Comment: by Terry Murden
Syriza’s victory marks new era of volatility for the troubled eurozone
Victory parades are being planned throughout Greece to mark the rise to power of a left wing coalition led by Alexis Tsipras, a charismatic young leader who promises an end to the debt burden placed on the country.
The rest of Europe will not share in the celebrations. Syriza’s victory is a symbol of hope for those who have suffered under the stringent conditions imposed on the country by its lenders, but the stronger eurozone partners who sanctioned the €240 billion bailout will play hard ball in any attempts to renegotiate the terms of the rescue.
The European Central Bank, one of the three principal lenders, last week announced a €60 billion (£45bn) a month programme of quantitative easing, essentially to prop up the ailing 19-member eurozone bloc, but also in anticipation of Syriza’s victory which is likely to send the euro lower this week.
There are worldwide concerns for the single currency and the impact that the vote will have on others. The euro is down 20% against the dollar in less than a year, from around $1.40 last summer to $1.12. The pound has hit a seven-year high against the euro.
All this means cheaper holidays and imports for Brits, but it makes exports more expensive and is also contributing to a strengthening dollar. One immediate effect could be to weaken the resolve of the Federal Reserve to raise US interest rates in order to stop the dollar getting too far ahead of itself and undermining its recovery.
Dropping out of the euro – the so-called Grexit – will be opposed by the Greeks as well as among their European partners. The citizens may dislike or distrust the ECB, the International Monetary Fund and other governments who loaned the country money on such tough terms, but they dislike and distrust their own former elite leaders even more. It was their profligacy and corruption that got the country into a mess in the first place and the Greeks will not want to see the return of the drachma which would enable a future elite to once again manipulate the economy.
So, what chances are there of Syriza renegotiating the Greek debt?
Most analysts believe it to be almost zero. It would encourage other indebted eurozone countries to demand similar changes to their terms and add to the burden shouldered by the stronger nations. That would be unpopular at home.
The best that the new Greek government can expect is an extension to the repayment deadline and a reduction in the interest rate.
For Mr Tsipras, this may prove insufficient to retain the loyalty of the fanatical support that has brought him to power.
Syrizas, described by one commentator as a “coalition of hard and soft communists, violent and peaceful revolutionaries, eco-warriors, radical socialists and a hotchpotch of lefties” could become a new cauldron of violent rebellion on the streets.