Syriza Rides Anti-Austerity Wave to Decisive Victory in Greece

http://www.bloomberg.com/news/print/2015-01-25/syriza-defeats-samaras-to-win-greek-election-exit-poll.html

By Eleni Chrepa and Marcus Bensasson - Jan 25, 2015

Alexis Tsipras’s Syriza brushed aside Prime Minister Antonis Samaras’s party to record a decisive victory in Greece’s elections, after riding a public backlash against years of budget cuts demanded by international creditors.

Tsipras’s Coalition of the Radical Left, known by its Greek acronym, took 36.5 percent compared with 27.7 percent for Samaras’s New Democracy in Sunday’s election, according to official projections. The far-right Golden Dawn placed third with 6.3 percent followed by To Potami, a potential Syriza coalition partner, with 5.9 percent.

While the projected victory was by a wider margin than polls predicted, it remains unclear whether Syriza will be able to govern alone. Even with a razor-thin majority or in a fragile coalition, the result still hands Tsipras, 40, a clear mandate to confront Greece’s program of austerity imposed in return for pledges of 240 billion euros ($269 billion) in aid since May 2010. The challenge for him now is to strike a balance between keeping his election pledges including a writedown of Greek debt and avoiding what Samaras repeatedly warned was the risk of an accidental exit from the euro.

“The Greek people punished New Democracy for governing in the petty manner of the old regime’s political parties,” Aristides Hatzis, an associate professor of law and economics at the University of Athens, said by phone. “Most Greeks voting Syriza don’t expect a spectacular change but a marginal one. A marginal one would be significant for them.”

Had Enough

Syriza’s victory, based on Interior Ministry projections after about 20 percent of ballots were counted, sends a signal to parties challenging economic and political conventions across Europe from a country whose output has shrunk by about a quarter and where one in two young people is jobless.

Investors must now wait for Tsipras to spell out how he plans to negotiate Greece’s future financing needs. An extension of the current euro-area-backed bailout program expires at the end of February, with Greece projected to run out of money by July at the latest.

The market response to Syriza’s growing lead in opinion polls last week in the run-up to the election was muted. Bonds and stocks rallied in Athens on Friday, the day after Mario Draghi announced the European Central Bank’s new bond-buying program. The euro declined in early trading in New Zealand.

Euro-Area Warnings

European policy makers including German Finance Minister Wolfgang Schaeuble and his Dutch counterpart, Jeroen Dijsselbloem, warned Greece against diverting from its agreed bailout program. 

Finance ministers from the 19 countries that share the euro are due to discuss Greece when they meet in Brussels on Monday. Germany’s Finance Ministry said in a statement that Schaeuble’s position was unchanged after the result and “the agreements reached with Greece remain valid.”

Tsipras, who arrived at Syriza’s headquarters in central Athens to cheering crowds, is due to comment later. In a statement read out earlier by a party official, Syriza said the victory was “historic” and one that represented hope.

“Overwhelmingly the Greek people voted against austerity policies,” the party said. “This result can be the first step for progressive developments throughout Europe. The government will implement its political program addressing the humanitarian crisis and begin the real negotiation with our European partners.”

Parliamentary Seats

The election ends more than four decades of rule by New Democracy or Pasok, the two parties that have alternated in power since the reintroduction of democracy in 1974 following a seven-year period of military dictatorship.

The results so far translate into between 149 and 151 Syriza lawmakers in the 300-seat Parliament, 76 seats for New Democracy, 17 seats for Golden Dawn and To Potami, which was formed less than a year ago, taking 16 seats.

Pasok, which won the 2009 election under George Papandreou before he was forced to request an international aid package in April 2010, will get 13 seats, behind the Communists with 15 seats. 

Papandreou, who was ousted as prime minister in late 2011, failed to be re-elected, with projections showing the new party he founded this month, the Movement of Democratic Socialists, falling at the 3 percent threshold to win seats.

Syriza lawmaker Stavros Kontonis said in an interview that the result represented “a clear mandate to Syriza for renegotiating Greek debt, the implementation of a radical program and governmental stability.”

“We are fully aware of our historic responsibility,” Kontonis said.