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Red flag in Athens

In government, Syriza may temper its rhetoric and politics. But EU needs to handle Greece with care.

By: Express News Service |
January 27, 2015 12:59:47 am

When the eurozone crisis unfolded, it was not expected that the European Central Bank (ECB) would roll out a stimulus, or that Greece would actually elect the far-left. Over the last few days, both have happened. The ECB flooded the market with a 1.1 trillion euro package and radical left Syriza has formed a coalition with the right-wing Greek Independents, after falling just short of an absolute majority in Sunday’s general election. The euro marked this potential turning point for the European Union, and especially for the monetary union, by falling to $1.11 against the US dollar, its lowest in more than 11 years, while global markets prepared for a period of likely volatility.

Although Syriza’s leader, Alexis Tsipras, insists Greece will retain the euro and cooperate with the EU on a “fair and mutually beneficial solution”, his post-result rhetoric returned to the overwhelming populism of Syriza’s campaign. He said the mandate “is undoubtedly cancelling the bailouts of austerity and destruction”, adding that the “Troika… is a thing of the past”. That troika is the EU, ECB and IMF, lenders who put Greece through big budgetary cuts and restructuring. Tsipras had promised to write off half of Greece’s 240 billion euro debt and raise salaries. Unsurprisingly, from Frankfurt to Brussels, Greeks had been warned against the “wrong result” and its new leaders cautioned against reneging on the country’s deals.

Greece has been hit hard by austerity, given the job losses, cutback in public services and pensions, with unemployment at 25.5 per cent against an eurozone average of 11.5 per cent. But with a final bailout of 7.2 billion euros hanging in the balance, Syriza may find governing vastly different from campaigning. Also, last week’s ECB roll-out may mitigate Syriza’s impact. But its triumph comes at a time when populists, on the right and the left, are gaining ground in states like France, Italy and Spain. Spain’s anti-austerity Podemos leads polls; and the anti-EU UK Independence Party is certain to make its presence felt in May’s general election. From 52 per cent in 2007, public faith in the EU has dipped to a third. Handled without caution, Syriza could yet signal a dimming of the EU project.

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First published on: 27-01-2015 at 12:59:47 am
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