Reuters.com/ Greek leftists ally with right against bailout after huge election win

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SHAFAQNA – Greek left-wing leader Alexis Tsipras on Monday agreed to team up with a right-wing party to form a new hardline, anti-bailout government determined to face down international lenders and end nearly five years of tough economic measures.

The decisive victory by Tsipras’ Syriza in Sunday’s snap election reignites fears of new financial troubles in the country that set off the regional crisis in 2009. It is also the first time a member of the 19-nation euro zone will be led by parties rejecting German-backed austerity.

“There are two important messages in these elections: The first is that we need to create more growth and jobs. This is what the electorate of an important country is telling us,” said Italian Economy Minister Pier Carlo Padoan. “The second is that we need to find an equilibrium between financial sustainability, growth and jobs.”

Tsipras’ success is also likely to empower Europe’s fringe parties, including other anti-austerity movements across the region’s economically-depressed south. The trouncing of conservative Prime Minister Antonis Samaras represents a defeat of Europe’s middle-ground political guard, which has dallied on a growth-versus-budget discipline debate for five years while voters suffered.

Within hours of victory on a campaign of “Hope is coming!”, the 40-year-old Tsipras sealed a coalition deal with the small Independent Greeks party which also opposes Greece‘s EU/IMF aid programme.

“Greece leaves behind catastrophic austerity, it leaves behind fear and authoritarianism, it leaves behind five years of humiliation and suffering,” Tsipras, pumping his fist in the air, told thousands of cheering supporters in Athens on Sunday.

Syriza won 149 seats in the 300-seat parliament, leaving it just two seats short of an outright majority and in need of a coalition partner. The Independent Greeks won 13 seats.

The alliance is an unusual one between parties on the opposite end of the political spectrum brought together by a mutual hatred of the 240-billion-euro bailout programme keeping Greece afloat at the price of budget cuts.

The Independent Greeks and Syriza are at odds on many social issues such as illegal immigration, raising the prospect of tensions within a coalition united by its opposition to the international bailout.

An alliance between the two sides would suggest a hardline stance against Greece’s creditors, who have dismissed Tsipras’s demands for a debt writeoff and insisted the country stay on the path of reforms and austerity to get its finances back on track.

“At first sight this looks like a very strange marriage, but both parties share a strong opposition to austerity,” said Diego Iscaro, an analyst at IHS Global Insight.

Tsipras is expected to meet President Karolos Papoulias at 1530 local time (1330 GMT) to assume the mandate to form a government and be sworn in as prime minister at 1600 on Monday. He is expected to announce his cabinet on Tuesday.

Economist Yanis Varoufakis, an outspoken crusader against austerity and a prolific blogger, was expected to become finance minister, according to senior party officials.

The Greeks had voted “to put an end to a self-reinforcing crisis that produces indignity in Greece and feeds Europe’s darkest forces,” he wrote on his blog.

Reaction from financial markets to Syriza’s victory was largely muted, with the euro recovering from a tumble to an 11-year low against the dollar on initial results. Greek stocks fell 1.5 percent while 10-year bond yields rose.

In a sign of the changes already being ushered in, Tsipras will meet Greece’s Archbishop Ieronymos on Monday to say he plans to take a non-religious oath rather than being sworn in over a Bible as per tradition, Syriza’s spokesman said.

For the first time in more than 40 years, neither the New Democracy party of Samaras nor the centre-left PASOK, the two forces that had dominated Greek politics since the fall of a military junta in 1974, will be in power, beaten by a party that has until recently always been at the fringe.

Tsipras also intends to talk to the heads of two other parties, the centrist To Potami and the communist KKE, after being sworn in to seek their support even if they do not join the coalition.

 

“CATASTROPHIC AUSTERITY”

Together with last week’s decision by the ECB to pump billions of euros into the euro zone’s flagging economy despite objections from Germany, Syriza’s victory marks a turning point in the long euro zone crisis.

It signals a move away from the budgetary rigour championed by Germany as the accepted approach to dealing with troubled economies, though it is unclear the extent to which Syriza will be able to wring concessions and aid from creditors.

But after the euphoria of election night, hailed by flag-waving crowds in Athens, Tsipras faces daunting challenges and can expect strong resistance to his demands for a debt writeoff from Germany in particular.

Hours after Syriza’s victory, ECB Executive Board member Benoit Coeure said that Greece had to pay its debts and warned Tsipras to play by the “European rules of the game”.

“There is no room for unilateral action in Europe, that doesn’t exclude a discussion, for example, on the rescheduling of this debt,” Coeure told Europe 1 radio.

With Greece unable to tap the markets because of sky-high borrowing costs and facing about 10 billion euros of debt payments this summer, Tsipras may find himself with limited room to fight creditors.

During campaigning, Tsipras promised to immediately end the huge budget cuts and heavy tax rises that have help send unemployment to over 25 percent and pushed millions into poverty. But the new prime minister will also need a deal to unlock more than 7 billion euros (5.24 billion pounds) of outstanding aid to make debt payments in the summer.

 

(Additional reporting by Angeliki Koutantou, Lefteris Papadimas and George Georgiopoulos, Writing by James Mackenzie and Deepa Babington; editing by Anna

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