Econintersect: As expected based on strengthening opinion polling in recent days, former Communist youth member Alexis Tsipras will be the next Prime Minister of Greece. The 41-year old charismatic leader of the leftist Syriza party will replace outgoing Prime Minister Antonis Samaras whose conservative New Democracy Party lost the election by a margin about 8% (36% to 28%). With 60% of the vote counted Syriza appears to be winning about 149 seats in the Greek parliament, two short of an absolute majority in the 300 member body.
If Syriza does fail to capture an outright majority of seats, a coalition government will be formed with one or more of three minor parties: the centrist To Potami (River) Party (expected to finish fourth), the very small Independent Greeks Party and/or the PASOK Socialists, formerly the chief opposition party to the defeated conservative New Democracy Party but now expected to run a poor fifth in the current polling. The second and expected third place finishers (New Democracy and extreme right-wing Gold Dawn) are not considered likely to make a deal with the winner.
Tsipras campaigned on a platform rejecting the austerity program imposed by the European Union to reduce spending to bring Greece’s debt under control. Instead the economy has tanked, with unemployment rising above 25% (above 50% for the young) and the national debt exploding to more than 175% of GDP as tax revenues dropped drastically.
Tsipras has said he would work to renegotiate agreements with the European Commission, European Central Bank and International Monetary Fund “troika” and write off much of Greece’s €320 billion debt, which is the world’s second highest per capita after Japan. This objective has been rejected out of hand by German spokesmen in Berlin.
The question that has been discussed is whether the euro can survive a failure to negotiate a settlement of the sort sought by the incoming Greek government, which could result from Greece withdrawing from the euro ( a “Grexit”). Others have suggested that the euro has a defective design and cannot survive under any circumstance. See today’s GEI Analysis: The Eurozone is Doomed: Why ECB Bond Purchases and the Greek Election Don’t Matter by Elliott Morss, a former IMF economist.
Sources:
- Greek leftist leader Tsipras claims victory over austerity (Renee Maltezou and Lefteris Papadimas, Reuters, 25 January 2015)
- Greece Election Sunday And Why The Entire World Is Watching! (GEI News, 24 January 2015)
- It’s Here: Why the Greek Election is So Important (GEI News, 24 January 2015)
