Suprise alliance between two staunchly anti-bailout parties
(ATHENS) — Left-wing Greek election winner Syriza gained key support from an anti-bailout party Monday, allowing it to form a new government.
The right-wing Independent Greeks party said it would back Syriza leader Alexis Tsipras to be the next prime minister, after he fell just short of the majority needed to govern alone, following Sunday’s poll.
The suprise alliance between two staunchly anti-bailout parties, spooked markets and triggered a loss of nearly 4 percent on the Athens Stock Exchange as well as elsewhere in Europe.
Tsipras has promised to renegotiate Greece’s massive bailout agreements, but has promised not to take any unilateral action against lenders from other eurozone countries.
With 99.8 percent of the vote counted, Syriza had 149 seats in the 300-member parliament with 36.3 percent of the vote. The ruling conservative coalition was on 27.8 percent, and the extreme right Golden Dawn party in third place with 6.28 percent.
Tsipras’ choice to negotiate with the Independent Greeks rather than the centrist Potami caused concern that he could take a tough line in negotiations with rescue lenders.
Syriza’s financial planning official, Giorgos Stathakis, confirmed Monday that the new government had no plans to meet with negotiators from the “troika” of the European Central Bank, the European Commission and the International Monetary Fund and would instead seek talks directly with governments.
Greek voters swung to the once-marginal left-wing party after five years of punishing austerity measures demanded under 240 billion euro ($268 billions) bailout deals threw hundreds of thousands of people out of work and left nearly a third of the country without state health insurance.
Thousands of supporters turned out to watch the 40-year-old Tsipras speak in central Athens after his opponents conceded.
“The Greek people have written history,” he said, to cheers. “Greece is leaving behind catastrophic austerity, fear and autocratic government.”
Outside the party’s campaign tent in central Athens, supporters hugged each other and danced in celebration.
“It’s like we’ve been born again and finally feel some hope,” said Litsa Zarkada, a fired government cleaning worker. “We were thrown into the street just before we could take our pension. We have been through so much.
The new government faces an immediate cash shortage, with a dwindling primary surplus, upcoming loan repayments, and limits on the money it can raise using treasury bill auctions.
Megan Greene, chief economist at Manulife Asset Management, said the government will be unable to afford to run its day-to-day operations and pay back debt that falls due in March in the absence of additional cash from international creditors.
“Syriza and its creditors are stuck in a Gordian Knot, and both sides will need to cave on something. Neither Greece nor its creditors want Greece to default or exit the eurozone, so a compromise will probably be found,” Greene told the AP.
“If Syriza forms a coalition with the Independent Greeks, that suggests the new government will engage in dangerous brinkmanship with Greece’s creditors as it tries to negotiate funding to stave off utter bankruptcy over the next few months.”