James G
By James G Neuger
The revolution starts in Greece. It might end there as well.
Alexis Tsipras, the untested winner of Greek elections, is about to discover the difference between campaigning and governing. Simply holding on to power will be a tall order. It will be harder to push through demands for debt relief and inspire a broader European revolt against austerity.
The one-time student radical has shed his communist roots and, in op-ed pieces in western European newspapers during the campaign, presented himself as open to compromise. Whether that message got through to the Greeks who gave his Syriza party 36.3 percent of the vote yesterday remains to be seen. It’s what his creditors are banking on to hold together the 19-nation euro area.
“There will be much more pragmatism than people think,” said Miguel Otero Iglesias, a senior analyst at the Elcano Royal Institute in Madrid. “There will be some kind of easing of the bailout conditions so that Tsipras can go back to his people and say I got a victory, but I don’t think there will be a radical rupture.”
Never before elected to high office, Tsipras said Monday he will govern in coalition with the Independent Greeks, a party that shares his anti-austerity credo but little else. He now sets about appointing a cabinet to win a confidence vote in early February, and has until the end of next month to persuade the German-led group of creditors to ease the terms on Greece’s 240 billion-euro ($270 billion) aid program.
Financial markets may give him less time. Greek bonds fell, pushing up the 10-year yield by 59 basis points to 9 percent at 2:10 p.m. in Athens. An early confrontation with creditors would further hem in Syriza’s room for maneuver by conjuring up the risk of expulsion from the euro, leading depositors to move money out of Greek banks.
The 40-year-old’s main antagonist will be German Chancellor Angela Merkel, the European Union’s longest-serving leader, head of its biggest economy, main underwriter of the bailout and architect of the budget-cutting orthodoxy that Greeks rebelled against at the ballot box.
Both sides label their demands non-negotiable. Tsipras wants a debt writedown and leeway to spend more, starting with this year’s budget. The Germans, backed by the Dutch and Finns, say an unequivocal no on both counts.
Tsipras is “much more given to shrewd compromises than to radicalism,” said Angelos Chryssogelos, a lecturer in European politics at the University of Limerick in Ireland. He called Tsipras “a very cynical person in doing away with foes in his party” and said that by broadening its appeal beyond the anti- capitalist fringes, Syriza “cannot possibly be as radical as it was when it was at 4 percent.”
One thing both will probably agree on is to push back the end-of-February deadline, which is more of a loose target than a line in the sand. The real crunch is in July and August, when two bond repayments totalling 6.7 billion euros to the European Central Bank will drain Greece’s remaining cash.
The elements of any compromise, reprisals of past deals, are in place: Creditors could cut Greece’s interest rates and give it more time to pay back, something promised in November 2012. Such a maneuver could save Greece a sum equal to 17 percent of gross domestic product without costing creditors a penny, according to Zsolt Darvas and Pia Huettl of the Brussels- based Bruegel institute.
“Our aims are the same, a Greece that stands on its own feet and creates jobs,” EU Economic Commissioner Pierre Moscovici told reporters in Brussels before the monthly meeting of euro finance ministers. “It’s also a Greece that can pay its debts.”
While debt of around 176 percent of gross domestic product limits Syriza’s options, it isn’t the guillotine that some make it out to be. Most is now owed to European governments and the International Monetary Fund, and Greece is now posting surpluses on its operating budget.
The bulk of Greece’s European loans are interest-free until 2022. Principal repayments begin in 2023. Graham Bishop, a London-based adviser on EU financial regulation and author of “The EU Fiscal Crisis,” said it would be foolhardy to Greece to give up those terms and throw itself back on the mercy of the markets.
“They’ve already got a terrific deal and I would have thought the wiggle room must include a further lengthening of the maturities and a further extension of the interest moratorium,” Bishop said. “The cash-flow effects could not be better.”
Syriza’s detractors aren’t only in Europe’s wealthier north. Its attempt to court allies in the depressed European south is running into trouble there. Italy’s Five Star Movement, which echoes Syriza’s economic grievances, has lost popularity since making it into parliament in 2013.
For Syriza, the bigger southern European prize is Spain. Unemployment there is 23.9 percent, comparable to Greece’s 25.7 percent, with economic discontent combining with outrage at official corruption to fuel the even faster rise of the anti- establishment Podemos party ahead of an election in late 2015.
Syriza mobilised its Spanish allies in campaign videos. In one, Tania Gonzalez, elected to the European Parliament for Podemos last year, voiced hope that “all this pain can be transformed into resentment and political change” in Greece.
Podemos is running neck-and-neck in polls with Prime Minister Mariano Rajoy’s People’s Party. While an opponent of excessive austerity, Rajoy has no interest in a successful Syriza exporting its insurgent politics. The party’s public posture is that Spain isn’t Greece and what galvanized Syriza won’t work for Podemos.
“Spanish citizens value the economic recovery, where we were and where we are now, and political stability,” Spanish Economy Minister Luis de Guindos told Expansion newspaper.
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By James G Neuger
The revolution starts in Greece. It might end there as well.
Alexis Tsipras, the untested winner of Greek elections, is about to discover the difference between campaigning and governing. Simply holding on to power will be a tall order. It will be harder to push through demands for debt relief and inspire a broader European revolt against austerity.
The one-time student radical has shed his communist roots and, in op-ed pieces in western European newspapers during the campaign, presented himself as open to compromise. Whether that message got through to the Greeks who gave his Syriza party 36.3 percent of the vote yesterday remains to be seen. It’s what his creditors are banking on to hold together the 19-nation euro area.
“There will be much more pragmatism than people think,” said Miguel Otero Iglesias, a senior analyst at the Elcano Royal Institute in Madrid. “There will be some kind of easing of the bailout conditions so that Tsipras can go back to his people and say I got a victory, but I don’t think there will be a radical rupture.”
Never before elected to high office, Tsipras said Monday he will govern in coalition with the Independent Greeks, a party that shares his anti-austerity credo but little else. He now sets about appointing a cabinet to win a confidence vote in early February, and has until the end of next month to persuade the German-led group of creditors to ease the terms on Greece’s 240 billion-euro ($270 billion) aid program.
Financial markets may give him less time. Greek bonds fell, pushing up the 10-year yield by 59 basis points to 9 percent at 2:10 p.m. in Athens. An early confrontation with creditors would further hem in Syriza’s room for maneuver by conjuring up the risk of expulsion from the euro, leading depositors to move money out of Greek banks.
The 40-year-old’s main antagonist will be German Chancellor Angela Merkel, the European Union’s longest-serving leader, head of its biggest economy, main underwriter of the bailout and architect of the budget-cutting orthodoxy that Greeks rebelled against at the ballot box.
Both sides label their demands non-negotiable. Tsipras wants a debt writedown and leeway to spend more, starting with this year’s budget. The Germans, backed by the Dutch and Finns, say an unequivocal no on both counts.
Tsipras is “much more given to shrewd compromises than to radicalism,” said Angelos Chryssogelos, a lecturer in European politics at the University of Limerick in Ireland. He called Tsipras “a very cynical person in doing away with foes in his party” and said that by broadening its appeal beyond the anti- capitalist fringes, Syriza “cannot possibly be as radical as it was when it was at 4 percent.”
One thing both will probably agree on is to push back the end-of-February deadline, which is more of a loose target than a line in the sand. The real crunch is in July and August, when two bond repayments totalling 6.7 billion euros to the European Central Bank will drain Greece’s remaining cash.
The elements of any compromise, reprisals of past deals, are in place: Creditors could cut Greece’s interest rates and give it more time to pay back, something promised in November 2012. Such a maneuver could save Greece a sum equal to 17 percent of gross domestic product without costing creditors a penny, according to Zsolt Darvas and Pia Huettl of the Brussels- based Bruegel institute.
“Our aims are the same, a Greece that stands on its own feet and creates jobs,” EU Economic Commissioner Pierre Moscovici told reporters in Brussels before the monthly meeting of euro finance ministers. “It’s also a Greece that can pay its debts.”
While debt of around 176 percent of gross domestic product limits Syriza’s options, it isn’t the guillotine that some make it out to be. Most is now owed to European governments and the International Monetary Fund, and Greece is now posting surpluses on its operating budget.
The bulk of Greece’s European loans are interest-free until 2022. Principal repayments begin in 2023. Graham Bishop, a London-based adviser on EU financial regulation and author of “The EU Fiscal Crisis,” said it would be foolhardy to Greece to give up those terms and throw itself back on the mercy of the markets.
“They’ve already got a terrific deal and I would have thought the wiggle room must include a further lengthening of the maturities and a further extension of the interest moratorium,” Bishop said. “The cash-flow effects could not be better.”
Syriza’s detractors aren’t only in Europe’s wealthier north. Its attempt to court allies in the depressed European south is running into trouble there. Italy’s Five Star Movement, which echoes Syriza’s economic grievances, has lost popularity since making it into parliament in 2013.
For Syriza, the bigger southern European prize is Spain. Unemployment there is 23.9 percent, comparable to Greece’s 25.7 percent, with economic discontent combining with outrage at official corruption to fuel the even faster rise of the anti- establishment Podemos party ahead of an election in late 2015.
Syriza mobilised its Spanish allies in campaign videos. In one, Tania Gonzalez, elected to the European Parliament for Podemos last year, voiced hope that “all this pain can be transformed into resentment and political change” in Greece.
Podemos is running neck-and-neck in polls with Prime Minister Mariano Rajoy’s People’s Party. While an opponent of excessive austerity, Rajoy has no interest in a successful Syriza exporting its insurgent politics. The party’s public posture is that Spain isn’t Greece and what galvanized Syriza won’t work for Podemos.
“Spanish citizens value the economic recovery, where we were and where we are now, and political stability,” Spanish Economy Minister Luis de Guindos told Expansion newspaper.
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