Can Tsipras’ elec­tion vic­tory lead Greece back to eco­nomic pros­per­ity?

Financial Mirror (Cyprus) - - FRONT PAGE -

The elec­toral gam­ble by Alexis Tsipras even­tu­ally paid off, if we are to judge by last Sun­day’s elec­toral re­sult when his rad­i­cal left Syriza party claimed an easy vic­tory with 145 seats and 35.46% of the votes, 7.4% ahead of its main ri­val the New Democ­racy party. The Septem­ber 20 snap elec­tion was called by Tsipras in an ef­fort to re­store his party’s unity by get­ting rid of its ex­treme left wing hard core com­mu­nist frac­tion, fol­low­ing a split dur­ing par­lia­men­tary vot­ing for the new bailout pro­gramme last July and Au­gust.

Re­sults con­firmed that Tsipras, who was sworn in as Greece’s Prime Min­is­ter on Mon­day evening, was able to re­new the coali­tion he pre­vi­ously had formed, when he first came to power last Jan­uary, with the “In­de­pen­dent Greeks”, a right wing na­tion­al­ist party, which although at­tracted only 4.3% of the vote and won ten par­lia­men­tary seats was enough to sup­ple­ment Syriza’s pres­ence thus giv­ing the coali­tion a clear ma­jor­ity of 155 seats in the 300-seat par­lia­ment.

The re-elec­tion, with al­most the same strength as in Jan­uary, of a party which be­cause of its am­a­teur­ish han­dling of the econ­omy brought the coun­try to a stand­still, closed the banks and in­tro­duced wide rang­ing cap­i­tal con­trols, still in strength, can only be in­ter­preted in psy­cho­log­i­cal terms, ac­cord­ing to po­lit­i­cal sci­en­tists in Athens.

For Syriza’s re-elec­tion, note the above sources, cer­tainly re­flects some deep un­der­ly­ing changes in Greeks’ so­ci­etal be­hav­iour and an­tic­i­pa­tory think­ing. For the re­turn to power of Syriza, which ac­tu­ally bankrupted the coun­try last July by call­ing an ill-con­ceived ref­er­en­dum just to demon­strate its op­po­si­tion to Europe, while at the same time was seek­ing a huge fi­nan­cial bailout, shows the ill placed po­lit­i­cal pri­or­i­ties of a large fac­tion of so­ci­ety. A fac­tion which places its trust in an in­ex­pe­ri­enced gov­ern­ment only be­cause it showed its re­sis­tance to pre­vi­ous bailout pro­grammes, only to in­tro­duce, in or­der to pre­vent one more bank­ruptcy, a new more aus­tere and far more costly bailout pro­gramme.

Psy­chol­ogy and changes in so­cial be­hav­iour apart, the new Syriza gov­ern­ment will now have to face a re­al­ity check as it will have to han­dle some tough eco­nomic and po­lit­i­cal chal­lenges. Top pri­or­i­ties for the newly elected gov­ern­ment, as stated by the Prime Min­is­ter, re­main the sta­bil­i­sa­tion of the econ­omy, the re­gain­ing of trust in the coun­try’s fi­nan­cial sys­tem fol­lowed by bank re­cap­i­tal­i­sa­tion and the lift­ing of cap­i­tal con­trols. In this re­spect, the pre­vi­ous fi­nance and econ­omy min­is­ters, Eu­cle­i­des Tsakalo­tos and Ge­orge Stathakis re­spec­tively, will re­tain their old posts while Ge­orge Chou­liarakis, the gov­ern­ment’s top ne­go­tia­tor with the EU is ex­pected to be ap­pointed ju­nior min­is­ter in charge of over­see­ing the im­ple­men­ta­tion of the bailout pro­gramme.

An­a­lysts in rat­ing agen­cies be­lieve that the elec­tion re­sult re­duces po­lit­i­cal un­cer­tainty, but dan­gers still loom large con­cern­ing the new gov­ern­ment’s abil­ity to im­ple­ment the bailout agree­ment with the cred­i­tors reached on July 13 and ap­proved by a large par­lia­men­tary ma­jor­ity of Greece’s par­lia­ment last Au­gust. In sharp con­trast to his pre­vi­ous ten­ure as Prime Min­is­ter, dur­ing the trau­matic pe­riod from the end of Jan­uary un­til late Au­gust, Alexis Tsipras now ap­pears to be more rec­on­ciled with eco­nomic and mar­ket re­al­ity and cer­tainly with EU gov­er­nance re­quire­ments.

“We have dif­fi­cul­ties ahead,” Tsipras told his sup­port­ers im­me­di­ately upon learn­ing the elec­tion re­sults. “Re­cov­ery can­not come through magic but through lots of work, stub­born­ness and strug­gle,” he said.

Although mar­ket sen­ti­ment ap­pears at first mildly pos­i­tive as busi­ness lead­ers are re­lieved that a new gov­ern­ment man­aged to be formed quickly, se­ri­ous doubts linger as to the gov­ern­ment’s abil­ity to re­verse the econ­omy’s down­turn. Many thou­sands of work­ers have been laid off over the last 34 months while the econ­omy is set to con­tract by an es­ti­mated 3.0% y-o-y, by the end of this year.

An­thi­mos Tho­mopou­los, chief ex­ec­u­tive of Pi­raeus Bank, the coun­try’s largest, although ap­peared hope­ful he ob­served, as quoted by the Fi­nan­cial Times, that “es­sen­tially we are where we were some five years ago in terms of the things that need to be done. Ex­cept now, we have an en­thu­si­as­tic, dy­namic prime min­is­ter with a pop­u­lar man­date to do it. And its pos­i­tive”.

Mathios Ri­gas, CEO of Greece’s only oil pro­duc­ing com­pany, also sounded pos­i­tive when he said “that in the sense that we now have a gov­ern­ment with a fresh man­date and a clear mis­sion and with­out its pre­vi­ous ex­treme left fac­tion, that can only be good for busi­ness. It re­mains to be seen, though, whether they will be able to han­dle ev­ery­day mat­ters that of­ten make run­ning a busi­ness in Greece a night­mare”.

How­ever, many EU of­fi­cials re­main deeply skep­ti­cal that a re­newed Syriza-led gov­ern­ment can de­liver in im­ple­ment­ing the three year EUR 86 bln bailout pro­gramme, re­store busi­ness con­fi­dence and re­turn Greece to an eco­nomic growth path. Part of this skep­ti­cism stems from the at­ti­tudes ex­pressed by some fac­tions within the Syriza party which, in spite of elec­toral suc­cess, are ques­tion­ing the lack of con­sen­sus within the party and ap­pear de­ter­mined to slow the fast pace of re­form which the bailout pro­gramme im­plies.

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