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Κυριακή 25 Ιανουαρίου 2015

Greeks Vote In Austerity Foes, a Major Shift

EUROPE



Alexis Tsipras, leader of the Syriza party, celebrating on Sunday in Athens. Mr. Tsipras has promised to force creditors to renegotiate the terms of Greece’s bailout.CreditPetros Giannakouris/Associated Press

ATHENS — Greece rejected the harsh economics of austerity on Sunday and sent a warning to the rest of Europe as the left-wing Syriza party won a decisive victory in national elections, positioning its tough-talking leader, Alexis Tsipras, to become the next prime minister.
With almost 98 percent of the vote counted, Syriza had 36 percent, almost nine points more than the governing center-right New Democracy party of Prime Minister Antonis Samaras, who conceded defeat. The only uncertainty was whether Syriza would muster a parliamentary majority on its own or have to form a coalition.
Appearing before a throng of supporters outside Athens University late Sunday, Mr. Tsipras, 40, declared that the era of austerity was over and promised to revive the economy. He also said his government would not allow Greece’s creditors to strangle the country.


“Greece will now move ahead with hope and reach out to Europe, and Europe is going to change,” he said. “The verdict is clear: We will bring an end to the vicious circle of austerity.”

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Greek voters gave power to Syriza as the country’s unemployment rate stood near 26 percent.CreditLefteris Pitarakis/Associated Press

Syriza’s victory is a milestone for Europe. Continuing economic weakness has stirred a populist backlash from France to Spain to Italy, with more voters growing fed up with policies that require sacrifice to meet the demands of creditors but that have not delivered more jobs and prosperity. Syriza is poised to become the first anti-austerity party to take power in a eurozone country and to shatter the two-party establishment that has dominated Greek politics for four decades.
“Democracy will return to Greece,” Mr. Tsipras said to a swarm of journalists as he cast his ballot in Athens. “The message is that our common future in Europe is not the future of austerity.”
Youthful and seemingly imperturbable, Mr. Tsipras has worked to soften his image as an anti-European Union radical, joking that his opponents had accused him of everything but stealing other men’s wives. On the campaign trail, he has promised to clean up Greece’s corrupt political system, overhaul the country’s public administration and reduce the tax burden on the middle class while cracking down on tax evasion by the country’s oligarchical business class.
But his biggest promise — and the one that has stirred deep anxiety in Brussels and Berlin as well as in financial markets — has been a pledge to force Greece’s creditors to renegotiate the terms of its financial bailout, worth 240 billion euros, or about $267.5 billion. Squeezed by policies intended to stabilize the government’s finances, Greece has endured a historic collapse since 2009; economic output has shrunk by 25 percent, and the unemployment rate hovers near 26 percent.
While setting up an imminent showdown with creditors, led by Chancellor Angela Merkel of Germany, Mr. Tsipras has argued that easing the bailout terms would allow more government spending. That, he said, would stimulate economic growth and employment as well as help the Greeks who are most in need.
“Tsipras won because those who imposed austerity never thought about the effects of such drastic policies that impoverished millions of people,” said Paul De Grauwe, a professor at the London School of Economics and a former adviser to the European Commission. “In a world where people are so hit, they just don’t remain passive. Their reaction is to turn to the politicians who will change the process.”

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Mr. Tsipras, leader of the left-wing Syriza party, cast his vote in Athens on Sunday.CreditPetros Giannakouris/Associated Press

Mr. Tsipras will face immediate challenges. Greece is waiting for a €7 billion bailout payment needed to keep the government running and to pay off billions in debt obligations due in the coming months. Mr. Tsipras has demanded that creditors write down at least half of Greece’s €319 billion public debt to give the country more breathing room for a spending stimulus.
“This is a turning of a page, a historical moment for all of Europe,” Yiannis Milios, the chief economist for Syriza, told reporters. “The Greek people are taking their future into their own hands.”
Europe “cannot go on with deflation, recession, increasing unemployment and over-indebtednesses,” he said. “Greece points the way. Our country, our people, are the groundbreakers of a very big change.”
A Syriza victory would lift hopes elsewhere for parties that are critical of the European Union, especially in Spain. There, the left-leaning, anti-austerity Podemos party, which is less than a year old, already is drawing 20 percent support in national opinion polls. The leader of Podemos, Pablo Iglesias, joined Mr. Tsipras last week for Syriza’s final campaign rally.
“What the whole debate about Greece and Syriza highlights is that voter anxieties, voter resentment and electoral disillusionment over austerity policies can be expressed at the ballot,” said Jens Bastian, an economic consultant based in Athens and a former member of the European Commission’s task force on Greece. “The example of Greece today may become a precursor to what happens in other countries like Spain, Portugal or Italy.”
Mr. Tsipras has said he wants to negotiate directly with Ms. Merkel and other European leaders to reduce Greece’s debt burden. Some officials, however, have characterized Mr. Tsipras’s demands as unrealistic and rife with potential to drive Greece toward default — or even out of the eurozone, the group that shares the currency.

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Supporters of Mr. Tsipras cheered as exit poll results were announced in Athens. CreditMarko Djurica/Reuters

Earlier concerns that a Syriza-led Greece would abandon the euro have been fading, but Mr. Tsipras’s confrontational stance on renegotiating the bailout could create a game of chicken with Greece’s creditors. Mr. Tsipras has insisted that he will not adhere to the bailout’s austerity conditions; Greece’s creditors insist that they will not disburse funds unless he does.
Mr. Tsipras has pledged immediate action, including restoring electricity to poor families who were unable to pay their bills. He has promised to raise the minimum monthly wage to €751 from €586 for all workers, restore collective bargaining agreements, prohibit mass layoffs and create 300,000 jobs.
Jens Weidmann, president of Deutsche Bundesbank, the German central bank, warned that Greece would remain dependent on outside financial support and that the new government “should not make promises that the country cannot afford.”
“I hope the new government won’t call into question what is expected and what has already been achieved,” Mr. Weidmann said in an interview with Germany’s public broadcaster.
On the streets of Athens, voters expressed a range of emotions as they went to the polls.
At a polling station in Mets, a middle-class district near central Athens, Achilleas Mandrakis, 47, said he runs a garage but has been struggling since his wife lost her job at a shoe store. “I always voted New Democracy, and I never trusted the leftists,” he said. “But enough is enough, really. We kept giving them a chance, but they messed up. They’ve made our lives miserable.”

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Continuing economic weakness has stirred a populist backlash as more voters grow fed up with policies that demand sacrifice. CreditMilos Bicanski/Getty Images

“At least,” Mr. Mandrakis added, “a different party might change something in this mess, anything.”
In a brief news conference late Sunday, Mr. Samaras vowed that his party would continue to play a role in Greek politics and defended his government. “I received the country at the edge of a cliff,” he said. “I was asked to take burning coals into my hands, and I did it.”
Mr. Samaras said that Greece had moved away from deficits and recession and that his government had “restored the credibility of the country.”
For Syriza, the immediate question was whether the party would win the 151 seats needed for a majority in Parliament. Projections suggested a close final result. If he falls short, Mr. Tsipras might align with the Independent Greeks, a center-right fringe party that opposes austerity measures and might push for a harder line in any debt negotiations.
Early returns also showed the neo-fascist Golden Dawn party in third place with roughly 6 percent of the total vote, even with some of its leaders campaigning from prison, awaiting trial on charges of being in a criminal gang.
While Greece sees itself as being punished by creditors’ demands, Germany and a host of European officials have argued that Greece and other troubled nations in the eurozone must clean up the high debts and deficits at the root of Europe’s crisis. They say Athens has failed to make enough progress on structural reforms seen as necessary to stabilize the economy, and they are pressing Greece to raise billions of euros through more budgetary cutbacks and taxes.
Many analysts say Mr. Tsipras must moderate his campaign promises and take a more centrist approach if he wants to save the economy and keep Greece solvent. “That will be the best possible outcome for Greece and for Europe, because it would show that these protest movements ultimately recognize reality — which is that they are in the euro, and they have to play by the rules,” said Jacob Funk Kirkegaard, a senior fellow at the Peterson Institute for International Economics in Washington.
Otherwise, he warned, “things could get a lot worse.”
“Very, very quickly,” he added.

Greek Radical Left Wins Election, Threatening Market Turmoil

THE NEW YORK TIMES - By THE ASSOCIATED PRESS

EUROPE

JAN. 25, 2015

ATHENS, Greece — A radical left-wing party vowing to end Greece's painful austerity program won a historic victory in Sunday's parliamentary elections, setting up a showdown with the country's international creditors that could shake the eurozone.

Alexis Tsipras, leader of the communist-rooted Syriza party, immediately promised to end the "five years of humiliation and pain" that Greece has endured since an international bailout saved it from bankruptcy in 2010.

"The verdict of the Greek people ends, beyond any doubt, the vicious circle of austerity in our country," Tsipras told a crowd of rapturous flag-waving supporters.

Syriza appeared just shy of the majority that would allow it to govern alone. With 97.6 percent of polling stations counted, Syriza had 36.4 percent — and 149 of parliament's 300 seats — versus 27.8 percent for Prime Minister Antonis Samaras' conservatives.

If Tsipras, 40, can put together a government, he will be Greece's youngest prime minister in 150 years, while Syriza would be the first radical left party to ever govern the country.

The prospect of an anti-bailout government coming to power in Greece has revived fears of a bankruptcy that could reverberate across the eurozone, send shockwaves through global markets and undermine the euro, the currency shared by 19 European countries.

The already battered euro was down 0.3 percent Monday, at $1.117, on the news of Syriza's victory. That was its lowest since April 2003.

Syriza's rhetoric appealed to many in a country that has seen a quarter of its economy wiped out, unemployment above 25 percent and average income losses of at least 30 percent.

Tsipras won on promises to demand debt forgiveness and renegotiate the terms of Greece's 240 billion euro ($270 billion) bailout, which has kept the debt-ridden country afloat since mid-2010.

To qualify for the cash, Greece has had to impose deep and bitterly resented cuts in public spending, wages and pensions, along with public sector layoffs and repeated tax increases.

Samaras soon conceded defeat Sunday, saying he had received a country "on the brink of disaster" when he took over in 2012 and was close to ushering it out of the crisis.

"I was asked to hold live coals in my hands and I did," he said.

The country's progress in reforms is reviewed by inspectors from the International Monetary Fund, European Commission and European Central Bank, collectively known as the troika, before each installment of bailout funds can be released.

Tsipras pronounced the troika and its regular debt inspections "a thing of the past."

Greece's creditors insist the country must abide by previous commitments to continue receiving support. In Germany, Bundesbank President Jens Weidmann told ARD network that he hoped "the new Greek government will not make promises it cannot keep and the country cannot afford."

The election results will be the main topic at Monday's meeting of eurozone finance ministers. Belgium's minister, Johan Van Overtveldt, said there is room for some flexibility, but not much.

"We can talk modalities, we can talk debt restructuring, but the cornerstone that Greece must respect the rules of monetary union — that must stay as it is," Van Overtveldt told VRT network.

JPMorgan analyst David Mackie said negotiations between the new government in Athens and creditors "are likely to be very difficult" but cannot drag on indefinitely.

"If Greece is unable to honor its obligations this year, then economic, financial and banking stress is likely to lead either to an agreement, or to a second round of elections, or to an EMU exit," he said, referring to Greece's membership in the eurozone.

But Re-Define think tank analyst Sony Kapoor said that while Greece has failed the eurozone and EU authorities, they have also failed Greece.

"The Greek rescue package was financially unsustainable, economically wrong-headed, politically tone-deaf and socially callous," he said. "Syriza deserves a chance, and their victory will force the EU to confront the elephant in the room: unpayable debt and bad policy decisions."

He noted that Syriza's moderation of its rhetoric before the election "is promising, making it likely that it will govern closer to the center than many think."

A Syriza official said Tsipras would meet Monday with the head of the small Independent Greeks party, which elected 13 lawmakers, "to confirm the support and possible participation of the Independent Greeks in the new government." Apart from their mutual opposition to austerity, the two parties disagree on practically every other issue.

The official, who asked not to be named because he was not authorized to speak on the record, said Tsipras would likely be sworn in as prime minister later Monday, and the new government would be formed in the following couple of days.

The centrist Potami (river) party was battling for third place with the Nazi-inspired Golden Dawn, whose leader and several lawmakers campaigned from prison, where they are awaiting trial on charges of participating in a criminal organization.

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Raf Casert in Brussels and Derek Gatopoulos in Athens contributed.