DANGER SIGNS?

THE TOPPLING OF THE HANDSOME, WELL-DRESSED GREEK LEADER ALEXIS TSIPRAS HAS LESSONS FOR TRUDEAU.

The defeat of the leftist Syriza party in the recent Greek parliament elections was a renunciation of the policies espoused by its leader Alexis Tsipras. Tsipras was a very progressive prime minister, young, handsome and to some extent charismatic, especially when compared with his key opponent, who eventually won the election, Kyriakos Mitsotakis. With his open-necked shirt and business jacket, Tsipras became a darling of the international media in early 2015, just months before another handsome, young, progressive leader, our own Justin Trudeau, lit up TV screens around the world. The Greek parliamentary elections and what happened to Tsipras may tell us a lot about what fate awaits Trudeau in our own election this fall.

Tsipras’ policies, too, not just his presence, are a lot like Trudeau’s. He and his ministers made clear they wanted corporations to become benevolent organizations that put workers before shareholders. They favoured taxing corporations and the rich, and adding regulatory impediments

and red tape to corporate activity. They were big supporters of income redistribution rather than making the economic pie bigger for everyone. They wanted to regulate the economy and nudge corporations to submit to the Syriza government’s social views and economic philosophy.

The parallels with Trudeau are obvious. A largely untested politician, Tsipras replaced Antonis Samaras, a disliked leader of the New Democracy party, just as Trudeau, another neophyte, replaced Stephen Harper. Each country’s electorate was willing to take a chance on a young, energetic, likable leader. Unfortunately, in Greece as in Canada, voters came to realize the new leaders were not quite what they seemed to be. Like Trudeau, Tsipras showed he was more opportunistic than idealistic, or at best seriously naive, possibly because of inexperience.

There were other similarities. Investors never trusted either of them. Tsipras presided over a stock market that severely underperformed other European stock markets. Once his demise was certain, however, the Greek stock market soared, while spreads on Greek bonds plummeted. In the same way, the TSX has severely underperformed the U.S. market. And for good reason. While Trudeau has been in power there has been a stampede of U.S. and foreign investments from the oil sector. For example, Devon Energy recently announced plans to sell its oil sands assets in Alberta. This follows divestures from Royal Dutch Shell and ConocoPhilips.

Oil executives talk about a government that has enacted a policy that is “horrific, inept, incompetent and incomprehensible”. Analysts believe foreigners are voting with their feet as companies seek their fortunes where they can generate better cash flows with less capital investment. Investment funds that track the S&P 500 have outperformed their Canadian equivalents by more than 40 per cent over the last five years, while the Canadian dollar, which has lost nine cents against the U.S. dollar over the same period, falling from $0.86 to $0.77.

The Trudeau government’s poor communication and execution have alienated key economic partners, including China, Saudi Arabia, Russia, the U.S., Mexico, India and others. Gaffes have multiplied. The SNC-Lavalin affair, including the firing of two key female ministers, was badly mishandled. And mixed messages on pipelines and other infrastructure projects have created uncertainty and resentment. Taking years to complete energy projects makes no economic sense whatsoever.

Greece’s new prime minister, Kyriakos Mitsotakis, is not nearly as comfortable in the public eye as Alexis Tsipras, nor as able to give uplifting speeches. But he capitalized on what was perceived to be Tsipras’ opportunism and his flip-flops regarding taxes and relations with the European Union. Sometimes Tsipras seemed to be on the left but other times, having co-operated with a small conservative party to win a majority in parliament, he veered opportunistically right, just as Justin Trudeau seems to pander to NDP and Green voters — but only as much as suits his interest.

It will be interesting to see whether Andrew Scheer turns out to be a Canadian Mitsotakis, a charisma-challenged, largely colourless leader who nevertheless knocks off a now-faded former political phenom.

Special to Financial Post George Athanassakos is professor of finance and the Ben Graham Chair in Value Investing at the Ivey School of

Business.