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.
