According to the latest news on the Greek elections, Left-wing Syriza will be forming a coalition government with a Right-wing populist party called the Independent Greeks – think a Greek version of UKIP with a pinch of conspiracy theorists. Weird? Well, it’s not really that unexpected as, barring differences on national, religious and immigration issues, their anti-austerity rhetoric has been remarkably similar. But what else can we expect from this emerging new Government?
In the longer term, I believe we are looking at some kind of renegotiation for an extension of debt repayments and, a couple of years down the road, another possible writing off of debt. It has already happened and affected all bondholders, which included Greek pension funds that had invested in Government bonds. The agreement to go along with these renegotiations will be in effect a new Memorandum, much like the ones Greece has already signed, but of course this one will be called something else, “Support Agreement”, “Salvation Concordat” or some such name to avoid the negative connotations of “Memorandum”, against which Syriza railed constantly while in Opposition.
The groundwork for some kind of policy shift has already been laid with Syriza’s line softening somewhat over time, as their support was increasing, stating more recently that the leeway to pursue their promises was dependent on whether they will govern by themselves or in coalition. Of course, officially, the party states that “we support remaining in Europe and the Eurozone, but will not accept doing that irrespective of cost”. I personally do not believe things will ever get to the point of the country having to leave the Eurozone, let alone the EU, as such statements are mostly for public consumption, as well as to present the country’s creditors with a more tough line ahead of negotiations (“game of chicken”, as the British press has put it today).
It also remains to be seen if and how the new coalition government will go along implementing its spending positions (hiring people in the public sector and increasing wages, pensions etc), but the Government programme, anticipated in the next few days, will offer more information on that.
Syriza has undeniably succeeded in giving hope to a significant part of the Greek population. The future will tell whether this is proven justified. Whatever one’s misgivings, we can only hope that believers will not be let down.