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Tuesday, 27 January 2015 00:03 - - {{hitsCtrl.values.hits}}
Nevertheless, the 40-year-old Tsipras is on course to become prime minister of the first euro zone government openly opposed to the kind of severe austerity policies which the European Union and International Monetary Fund imposed on Greece as a condition of its bailout.
“Greece leaves behinds catastrophic austerity, it leaves behind fear and authoritarianism, it leaves behind five years of humiliation and anguish,” Tsipras told thousands of cheering supporters gathered in Athens.
Financial markets reacted nervously to the victory of Tspiras, who has promised to renegotiate Greece’s debt agreements, fearing potential conflict with other euro zone governments that could put more strain on the currency bloc.
The euro slid to near an 11-year low and US stock futures fell as Asian markets opened on Monday.
Germany, Europe’s biggest economy, has insisted Greece must respect the terms of its 240 billion euro bailout deal, which saved the country from bankruptcy but at the cost of bitter sacrifices by the Greek people.
As thousands of flag-waving supporters hit the streets of Athens, some shedding tears of joy, Germany’s Bundesbank warned Greece it needed reform to tackle its economic problems.
Syriza’s campaign slogan ‘Hope is coming!’ resonated with voters worn down by huge budget cuts and heavy tax rises during six years of crisis that has sent unemployment over 25% and pushed millions into poverty.
“We hope our expectations will be fulfilled,” said 47-year-old teacher Efi Avgoustakoushe. “On Monday in class, we’re not allowed to comment and take sides but we will be smiling.”
Lost dignity
Tsipras said he would cooperate with fellow euro zone leaders for ‘a fair and mutually beneficial solution’ but said the Greek people came first. “Our priority from the very first day will be to deal with the big wounds left by the crisis,” he said. “Our foremost priority is that our country and our people regain their lost dignity.”
He has promised to keep Greece in the euro and has toned down some of his rhetoric but his arrival in power would mark the biggest challenge yet to the approach adopted to the crisis by euro zone governments.
Syriza’s victory is likely to encourage other anti-austerity parties which are winning support across Europe, such as the Podemos movement in Spain.
But it might also strengthen the hand of mainstream leaders including French President Francois Hollande and Italian Prime Minister Minister Matteo Renzi who argue that orthodox austerity policies have failed to produce the economic growth which Europe needs to recover fully from the global financial crisis.
Hollande expressed in a statement his ‘desire to pursue the close cooperation between our two countries in service of growth and the stability of the euro zone’.
Finnish Foreign Minister Erkki Tuomioja was more forthright, saying he believed the result would change the debate in Europe and put more emphasis on growth and employment. “This is a slap at what I see as a very right-wing economic policy in Europe,” Tuomioja, a Social Democrat, told the website of the Helsingin Sanomat newspaper.
However with Greece’s economy unlikely to recover for years, Tsipras faces enormous problems and his victory raises the prospect of tough negotiations with European partners including German Chancellor Angela Merkel.
Greece’s bailout deal with the euro zone is due to end on 28 February and Tsipras’ immediate challenge will be to settle doubts over the next instalment of more than 7 billion euros in international aid. EU finance ministers are due to discuss the issue in Brussels on Monday.
If Syriza falls short of a majority, Tsipras will have to try to build a coalition with smaller parties or form a minority government with ad-hoc support from others in parliament.
“It’s a historic win,” said Athens-based political analyst John Loulis, adding that Tsipras would have to form a coalition to prevent renewed instability. “He has no other option, the last thing the country needs would be another round of elections
Negotiations are likely to begin immediately, and both the small Independent Greeks party and centrist To Potami party, said they would be willing to support an anti-bailout government. If Syriza requires support to govern, it may find itself hostage to its partners’ demands, raising questions over how durable a Tsipras government would prove.
Standoff with Berlin
Tsipras has promised to renegotiate agreements with the European Commission, European Central Bank and International Monetary Fund ‘troika’ and write off much of Greece’s 320 billion-euro debt, which at more than 175% of gross domestic product, is the world’s second highest after Japan.
Coming after the ECB’s move to pump billions into the bloc’s flagging economy, Sunday’s result will stir consternation in Berlin. A senior lawmaker in Merkel’s conservative party said the result showed Greek voters had turned away from austerity but he said Europe could not accept rejection of the bailout.
“We must not reward the breaching of agreements,” Wolfgang Bosbach told the daily Osnabruecker Zeitung newspaper. “That would send completely the wrong signal to other crisis-stricken countries that would then expect the same treatment.”
Tsipras wants to roll back many of the measures demanded by the ‘troika’, raising the minimum wage, lowering power prices for poor families, cutting property taxes and reversing pension and public sector pay cuts.
US investment bank J.P. Morgan said the result could weigh on markets but that it considered speculation over a possible Greek exit from the euro was ‘a stretch’ and a negotiated deal appeared the most likely outcome. “Our base case remains that a Syriza government or Syriza-dominated coalition would alter its platform to retain troika financing,” it said.
Greece, unable to tap the markets because of sky-high borrowing costs, has enough cash to meet its immediate funding needs for the next couple of months but it faces around 10 billion euros of debt repayments over the summer.
