A radical leftist party and its 40-year-old anti-austerity leader have swept to power in Greece, outdistancing the conservative New Democracy party led by outgoing Prime Minister Antonis Samaras. 

The results of Sunday’s elections make Alexis Tsipras, the chief of the Syriza party, the country’s youngest prime minister in 150 years.  

He has pledged to end years of austerity polices.  However, the outcome of the election likely places Greece in conflict with the European Union and international creditors.

“In the last year Greece was chosen to be the guinea pig of austerity in order to exit the crisis. This was proven to be a failure and catastrophic,” he said.

Syriza fell just two seats in parliament short of the 151 needed to rule on its own without forming a coalition government.

Tsipras has already gained the support of the right-win Independent Greeks party, apparently allowing him to quickly form a ruling coalition.  After election results were announced Monday, the incoming prime minister held talks with Panos Kammenos, the leader of the Independent Greeks party.  The right-wing party has little in common with Syriza, but both are opposed to the international bailout of the country that started a few years ago.

Markets reaction

Global stocks initially reacted negatively to results of Sunday’s election, but recovered as the day wore on.  However, Greek stocks dropped nearly four percent shortly after markets opened.

The euro fell to an 11-year low before recovering, renewing fears the European common currency bloc could unravel. EU finance ministers are meeting Monday to discuss how their shared currency will be affected by the Greek election.

“This fear-mongering creates a hostile stance in the markets against Greece, because fear-mongering works as a self-fulfilling prophesy. But when the Greek people speak, and Syriza wins the elections, and it is proven that none of this is true, then there will be redemption,” said Tsipras.

Analysts say there is concern Syriza’s win could inspire other radical parties opposed to austerity in Europe.  In Spain, Pablo Iglesias, the leader of the anti-austerity Podemos party, said “Hope is coming, fear is fleeing.  Syriza, Podemos, we will win.”

Renegociating bailout loans

Tsipras has vowed to renegotiate Greece’s bailout loans, which totaled nearly $300 billion when the European Union, the European Central Bank and the International Monetary Fund approved them in recent years. Tsipras also pledged to reverse many of the austerity demands of the lenders, including pension and wage cutbacks.

“The message of the Greek people and Syriza to the people of northern Europe who have had to put their hands in their pockets is that we don’t want any more loans,” he said. “We want a viable solution so we can return what you gave us, not for it to go into a black hole, which unfortunately is where it went, and at the same time to bring Greece back to growth.”

The creditors have insisted that Greece live up to the austerity pledges it made in winning approval for the bailouts.

World reactions

British Prime Minister David Cameron warned Sunday the Greek election would “increase economic uncertainty across Europe.”

The White House – without mentioning economic issues –  congratulated Greece Monday on the successful election.  Spokesman Mark Stroh said the U.S. is looking forward to “working closely” with the new government.

French President Francois Hollande congratulated Tsipras on Syriza’s victory, expressing the French leader’s desire “to continue the close cooperation” between the two countries.

Italy’s EU affairs minister, Sandro Gozi, said officials “will have new opportunities to pursue change in Europe to create growth and investment and fight against unemployment.”

Aside from renegotiating the bailouts, Tsipras said he wants creditors to write off some of the country’s heavy debt.  Outgoing Prime Minister Samaras warned that Greece could be forced out of the 19-nation euro currency bloc if Syriza assumes control of the Greek government.  

Syriza attracted many voters infuriated by the deterioration in their standard of living and ever-increasing tax bills.

 

 
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