On Sunday, Greece voted in its second set of elections this year. Polls had put the two main parties – incumbents Syriza and the conservative opposition, New Democracy – neck and neck. Yet in the end, Syriza won with only a slightly smaller majority than before.
Instead of the “grand coalition” that many commentators had expected, it is forming a government with its previous partners, the eurosceptic Independent Greeks, a move strongly criticised by the head of the European Parliament, Martin Schulz, who described it as “bizarre”. The Greek stockmarket remained virtually unchanged from its weekend level.
It seems that “a large section of Greek society is willing to be incredibly patient” with Greek Prime Minister Alexis Tsipras, says Nick Malkoutzis in The Guardian. “Syriza’s victory probably owes much to the desire among many Greeks to move away from the rule of New Democracy and Pasok.” But Tsipras isn’t out of the woods yet.
He has “a list of challenging reforms to quickly carry out”. These include “pension reform and overseeing another recapitalisation of Greek banks”. Despite his success, many Syriza members “feel Tsipras failed to consult” with them properly. Yet the unlikely victory could increase the chances of a deal with the rest of Europe, says Mohamed El-Erian on Bloomberg.
The Greek prime minister may find that “his once-hostile European partners have warmed to him considerably… history is replete with examples of seemingly unlikely politicians who were catalysts for change and able to deliver improbable outcome”.
Meanwhile, the refugee crisis means “reluctant creditors, led by Germany, now have an excuse to forgive the earlier bailout loans”. With “a Tsipras-led Syriza in power and the pro-bailout New Democracy in opposition, there would appear to be a strong consensus in favour of sticking to the bailout”, agrees Capital Economics’ Jonathan Loynes.
However, the low turnout “points to general disillusionment”. Tsipras has also “pledged to renegotiate some key aspects of the deal”, which means “the days of extended negotiations at late-night Brussels summits are not necessarily over”. The fact remains that Greece still faces “unsustainably high public debts”.