The Greek prime minister, Alexis Tsipras, has resigned, triggering an election for 20 September. With Syriza hardliners in revolt since Tsipras agreed an €86bn bailout deal in July, his administration has been relying on opposition votes in parliament. The hardliners have formed a new party – Popular Unity – to contest the election, but Tsipras is still likely to lead the next government, with one poll giving him an approval rating of 61%.
What the commentators said
Ignore gloomy warnings of renewed turmoil in Greece, said Jim Armitage in London’s Evening Standard. The election is “more likely to be good news”. If Tsipras’s plan works, most radical members of Syriza will quit and he’ll have a more unified party and a strong mandate behind him. With a more cooperative Greek government in place, Merkel will find it easier to sell much-needed Greek debt forgiveness to German voters. “The end… is not nigh.”
Yet with the election coming only a month before the first bailout review in October, and a caretaker government until then, there will be little time to pass major reforms, said Jennifer McKeown of Capital Economics. If Greece slips further into recession, the enthusiasm of the remaining Syriza MPs for further austerity could be sorely tested. The bailout deal could still unravel quickly. Syriza cannot be relied on to reform Greece as boldly as required, agreed The Wall Street Journal.
“Even the supposed moderates… retain a deep suspicion of private enterprise.” The bailout deal itself is flawed, with tax rises and spending cuts that won’t address Greece’s fundamental growth problem. Greece requires bolder privatisation and deregulation than foreseen in the bailout if the economy is to return to robust growth. “Athens needs a government that can adopt, and then exceed, the supply-side reforms included in the bailout deal.” Syriza is not that party.