Greek party leader warns austerity threatens euro

[May 23, 2012]  BERLIN (AP) -- The leader of a radical left Greek coalition some see as the front-runner in fresh elections due next month warned the EU Tuesday that austerity measures championed by Germany could ultimately bring down the eurozone as a whole.

Greece's international creditors must acknowledge their "errors" and change course "to avoid a catastrophe," Syriza leader Alexis Tsipras told reporters in Berlin.

European officials have voiced strong hopes that the June 17 elections will produce a strong government, ending weeks of political uncertainty. Several have also argued that the vote could determine whether Greece remains in the euro, and stressed that in any case the new government must respect the country's bailout commitments.

Tsipras said Tuesday that, under his leadership, Greece would ditch the terms of the bailout agreements struck with its creditors, but would not actively seek to leave the eurozone.

"To the contrary, it would mean that we have a chance of saving the euro," he claimed.

Still, he warned that insisting on the "wrong solutions" of austerity measures might eventually force Greece out of the 17-nation eurozone -- which "would represent a much greater danger for the euro."

"Greece is being handed a medicine that does no good to the patient. So the solution can't be to increase the dosage," he said, adding that the measures have devastated the country's economy, which is in its fifth year of recession with unemployment at record levels above 20 percent.

He insisted that it must be in the eurozone's own interest to save Greece from collapse.

"If the Greek patient cannot be treated, then the crisis will spread to all of Europe," he said through a translator.

A Greek exit from the euro would be certain to spook financial markets worldwide, and many analysts have warned that the pressure on other southern European nations -- such as Portugal, Spain or even Italy -- would increase as investors would start questioning whether those nations can still remain inside the currency bloc.

Greece has been surviving since May 2010 on an initial (EURO)110 billion ($140.45 billion) package of rescue loans, and was granted a second bailout of about (EURO)130 billion ($165.98 billion) this year to keep it afloat in the coming years. In return, Greek leaders signed up to implementing harsh budget cuts, privatizing state assets and carrying out structural reforms.

Greece is set to hold elections on June 17 to end a political deadlock after a previous vote on May 6 produced a hung Parliament. Syriza emerged from last month's elections as the second-strongest party.

"It is now up to the Greek parties, the Greek politicians and the Greek voters to chose which path they want to take," a German official from Chancellor Angela Merkel's office said Tuesday. He spoke on condition of anonymity in line with government policy.

Tsipras, in turn, said he hopes that the EU will start changing its course now that Merkel's conservative "axis" with former French President Nicolas Sarkozy is broken.

"We think that people can recognize their mistakes and change things," he said.

New French President Francois Hollande has called for measures to promote growth in Greece, which he seeks to discuss with EU leaders at an informal summit Wednesday in Brussels.

[Associated Press; By JUERGEN BAETZ]

Nicholas Paphitis contributed to this report from Athens

Juergen Baetz can be followed on Twitter at http://twitter.com/jbaetz.

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