Obama boost for Greece as finance minister visits London

Yahoo – AFP, James Pheby, 2 Feb 2015

Greek Finance Minister Yanis Varoufakis (right) poses for pictures with Britain's

 Finance Minister George Osborne outside 11 Downing Street on February 2, 2015

(AFP Photo/Justin Tallis)

London (AFP) - Greece's new government won support from US President Barack Obama as it seeks to build international support for a renegotiation of its 240-billion-euro ($270-billion) bailout despite German opposition.

As part of a European charm offensive, Finance Minister Yanis Varoufakis met his British counterpart George Osborne in London on Monday while Prime Minister Alexis Tsipras held talks in Cyprus.

Greece's new Prime Minister Alexis Tsipras

(left) shakes hands with Cypriot President

Nicos Anastasiades before a meeting in 

Nicosia on February 2, 2015 (AFP Photo/

Maria Christodoulou)

Greek stocks, which have been volatile since the January 25 election won by Tsipras's hard left Syriza party, jumped over five percent after Obama warned that imposing austerity on Greece could backfire on its creditors.

"You cannot keep on squeezing countries that are in the midst of depression," Obama told CNN.

"At some point, there has to be a growth strategy in order for them to pay off their debts to eliminate some of their deficits."

Obama said the Greek economy was in "dire need" of reform but warned that drastic changes were tough to implement in a struggling economy.

In Cyprus on his first foreign trip since coming to power, Tsipras said he had not expected so much international support for his campaign and stressed that Greece wanted a wider debate about debt for "all the peoples of Europe".

Tsipras will travel to debt-laden Italy on Tuesday and on to Brussels on Wednesday for talks with European Commission president Jean-Claude Juncker.

Notably absent on the current itinerary is a visit to European paymaster Germany, which has refused to consider any debt relief.

Varoufakis was meeting Osborne after a stop Sunday in Paris where he said he wanted to reach a new debt deal within months to end a loan "addiction", which was loading more liabilities on Greece's economy.

He said Greece did not want a promised loan tranche of 7.2 billion euros from the so-called "troika" of creditors, the International Monetary Fund, European Union and European Central Bank (ECB).

"It's not that we don't need the money; we're desperate," he said at a press conference with French counterpart Michel Sapin. "What this government is all about is ending this addiction."

Although not in the eurozone, Britain is in the IMF and Varoufakis is looking for as many allies as possible for any future negotiations within the EU.

Greek Finance Minister Yanis Varoufakis (L) shakes hands with his French counterpart

 Michel Sapin after a press conference following their meeting at the French Finance

Ministry in Paris on February 1, 2015 (AFP Photo/Jacques Demarthon)

Varoufakis is also expected to meet key figures from London's vital financial sector, which is home to many lenders exposed to Greek debt.

Greece's new anti-austerity government has refused to work with international inspectors charged with overseeing its painful fiscal reforms, instead seeking direct contacts with creditors and governments.

German meeting 'essential'

Setting out a timetable for a revised debt deal, which has met strong German opposition, Varoufakis said if Athens had until the end of the month to come up with detailed proposals, it could reach an agreement with international partners six weeks later.

Tsipras has tried to calm nerves by saying he did not intend to renege on commitments to the EU and IMF.

"It has never been our intention to act unilaterally on Greek debt," Tsipras said in a statement to Bloomberg News.

But the country "needs time to breathe and create our own medium-term recovery programme."

Varoufakis told reporters in Paris that he also wanted to visit Germany, which has shouldered the bulk of Greece's loans.

"It is essential that we meet," Varoufakis said, referring to German Finance Minister Wolfgang Schaeuble.

But the German finance ministry said it had not yet received an official request for such a visit.

In Paris, Varoufakis also met EU Economic Affairs Commissioner Pierre Moscovici -- the first talks between the new government and the European Union's executive arm.

Merkel holds firm

German Chancellor Angela Merkel on Saturday ruled out fresh debt relief, telling the Hamburger Abendblatt daily: "There has already been voluntary debt forgiveness by private creditors, banks have already slashed billions from Greece's debt."

French President Francois Hollande (R),

 German Chancellor Angela Merkel (C) and 

president of the European parliament Martin 

Schulz pose before a dinner in Strasbourg, 

France, on January 30, 2015 (AFP Photo/

Christian Lutz)

Greece's Deputy Prime Minister Giannis Dragasakis insisted late Sunday that Athens could still reach a "political agreement" with the ECB, satisfying the central bank's demands for reform and maintaining liquidity to Greece's hard-hit lenders.

Despite a restructuring in 2012, Greece is still lumbered with debts of more than 315 billion euros, upwards of 175 percent of gross domestic product (GDP) -- an EU record.

But in its first week in power, the government scrapped the privatisation of Greece's two main ports and the state power company and announced a major increase in the minimum wage.

Syriza's stunning election success sent shockwaves through Europe and has encouraged other anti-austerity parties.

At least 100,000 people took to the streets of Madrid on Saturday in support of the Spanish party Podemos, which has surged in polls ahead of elections late this year.