Visiting US Secretary of State Hillary Clinton met on Monday with main opposition New Democracy (ND) leader Antonis Samaras. During the 45-minute meeting the two officials discussed the state of the Greek economy, and Clinton expressed her admiration for the Acropolis Museum, the state news agency said. Samaras briefed Clinton on his own proposals for the management of the Greek debt crisis and the development of the Greek economy, clarifying that his disagreement with the government was not over the targets, which are decreasing the debt and deficit, but on how this will be accomplished.
In statements after the meeting, Samaras underlined his disagreement with government proposals for a selective default to deal with the debt crisis. "As I said to Mrs. Hillary Clinton, ND does not agree with the so-called participation of the private sector in state bond risk," Samaras said.
Outlining the reasons for his objections to the plan, Samaras noted that a selective default and make it more difficult for the European Central Bank to supply liquidity to Greek banks with 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 that the 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," the state news agency quoted him as saying.
He also pointed out, according to ANA, 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.
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