(Bloomberg) — After five years of relentless belt- tightening, Greeks have said enough. It’s now up to the country’s euro-area peers to decide how to respond to the election of the anti-austerity Syriza party and its leader Alexis Tsipras, Greece’s prime minister-in-waiting.
The best-case scenario, according to Stathis Kalyvas, a professor of political science at Yale University, is that Tsipras “gets a few carrots,” signs off on a new bailout agreement under a new name, “and gets his party to approve it.” In this case, to which Kalyvas attaches a low probability, Tsipras will “reinvent himself as a social democrat, reform the Greek state, and dominate Greek politics the next 10-15 years.”
With 90 percent of the vote counted, Syriza, an acronym for Coalition of the Radical Left, took 36.3 percent, just two seats short of an absolute majority. Leaders of smaller parties signaled their willingness to back Tsipras in the formation of a new government. Panos Kammenos, who leads the anti-bailout Independent Greeks party, said he’d help ensure stability and backed political change in Greece in light of the election.
Stavros Theodorakis, the head of To Potami, or River, a centrist party founded last year, said that Greece needs to avoid another snap election. He said he won’t support any coalition that includes anti-European forces.
The most likely scenario, according to Kalyvas, is that Tsipras manages to “put together a coalition that muddles along, perhaps taking advantage of the improved economic outlook.” If Tsipras attempts to strike a compromise, his party may split, meaning that he’ll need support from other lawmakers to keep his job, Kalyvas said in an e-mail before the election.
In his victory speech delivered late Sunday in Athens, Tsipras said that Greece is turning the page, leaving behind austerity and the era of the so-called troika of the European Central Bank, the International Monetary Fund and the European Commission.
His remarks set the stage for difficult talks between the new Greek government and its creditors, said David Schnautz, a strategist at Commerzbank AG in New York. At the same time, Tsipras said he doesn’t want a “catastrophic clash” with Greece’s euro-area peers.
The new Greek leader may find out the hard way that “EU negotiations is not the love-fest he expected,” Kalyvas said. Even if Tsipras tries to strike a face-saving deal, it is not certain his party would follow.
In the worst-case scenario, Tsipras will “opt for no compromise amid calls to national pride,” said Kalyvas. The Yale professor called this outcome the “Kirchner” scenario, after Argentina’s president, Cristina Kirchner. In that case, Tsipras “manages to harness economic disaster following Grexit and ushers in a radical populist regime.”
–With assistance from Paul Tugwell, Eleni Chrepa and Marcus Bensasson in Athens and Stefania Spezzati in Milan.
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