Eur-uh-oh (I’m sorry)

Big news from Greece, where it’s possible that the anti-austerity coalition of leftist parties called SYRIZA (ΣΥΡΙΖΑ) appears to be the big winner in today’s parliamentary elections, and may even have won an outright majority in the new parliament.

Official results from 17.6 percent of polling stations counted showed Syriza with 35 percent and Samaras’ New Democracy with 29.3 percent. An exit poll on state-run Nerit TV projected Syriza as winning with between 36 and 38 percent, compared to ND with 26-28 percent.

Earlier projections had given Syriza 146-158 seats in parliament, and New Democracy 65-75 seats.

An outright majority would require at least 151 seats; otherwise, SYRIZA will need to form a coalition with a more centrist party.

These results set up a major intra-Eurozone fight. SYRIZA campaigned explicitly on rejecting the austerity measures that have been imposed on Greece by its (mostly German) creditors since 2010. The presumptive next prime minister, SYRIZA leader Alexis Tsipras, has been promising government stimulus to help goose the economy in a country where unemployment is around 25% (and it’s much higher than that for young people) and over a third of the population is living in poverty (the employment rate is a ridiculously low 49%). Those creditors aren’t going to like that program very much, as anything that the Greek government spends trying to improve the lives of, you know, Greeks, isn’t going into the coffers of a big bank somewhere.

If the new government really gets into a fight with its creditors, then the ultimate, nobody-really-wants-this-to-happen outcome is for Greece to exit the Eurozone, either voluntarily (which, yes, do it), or after being booted out by the other Euro members. Either way, in such an eventuality Greece would once again be free to print its own money, and would therefore stop being a default candidate. The banks wouldn’t like it, because a new drachma probably wouldn’t be worth very much initially. The banks also wouldn’t like a Greek exit from the Eurozone, which would challenge the whole idea of the Eurozone (and might inspire other countries to abandon the Euro and take back their sovereignty). For Athens, while leaving the Euro could very well be in the long-term best interests of the country, doing so would probably involve a whole lot of short-term economic pain — ergo, both sides here have some incentive to try to work with each other.

Greek politics isn’t anywhere near my area of expertise, but it seems to be tough to get a bead on SYRIZA’s other policy stances at the moment, both because the economic crisis is dominating Greek politics and because the party has been sort of muffling or moderating some of its more extreme positions to maximize its electoral appeal. It doesn’t appear to be a big fan of NATO, for example, but has no plans to review Greece’s NATO membership, and it’s got some historical leftist/Marxist affinities with Russia (although Russia’s gone pretty right wing, so…?) but it’s not clear whether it will do anything to blunt EU sanctions against Moscow.

Author: DWD

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