Published : Jan. 26, 2015 - 21:18
BRUSSELS (AFP) ― Greek anti-austerity party Syriza’s resounding election win on Sunday leaves the European Union caught between finding a compromise with its leader Alexis Tsipras and making concessions that will be hard to swallow for countries like Germany, analysts said.
Having won over a frustrated Greek public with fighting talk of renegotiating the country’s 240 billion euro ($269 billion) rescue package and leaving behind years of painful spending cuts, Tsipras has put himself firmly on a collision course with Brussels.
There will be plenty of “tense” moments between Athens and Brussels in the weeks to come, a top European official said, not wishing to be named.
“We will not escape a renegotiation (of the bailout),” another European source told AFP on Sunday.
A European Union flag and a Greek national flag fly beneath the Parthenon temple on Acropolis hill in Athens, Greece. (Bloomberg)
The first indications of the EU’s reaction will come on Monday, with a long-scheduled meeting of eurozone finance ministers, where talk of Greece’s unsustainable debt level will top the agenda.
“It’s definitely an important victory for Syriza. Now we have to see what Tsipras will propose,” said Italy’s EU affairs minister Sandro Gozi.
There will also be close scrutiny of Germany’s response, the country seen as the driving force behind the bloc’s austerity drive.
German Chancellor Angela Merkel and Syriza are on track “for an exciting game of poker,” said Julian Rappold, an expert on European politics at the German Council on Foreign Relations think tank, adding that Tsipras’ victory could have wider European repercussions.
“The path of no alternative as presented by Merkel could be called into question,” he said. “There will have to be a concession (from Berlin).”
The clock is ticking for urgent action to tackle Greece’s mountain of debt, with a two-month extension from creditors ― granted to conclude an audit that will determine the release of the next tranche of some 7 billion euros in loans ― due to expire on Feb. 28.
French Finance Minister Michel Sapin has already said the EU should be open to discussions with the new Greek government on restructuring its debt or extending the bailout terms.
Aside from wanting to renegotiate his country’s massive bailout by the EU and International Monetary Fund, Tsipras has said he will immediately seek a 50 percent reduction in Greece’s debts that have ballooned to 318 billion euros.
While that may seem optimistic, experts say the idea of reducing Greece’s debt ― once off-limits ― is now gaining ground.
“We must reduce this debt, for instance by extending the duration of the loans and further reducing the interest rates on certain loans,” economist Jacques Sapir told the French daily Liberation.
“In exchange, Athens will have to implement structural reforms. That is what the discussion with Syriza will be about,” he said.
It would be a mistake to refuse to reduce Greece’s debt, agreed Paul De Grauwe of the London School of Economics, as this would “condemn Greece to several difficult years and encourage extremist political movements ... that could strongly shake up the eurozone as a whole.”
After conceding defeat, outgoing Greek Prime Minister Antonis Samaras on Sunday said he hoped the new government would not endanger the country’s EU and euro membership.
“I hand over a country that is part of the EU and the euro. For the good of this country, I hope the next government will maintain what has been achieved,” Samaras said in a solemn acceptance of defeat.