In a major shift, Greeks vote in austerity foes

Greece rejected the harsh economics of austerity on Sunday and sent a warning to the rest of Europe as the left-wing Syriza party won a decisive victory in national elections, positioning its tough-talking leader, Alexis Tsipras, likely to become the next prime minister.

With 92 per cent of the vote counted, Syriza had 36 per cent, almost 8 points more than the governing centre-right New Democracy party of Prime Minister Antonis Samaras, who conceded defeat. The only uncertainty was whether Syriza would muster a parliamentary majority on its own or have to form a coalition.

Appearing before a throng of supporters outside Athens University late Sunday night, Tsipras, 40, declared that the era of austerity was over and promised to revive the economy. He also said his government would not allow Greece’s creditors to strangle the country.

“Greece will now move ahead with hope, and reach out to Europe, and Europe is going to change,” he said. “The verdict is clear: We will bring an end to the vicious circle of austerity.”
Syriza’s victory is a milestone for Europe at a time when continuing economic weakness has stirred an angry populist backlash from France to Spain to Italy, as more voters grow fed up with policies that demand sacrifice to meet the demands of creditors but that have not delivered more jobs and prosperity.

Syriza is poised to become the first anti-austerity party to take power in a Eurozone country, and to shatter the two-party political establishment that has dominated Greece for four decades. “Democracy will return to Greece,” Tsipras said to a swarm of journalists as he cast his ballot in Athens. “The message is that our common future in Europe is not the future of austerity.” 

Youthful and seemingly unflappable, Tsipras has worked to soften his image as an anti-Europe radical, joking that his opponents had accused him of everything except stealing other men’s wives. On the campaign trail, he has promised to clean up Greece’s corrupt
political system, reform the country’s public administration and reduce the tax burden
on the middle class while cracking down on tax evasion by the country’s oligarchical business class.

But his biggest promise - and the one that has stirred deep anxiety in Brussels and Berlin as well as on financial markets - has been his pledge to force Greece’s creditors, led by Chancellor Angela Merkel of Germany, to renegotiate the terms of the country’s financial bailout, worth 240 billion euros, or about $267.5 billion. Squeezed by policies intended to stabilise the government’s finances, Greece has endured a historic collapse since 2009; economic output has shrunk 25 per cent and unemployment hovers near 26 per cent.
In setting up a showdown in the coming weeks with Germany and other creditors, Tsipras has argued that easing the bailout terms would allow more government spending, stimulating more economic growth and employment as well as helping the Greeks who need it the most.

“Tsipras won because those who imposed austerity never thought about the effects of such drastic policies that impoverished millions of people,” said Paul De Grauwe, a professor at the London School of Economics and a former adviser to the European Commission. “In a world where people are so hit, they just don’t remain passive. Their reaction is to turn to the politicians who will change the process.”

Tsipras will face immediate challenges. Greece is still waiting for a 7 billion-euro bailout payment that Athens needs to keep the government running and to pay off billions in debt obligations due in the coming months. He has demanded that creditors write down at least half of Greece’s 319 billion-euro public debt in order to give the country more breathing room for a spending stimulus. Tsipras has pledged immediate action, including restoring electricity to poor families who were unable to pay their bills. He has promised to raise the minimum wage to 751 euros a month, from 586 euros a month, for all workers; restore collective bargaining agreements; prohibit mass layoffs; and create 300,000 jobs.

Jens Weidmann, president of Deutsche Bundesbank, the German central bank, warned that Greece would remain dependent on outside financial support and that the new government “should not make promises that the country cannot afford.” “I hope the new government won’t call into question what is expected and what has already been achieved,” Weidmann said in an interview with Germany’s public broadcaster.

Outright majority
On the streets of Athens, voters expressed a range of emotions as they went to the polls. At a polling station in Mets, a middle-class district near central Athens, Achilleas Mandrakis, 47, said he runs a garage but has been struggling since his wife lost her job at a shoe store. “I always voted New Democracy, and I never trusted the leftists,” he said. “But enough is enough, really. We kept giving them a chance, but they messed up. They’ve made our lives miserable.” “At least,'' Mandrakis added, ”a different party might change something in this mess, anything."

In a brief news conference late Sunday, Samaras vowed that his party would continue to play a role in Greek politics and defended his government. “I received the country at the edge of a cliff,” he said. “I was asked to take burning coals into my hands, and I did it.” Samaras said Greece had moved away from deficits and recession and that his government had “restored the credibility of the country.”

For Syriza, the immediate question was whether the party would win the 151 seats needed for an outright majority in Parliament. Projections suggested a close final result. If he falls short, Tsipras might align with the Independent Greeks, a centre-right fringe party that opposes austerity measures and might push for a harder line in any debt negotiations. Early returns also showed the neo-fascist Golden Dawn party in third place with roughly 6 per cent of the total vote, even with some of its leaders campaigning from prison, awaiting trial on charges of being in a criminal gang.

While Greece sees itself as being punished by creditors’ demands, Germany and a host of European officials have argued that Greece and other troubled eurozone nations must clean up the high debts and deficits at the root of Europe’s debt crisis. They say Athens has still failed to make enough headway on the structural reforms necessary to put the economy on better footing, and they are pressing Greece to raise billions of euros through more budgetary cutbacks and taxes.

Many analysts say Tsipras must moderate his campaign promises and take a more centrist approach if he wants to save the economy and keep Greece solvent. “That will be the best possible outcome for Greece and for Europe, because it would show that these protest movements ultimately recognize reality - which is that they are in the euro, and they have to play by the rules,” said Jacob Funk Kirkegaard, a senior fellow at the Peterson Institute for International Economics in Washington. Otherwise, he warned, “things could get a lot worse…Very, very quickly.”