Greece’s far-left Syriza party teamed up with the right-wing Independent Greeks on Monday to form a government that is determined to put an end to austerity and write off part of the country’s debt.
Syriza won an election on Sunday but fell two seats short of an outright majority. The Independent Greeks won thirteen seats.
Both parties opposed the economic and fiscal reforms previous Greek governments implemented as a condition for the €240 billion in financial support the country has received from the European Union and the International Monetary Fund since 2010.
However, the rest of the Independent Greeks’ platform is reactionary. Syriza leader and prospective prime minister Alexis Tsipras may struggle to convince leftists they should cooperate with a party that is socially conservative and wants to curtail immigration.
“Austerity is over”
In a victory speech on Sunday night, Tsipras said, “The austerity period is over” and he predicted Europe would change.
Greece leaves behind catastrophic austerity, it leaves behind fear and authoritarianism, it leaves behind five years of humiliation and suffering.
Tsipras’ promise to renege on Greece’s bailout commitments puts him on a collision course with the rest of Europe. Northern European leaders had warned in the days leading up to the vote that they would not accept the writeoffs in Greece’s debts Syriza advocates.
Finnish prime minister Alexander Stubb said almost two weeks ago, “It is clear that we would say a resounding ‘no’ to forgiving the loans” of Greece, especially when Finland itself is “struggling at the moment.”
German weekly Der Spiegel reported that officials in Berlin no longer thought a Greek exit from the eurozone would be unmanageable. Chancellor Angela Merkel later insisted she wanted Greece to stay in the currency union.
Bundesbank president Jens Weidmann told ARD television on Sunday, “I hope the new government won’t call into question what is expected and what has already been achieved.” Philipp Mißfelder, the foreign policy spokesman for Merkel’s Christian Democrat group in parliament, said, “I think Syriza shouldn’t expect Germany to renegotiate with the programs. They have to stick with what the former government has promised.”
Although the Greek economy started improving last year and the government’s shortfall — excluding one-off expenditures to recapitalize its banks — is now below the European Union’s 3 percent treaty limit, down from nearly 16 percent at the height of the crisis in 2009, unemployment remains high. Many Greeks attribute the malaise to the austerity measures that have been enacted at the insistence of other European countries, especially Germany.
But Greece has repeatedly missed its targets and deadlines for budget cuts and liberal economic reforms that Syriza pledges to reverse altogether.
The Germans are running out of patience. An ARD-Deutschlandtrend poll found that 61 percent would want Greece to leave the euro if it does not stick to the terms of its bailout.
Tsipras is convinced other European countries will give in and allow Greece more leeway.
It would be difficult for other countries to meet his demand for debt reduction. Since Greece restructured its privately-held debt in 2012, 90 percent of its debt has been owed to official creditors, mainly other eurozone governments. Leaders in countries such as Finland, Germany and the Netherlands promised their voters the money lend to Greece would be paid back. Tsipras expects them to break that promise.