Posted January 27, 2015 Andrew Kiddey
On 25th January many Greeks took to the streets of Athens as radical left-wing, anti austerity party Syriza gained 149 seats in the county’s elections, just two short of an outright majority. Tsipras, leader of Syriza, made his party’s intentions for the new government clear, taking little time to form a coalition with the far right-wing Independent Greek party. The similarities in policies between the two parties stretch little further than ending austerity in Greece and seeking European debt write-off.
However, Greece’s creditors were not deterred by Syriza’s victory, ruling out any outright debt-forgiveness, instead hinting Greece may be given some breathing time on their repayments. A confrontation between Greece and it’s creditors is now inevitable with much of Syriza’s campaigning in the lead-up to elections being focused on negotiating down Greece’s repayments. Meanwhile it is clear that any concessions Europe makes in favor of Greece will be pounced on by anti-austerity parties in other struggling, debt-ridden countries in the Eurozone such as Spain and Italy. Spain and Italy are among a number of European countries which have seen popularity for anti-austerity parties surge in recent years as populations deal with struggling economies.
Following the results, markets were initially volatile with a sell-off in the euro, dropping to an 11-year low of 1.1098 against the dollar, before retracing the move. European stock markets were largely unaffected by the election results with the DAX and EuroStoxx closing higher, continuing the recent trend caused by the ECB announcing its €1.1 trillion QE program last week. However, the Athens Stock Exchange closed 3.2 per cent lower.
With European creditors needing to show the Eurozone that debt forgiveness is not an option for struggling countries and Syriza needing to live up to their popular election campaign mandate, it looks likely that compromise will feature in the outcome of any talks concerning Greece’s debt repayment.