5 min read.Updated: 27 Jan 2015, 02:05 PM ISTG. Sampath
The victory of the Syriza in the Greek national elections is the first time an avowedly anti-austerity party has come to power within the euro zone
The global elite of bankers, economists and investors have been following the developments in Greece, not without some anxiety. The victory of the Syriza in the Greek national elections is the first time an avowedly anti-austerity party has come to power within the euro zone. It is widely seen as a clear signal that the people of Greece have had enough of austerity economics, a sentiment likely shared by ordinary people in other parts of the euro zone where such measures are in place, such as Spain and Portugal.
The Syriza, which translates its name into English as coalition of the radical Left, fell just two short of a simple majority in the 300-member Greek parliament, winning 149 seats. It’s quest for a coalition partner ended, strangely enough, with its decision to take the support of the populist right-wing Independent Greeks party (also known as Anel), which secured 13 seats.
The only political factor uniting Syriza and Anel is their common hatred for the austerity measures imposed on Greece by the troika of the European Commission (EC), the European Central Bank (ECB) and the International Monetary Fund (IMF). In the words of Yanis Varoufakis, Syriza’s economist parliamentarian who is tipped to be the new regime’s finance minister, “fiscal waterboarding has turned Greece into a debt colony." Powerful words, and sure to worry Berlin, which accounts for the lion’s share of the bailout money lent so far to Greece.
Greece’s overall debt stands at €318 billion, with debt payments of €4.3 billion due over the coming months. But it has bailout funds only till February. If the Syriza regime were to stick to its poll promises, Greece would be on a collision course with the EC. It is not yet clear to what extent the new Syriza government led by the 40-year-old Alexis Tsipras would go in its programme of reversing Greece’s five-year-long embrace of austerity economics.
While the Syriza has been widely labelled a far Left party, it is a rather more heterogeneous entity, and far less radical than that label suggests. This is also evident from the fact that the KKE (the Greek Communist Party) has refused to have anything to do with it, leaving Tsipras with no option but to join hands with his ideological adversary, the right-wing Anel.
Syriza is basically an electoral alliance that has brought together under one umbrella a number of disparate but broadly left-wing groups, including Maoists, Trotskyists, green left groups and independent politicians. Till the 2012 elections, it had not secured noticeably more electoral success compared with the other similar political formations in the euro zone that have been misleadingly branded as far Left.
But it was Tsipras’ decision in 2012 to adopt a singular anti-austerity platform that spelt the death knell of the conservative New Democracy regime headed by Antonis Samaras, as it led even lifelong conservative voters to switch to Syriza. So what exactly are Tsipras’ post-poll, anti-austerity plans for the Greeks?
The Syriza’s plans, which were spelt out by Tsipras in Thessaloniki last September, read more like a European New Deal than some radical left-wing agenda. Its major highlights include free electricity and meal subsidies for those below the poverty line, housing guarantees, restoration of minimum wage at €751, restoration of public radio and television shutdown by the previous government, public spending for creation of 300,000 new jobs, abolition of a controversial property tax, a haircut of the Greek sovereign debt similar to what post-war Germany received in 1953, and quantitative easing by the ECB through direct purchase of sovereign bonds.
Greece’s bailout programme is anyway due for renegotiation at the end of February, and a lot depends on whether the stridently anti-austerity Syriza and Greece’s financially hardnosed European creditors can work out a compromise deal that is acceptable to both. If the Syriza takes a hard line stand on its demands for debt write-offs and softer terms for new funds, Europe’s bankers have two options. One, either go along with some of the demands so that Tsipras has something to offer those who voted him to power, or refuse to budge, and insist on Greece sticking to the fiscal commitments made by the previous regime.
If Greece’s creditors—and Germany especially—take option one, they might buy some time both for themselves and Greece. But they run the risk of encouraging other austerity-racked states in the euro zone to make similar demands, and that could lead to a domino effect leading to the eventual dilution of the austerity regime, with repercussions on the financial markets.
If the troika of ECB, IMF and EC follow option two, they run the risk of a Greek exit from the euro zone, which again would cause financial uncertainty across the area, besides provoking a massive flight of capital from Greece.
There is also a third, scarier scenario, which could come about if Syriza is seen as buckling to the demands of Greece’s creditors, and ends up losing credibility back home. This could drive its left-leaning mass base straight into the arms of neo-fascist elements such as the Golden Dawn, an eventuality that might see Greece—and if the virus spreads, Europe itself—harking back to the turbulence of the 1930s.
Going by the public pronouncements of its leaders, Syriza doesn’t seem in any particular hurry to carry out a radical programme. Rather, the idea seems to be to play ball with its European creditors, and stay in power long enough, while using this time to mobilize mass support from below, so that the anti-austerity sentiment gathers momentum across Europe. If that happens, it would become increasingly difficult for any euro zone state to maintain austerity measures, and there is no doubt that Syriza’s electoral success has given a tremendous political boost to its counterparts in the rest of Europe, such as, for instance, the Podemos in Spain.
At the same time, with the winds of Europe-wide public sentiment in its sails, Syriza’s own task of renegotiating its debt and bailout funds would also become easier.
So it remains to be seen whether Tsipras goes the way of the other socialist prime ministers of Europe and gives in to extra-democratic fiscal diktats, or uses his democratic mandate to push back against Greece’s creditors. Either way these are interesting times, and the developments in the coming months could have strong implications for the long-term sustainability of the euro zone.
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