, has managed to become part of the solution.”
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