How Does SYRIZA Election Win Affect Greece and Europe?
The party’s pleasant leader, Alexis Tsipras, vows for a renegotiation of Greece’s international bailout and a reversal of the austerity measures. The party aims to (among others): raise the minimum wage from 580 to 751 euros a month; restore the “13th salary to those working or retired whose pension is below 700 euros; introduce food and electricity coupons that will be distributed to a minimum of 300,000 households; main households of residence will be safeguarded from repossession; free medical care; the abandonment of heating fuel tax.
There are major doubts throughout Europe, financial markets and the nation’s international creditors who are all concerned that SYRIZA’s modus operandi may cause a default of Greek debt.
Tsipras’ plan for the above aims is to raise 12 billion euros from acquiring yet another national debt haircut (something that has been categorically ruled out), by redirecting EU reserves, and by diminishing tax evasion and reducing corruption. The primary issue with this is that such funds cannot be released instantaneously, which will therefore create little room for movement and the country may sooner than it think find its debt repayments ascend.
SYRIZA’s demand to write off the massive national debt (currently at 318 billion euros) as well as disputing various budget limitations imposed in exchange for the bailout (i.e. liberalisation of the labour market and pension system viability) could create added strain between Greece and its international creditors. In fact, there is reason to believe that former Prime Minister Antonis Samaras did not toil to avoid elections as he knew that the task of obtaining further savings to satisfy budget goals, debt repayments and public service wages is a herculean one at best. Adapted into old Greek adage: let SYRIZA remove the snake from the hole. It will in all likelihood fail, leading to an economic crisis that will bring about the shrinkage of political support and the conclusion by many Greeks that there is no such thing as a populist substitute able to provide a quicker fiscal revival and social welfare care and the more menacing and unfortunate conclusion by the population that they are forced turn to the despicable Golden Dawn or similar extreme parties. Such a scenario would allow New Democracy to once again restore itself to power.
Although SYRIZA says it has no intention of leaving the Eurozone, if it evades debt payments and the markets slump it could spark a bank run which could then in turn cause the European Central Bank to decline to intervene. Then, Greece will find itself out of the euro and all because of the obstinacy of its lenders coupled with the inexperienced management of Tsipras and his radical, populist bunch who deem that if they act tough the Europeans wont call their bluff and kick them out. Tsipras and his government as well as Europe must admit to what is at stake: European fiscal fallout should Greece default, the depletion of Greek banks, the certainty of a Grexit (Greek exit from the Eurozone) and the repercussions all of this will have upon other European countries.
There are two scenarios on the table. The first is the validation of many who hope that Tsipras will temper his populist attitude, blame a procession of former governments especially that of Samaras for the current mess he has been hallowed with, and admit the severity of the fiscal system. Under this scenario he will then proceed to creating a coalition government and endorse a new troika agreement while proclaiming his continual unrest against the lenders until they leave Greece. This, as mentioned above, may create a short-term lapse in judgment by many desperate Greeks whose mental depression drives them to vote for Golden Dawn. Such a scenario ends well for the creditors. The second scenario finds a torn Tsipra turning to his constituents through a referendum, which will of course end in Greece’s euro preservation. Eventually, the government will find its economy once again in disarray and will be forced to request further loans with old as well as new agreements in place. Such a scenario also ends with dissatisfaction in SYRIZA.
Even if the country’s creditors give a few months leeway, so as to accommodate the new Prime Minister with breathing space to settle into his new role and acknowledge the economic trials, there is little doubt that the outcome of Sunday’s election indicates rough seas ahead for Greece. To be sure a Grexit would be perceived as a colossal setback for European assimilation and the European dream. It would prove demoralizing to say the least, in view of the recent tragic terrorist attacks in Paris and the unity march that followed, which revitalized an otherwise waned sense of European unity.
This article might be seen as derogatory towards SYRIZA and its leader. It should not be. While Tsipra’s manifesto is unrealistic and – for a lack of a better word – a joke, it illustrates the reaction of a dissatisfied and tried population. The economic recklessness and pitiful administration of a parade of Greek officials preceding Mr Tsipras as well as an acutely faulty and stubborn troika approach, stressing wage cuts while failing to consider the development of product markets and the stripping to the bare bone of destructive public monopolies, are all to blame for a situation that has caused the complete and utter atrophy of Greece. So, yes, Greeks are right. Samaras’ government needed to go. Let us hope that Alexis Tsipras and his SYRIZA party make no disastrous mistakes. It can start by no longer making declarations that troika, the European Commission, the IMF and the ECB are not recognized by him and his party, such as Sunday’s remarks: “The mandate of the Greek people today cancels…the memorandum. It makes troika a thing of the past,” says Tsipras during a victory speech outside Athens University. Concessions will have to be made by both ends if Greece has any hope of revival.