New Greek PM Alexis Tsipras forms cabinet

Yanis Varoufakis (27 January 2015) Image copyright AFP
Image caption Mr Varoufakis argues that Greece should pursue a hard line in its negotiations with the EU and The IMF

Greek PM Alexis Tsipras has formed a new cabinet with Yanis Varoufakis as finance minister and right-winger Panos Kammenos as defence minister.

Mr Varoufakis is an outspoken critic of the conditions imposed on Greece in return for the 2010 bailout.

He will have the tough job of leading talks with the EU over the Syriza party's pledge to renegotiate Greece's massive international bailout.

Mr Kammenos is a member of the anti-bailout Independent Greeks party.

It joined a coalition with Syriza, after the left-wing party narrowly failed to secure a majority in parliament in Sunday's elections.

The EU has meanwhile warned that the new government must stick to its creditor commitments.

But the government's chief economics spokesman, Euclid Tsakalotos, has argued that it is unrealistic to expect Greece to repay its huge debt in full.

Image copyright EPA
Image caption The new government faces a huge challenge in its bid to tackle Greece's economic woes
Image copyright AP
Image caption Syriza supporters - like the majority of Greeks - want an end to tough budget cuts

Correspondents say that the appointment of Mr Varoufakis - who holds dual Greek and Australian nationality - is a signal that the new Syriza-led coalition will take an uncompromising stance when renegotiating Greece's €240bn (£179bn; $270bn) EU-IMF package.

Mr Varoufakis insists that his country cannot restore its finances until its debt is lessened and has described the bailout as "fiscal waterboarding".

Before the appointment of Mr Varoufakis, Prime Minister Tsipras said EU leaders needed now to show that they were willing to work with Syriza - and that it would be his "worst nightmare" if the eurozone collapsed because Greece fell.

No panic

The appointment of Mr Kammenos into the 11-minister cabinet is also likely to be controversial, correspondents say, because of his claims that Germany is to blame for his country's economic woes by its insistence on budgetary belt tightening.

Other key appointments made by the prime minister and detailed in the Greek press include:

  • Nikos Kotzias as foreign minister
  • Nikos Pappas as state minister
  • Nikos Voutsis as interior minister
  • Panagiotis Lafazanis as production and environment minister
  • Panos Skourletis as labour and social solidarity minister

BBC Economics Editor Robert Peston says that if Syriza were to win its negotiations with the rest of the eurozone, other anti-austerity parties would look more credible to voters.

But if Syriza were to lose in talks with Brussels and Berlin and the final rupture of Greece from the euro were to take place, investors might well pull their savings from any eurozone country where nationalists are in the ascendant.

But so far, our correspondent says, investors are not in a state of frenzied panic.

Mr Tsipras earlier stressed that he wanted negotiation - not confrontation - with international lenders.

Meanwhile, EU Commission President Jean-Claude Juncker warned that Greece cannot expect any reduction of its debt commitments.

German government spokesman Steffan Seibert also stressed it was important for Greece to "take measures so that the economic recovery continues".

Key dates

  • 26 January: Pre-scheduled meeting in Brussels of Eurogroup finance ministers expected to discuss Greece
  • 12 February: EU leaders' summit in Brussels, which newly-elected Greek prime minister Alexis Tsipras is due to attend
  • 16 February: Another Eurogroup meeting due to discuss "state of play" in Greece
  • 28 February: Current programme of loans to Greece under the European Financial Stability Facility ends. There is still €1.8bn of loans that could be disbursed to Greece if it meets the conditions imposed by the troika
  • First quarter of 2015: Economists estimate that Greece needs to raise about €4.3bn to help pay its way, with Athens possibly having to ask the IMF and eurozone countries
  • 19 March: Another EU leaders' summit

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