LONDON — Two days after the election of Socialist Francois Hollande as president of France and the never-anticipated strong showing of political outsiders in the Greek elections, people throughout Europe are questioning whether these results spell a direct assault against the belt-tightening spending policies and minimal tax increases that most of the Eurozone has adopted. And, Europeans increasingly wonder, will this lead to the end of the bailouts of debt-strapped nations by international organizations and with it, their more solvent neighbors left “holding the bag” of unpaid loans?
That’s precisely what David Cameron was saying here yesterday. In declaring there would be “no going back” on the harsh austerity measures his country supports to grapple with debt, the British prime minister threw the gauntlet down to French and Greek voters who supported anti-austerity candidates Sunday. German Chancellor Angela Merkel also weighed in strongly for her country’s support of austerity measures.
Possibly even more ominous than the triumph of austerity foe Hollande was the still unfinished political saga now being played out in Greece. The two major parties that have dominated Greek politics for 38 unbroken years both fared miserably at the polls: the New Democracy (conservative) Party drew a dismal 18.9 percent of the vote, while Pasok (Socialists) placed third with about 13 percent. Both supported the austerity measures required to secure a $169 billion bailout from the ‘troika’ — the International Monetary Fund, the European Central Bank, and the European Union.
Placing second was the new and aptly-named Coalition of the Radical Left (Synza), whose vote mushroomed to 16.8 percent and thus made it the second-largest party in the parliament, with 52 seats in the 300 member parliament. With the combined 149 seats of New Democracy and Pasok not enough to form a government, it is now the turn of Synza leader Alexis Tsipras — onetime youth leader of the Greek Communist Party and unabashed admirer of Venezuela’s Marxist strongman Hugo Chavez.
Not only did the 38-year-old Tsipras call for an outright annulment of Greece’s bailout agreement but he also campaigned for a three-year moratorium on servicing the debt. More than a few close observers of Greek politics suspect that Tsipras (who never wears a tie) encouraged and pandered to anarchists and rioters who have been behind the weeks of violent anti-austerity protests viewed on television worldwide.
Tsipras, of course, never gave any details about returning any of the $169 billion in loans that his country has so far accepted to stay above water. And he has never ruled in or out a government he runs opting out of the Eurozone and its single currency, the euro. Citigroup economists say the probability of Greece leaving the euro “is as high as 75 percent,” reported the Wall Street Journal.
Greek’s far-left has yet to form a government. But as Tsipras prepared to try, the Journal also reported that “the Athens Stock Exchange’s main index stumped 6.7 percent, while Greek banking stocks plunged 12.6 percent.”
Although parties opposed to the austerity measures required for a bailout won 60 percent of the votes Sunday, it is not at all clear whether Tsipras can form a government — not now, at least. This would require his making an alliance with some pretty unlikely political actors — notably, the anti-immigrant Golden Dawn Party, which won a stunning 7 percent of the vote Sunday and 21 parliamentary seats (Tsipras, interestingly, ran as a friend of the immigrants; Golden Dawn, some of whose leaders voiced fondness for the military dictatorship that ruled Greece from 1967-74, called for putting landmines along the borders to keep immigrants out of Greece).
In all likelihood, Greece will hold another election in June. The Radical Left could win more seats and put Tsipras in a stronger position with which to rule. June is a critical month, since the 30th of the month is the deadline for parliament to approve massive cutbacks for 2013-14 in order to guarantee the bailout agreement with its three big creditors.
Failure to do so would mean the government, without further loan installments, would probably be able to function until July. After that, well, it would be a dark and ominous time for Europe — especially if a Greek “Hugo Chavez” is in charge in Athens.