The victory of the radical left-wing Syriza in the Greek general election has been widely interpreted in
Alexis Tsipras, the new prime minister, has aroused great popular expectations − at home and abroad − but he will have his work cut out to unite his inexperienced government and meet the disparate demands of his supporters. This was not so much a vote against the eurozone, to which a large majority of Greeks still wish to belong, as a vote of no confidence in the Greek political and business establishment. It was a cry of frustration at the failure of the two dominant parties of the past four decades – Pasok on the left and New Democracy on the right – to root out corruption and nepotism, not least in their own ranks.
Blaming the austerity policies of the eurozone on Germany is also a gross oversimplification, although it was widely parroted on Greek election platforms. The harsh combination of fiscal discipline and structural reforms that was imposed on
The extent to which the Greek vote was a cry for reform, as much as for relief from austerity, may make it slightly easier to negotiate a compromise between Athens and the 18 other countries that share the euro as a common currency. But the fact that
There is very little time to negotiate an extension to the current Greek programme before it runs out on 28 February. Tsipras is demanding radical changes − he sees himself on a crusade to liberate Europe from austerity, and free Greece from half of its outstanding debt burden. But that is not going to happen, certainly not in a very few weeks.
Both in Brussels and in the financial markets, there has been a feeling recently that Syriza would prove more pragmatic than its propaganda suggests: the closer they got to power, the more they would tone down their demands. But first indications from
Tsipras’s choice of the right-wing nationalist Independent Greeks (Anel) as his coalition partner was not what the rest of the eurozone wanted. They thought he would opt for the moderate pro-European To Potami group. (Tsipras suggested as much on his last trip to Brussels.) Instead, he has chosen a party with which he has nothing in common except visceral hostility to the eurozone rescue programme, and blaming
The alliance with Anel also suggests that
The first ambassador to be received after he was sworn in to office was from
Tsipras’s first priority must be domestic: a social welfare package to deliver on election promises, with food and transport subsidies for the poorest, restoring the minimum wage, and boosting the lowest pensions. He has also promised to tackle tax evasion and corruption, and clamp down on the ‘oligarchs’ who dominate the economy and the media.
He can afford a gesture on welfare spending because the defeated Greek government had created a primary budget surplus before being ejected by the voters. But the key to getting any better deal out of
There lies the rub. There will be no new debt deal without clear conditionality – but the very concept of conditionality is precisely what Greek voters sought to reject.
As for the idea of outright debt forgiveness, it is likely to fall foul of many more eurozone finance ministers than just Wolfgang Schäuble of
So for all the media hype about the Syriza victory being a game-changer in the crisis-hit eurozone, the reality is likely to be another hard-fought compromise between fiscal disciplinarians and debtors. The alternative of Greek debt default and exit from the eurozone is too awful for either side to contemplate.
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