Far-left Syriza party wins Greece election
A fresh wave of uncertainty swept through the financial markets on Monday after Greece’s far-left anti-austerity party Syriza secured a decisive victory in the country’s snap elections.
Syriza secured more than one-third of the vote, pushing aside the ruling centre-right New Democracy party. The decisive victory is expected to give Syriza 149 of 300 seats in the Hellenic Parliament. The leftist group will partner with the Independent Greeks, a right-wing party that has similarly disavowed anti-austerity measures. With 13 seats, the Independent Greeks give Syriza the numbers it needs to form a majority coalition government aimed at tackling austerity.
According to latest polling data, Syriza has secured 36 percent of the vote, with New Democracy at 28 percent.
Syriza, an acronym meaning the “Radical Coalition of the Left,” was formed in 2004. It quickly rose to prominence following the 2008 Greek riots and has enjoyed growing support over the past several years.
Syriza party leader Alexis Tspiras has been sworn in as the new Greek prime minister after successfully campaigning on a platform of anti-austerity, promising voters to raise the minimum wage and cut taxes. Greece was subject to several reforms by its troika of international lenders – the European Central Bank, European Union and International Monetary Fund – after it received $270 billion in bailouts to avoid bankruptcy. The Hellenic Republic has an unemployment rate of around 26 percent with one-third of the population living below the poverty line. The country’s gross domestic product has plunged 30 percent since the onset of the Great Recession.
The Greek economy grew 0.3 percent in the third quarter of 2014, the third highest growth rate in the European Union. The EU 28 grew 0.3 percent from the previous quarter, while the 19-nation Eurozone expanded just 0.2 percent.
Tspiras will attempt to renegotiate the structure of Greece’s international bailout package without reneging on his party’s ambitious platform.
The news sent shockwaves throughout the financial markets, as investors traded defensively amid heightened prospects that Greece could default on its massive loans and exit the Eurozone. The EURUSD fell below 1.11 in intraday trade, hitting its lowest level in more than 11 years. The pair would subsequently consolidate north of the 1.1200 handle, advancing more than 1 percent.
The Athens Stock Exchange was down 4 percent before posting a mild recovery. Wall Street was little changed on Monday, as investors absorbed the news.
Greek voters have “given a clear, strong, disputable mandate,” Tspiras told supporters following the decisive victory.
He added, “The troika for Greece is the thing of the past… Your mandate is undoubtedly cancelling the bailouts of austerity and destruction.”
Tspiras said he is willing to negotiate with Greece’s international lenders, although it is uncertain whether the troika would be prepared to compromise. The German government has already ruled out a third debt restructuring for Greece but said it would consider extending the country’s current bailout package. The negotiations will be closely monitored outside Greece, especially by other leftist parties who seek to reverse the tide of austerity following the 2008 financial crisis.
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