“Greece has turned the page”, the winning party leader Alexis Tsipras said once the polls closed on Sunday.
This election results are the Greek people´s response to years of economic shortages following the global crisis in 2009, which unveiled Greece impossibility to pay its public debt worth 175% of its GDP. The country had to borrow 240 billion euro from the Eurozone countries, the European Central Bank and IMF (also known as Troika). The bailout loan came with austerity measures meant to make Greece pay back one day. This translated into taxes and cuts harshly felt by ordinary Greeks, a quarter of whom are unemployed. Property taxes of 400 euros and 20% salary cuts for public servants, as well as public services (electricity, transport) interruptions due to strikes were the order of the day. The Troika was supposed to review the bailout programme and possibly update it in February 2015, but the win of Syriza marked a game-changer.
Syriza’s leader declared that he does not recognize the authority of the Troika. The name of his party translates as the Radical Left Party and wants to renegotiate its debt with the European Union and to end austerity measures imposed on Greeks. It also promised food aid, electricity subsidies and a higher minimum wage. Syriza secured 149 seats in the Parliament and made a deal with the small right wing party Independent Greeks to have a clear majority in the 300 seats parliament.
A tough time for the EU
As most Greeks celebrate, Europe is quietly thinking about ways forward. The Syriza led government is not likely to sign off a new bailout agreement. The exit of Greece from the EU, also called Grexit by Citygroup, is another option. This can happen if Greece refuses to pay its debt and defaults. In this case, the Central European Bank would stop financing Greek banks, causing most to bankrupt. For the Eurozone, this would mean little more than a temporary decline in the Euro and some losses in trade with the US and China. It would also increase the fear of creating a precedent for other countries to leave the Eurozone, if on the long term this proves a successful move. However, Syriza’s electoral message was clear. They do not want to exit the Euro, they want to renegotiate the country’s debt. Tsipras sees “our common future in Europe” to be one of “democracy, solidarity and cooperation” and not a future of austerity. Sweden’s foreign minister called it “rather daring” to win elections promising “that taxpayers in other Euro counties will pay even more to [Greeks]”. The outcome of debt renegotiations is thus no longer the full responsibility of Greece, it largely depends on the EU’s response.
So far the response has been divided. France, the country most exposed to Greece’s debt due to its heavy bank and private lending, welcomed Syriza’s win. Francois Hollande vowed cooperation with the newly formed Greek government, recalling “the friendship that unites” the two countries. But Germany’s Angela Merkel was more straightforward. Her spokesman said that Greece should continue to economic recovery and stick “to its previous commitments”. The European Popular Party leader, Manfred Weber, followed the same course, calling Tsipras electoral promises “empty”. Eurozone finance ministers are meeting today and will discuss the outcome of the general elections in Greece, but they are generally reluctant to open doors for renegotiations with Greece. While the President of the European Commission, Jean Claude Junker says he looks forward to working with Tsipras, a unified response of the EU to Greece’s ambitions of debt restructuring will have to be crafted sooner or later.
Radical parties across Europe widely welcome Greece’s electoral results. Left wing radical parties congratulated Syriza’s Tsipas, with Spain’s Podemos welcoming the “real Greek president, not a delegate of Angela Merkel”. Right wing parties also followed, the French National Front calling the results of the elections a “democratic slap to EU”. Radical nationalist and anti-EU parties gained support from voters at the elections for the European Parliament in May of last year. Their popularity rose as a result of the austerity measures imposed on most European countries in order to cope with the economic crisis of the late 2000s. Greece is the first EU country with one such party leading the government, raising fears that this could be a precedent for other EU member states.