Tsipras forged path to power on promise to keep Euro and end austerity

Bloomberg

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Alexis Tsipras, leader of the Syriza party, waves to supporters during a pre-election rally at Omonoia square in Athens, Greece, on Jan. 22, 2015. Alexis Tsipras, leader of the Syriza party, waves to supporters during a pre-election rally at Omonoia square in Athens, Greece, on Jan. 22, 2015.
It was in the U.S. where Alexis Tsipras chose to step into Europe’s political mainstream.
At a conference at the University of Texas at Austin in November 2013, as Greeks a continent away prepared for winter with higher taxes on heating oil, Tsipras said Greece belonged in the euro area, despite the currency’s faults. No country should leave and any departure would be “game on” for speculators about who the next victim might be, he said.
“An exit by Greece or any other crisis country would be a disaster for Europe,” he told an audience of officials and academics. “This is something that deep down everyone knows.”
The comments were the clearest sign of a new pragmatism that began to seep into the ranks of the leadership of the party that calls itself the Coalition of the Radical Left, or Syriza, after it narrowly lost Greek elections in 2012.
It culminated in a decisive victory in a vote on Sunday that put Tsipras, 40, in line to be his country’s next prime minister and starts the clock on whether he can deliver on promises to end austerity while convincing fellow European leaders to keep aid flowing to Greece.
“The party has won a big anti-austerity mandate, the message of change,” said Wolfango Piccoli, managing director at Teneo Intelligence in London. “Tsipras will be the celebrated winner, but delivering on voters’ larger-than-life expectations has not become easier after the landslide victory.”
Greek promises
Sticking with the euro united Greeks since the debt crisis erupted in 2009 as they endured a six-year recession that shrank the economy by a quarter and sent unemployment to records.
Tsipras promised Greeks that he can walk the tightrope between rolling back spending cuts, providing free power to 300,000 impoverished households and balancing the budget.
In his speech to supporters late Sunday, he said the bailout agreements have ended for Greece and elites have been beaten. “Our victory is also a victory of all the people of Europe struggling against austerity which is destroying our common European future,” he said.
While the projected victory was by a wider margin than polls predicted, it remained unclear in the immediate aftermath whether Syriza would be able to govern with an unlikely wafer-thin majority or in a fragile coalition. He will meet leaders of smaller parties later on Monday.
Greece’s Lula?
It also remains to be seen whether he turns into Greece’s Luiz Inacio Lula da Silva, the Brazilian president and former union leader who confounded skeptics in financial markets and delivered economic success.
“An exit from the euro would unleash a greater crisis than anything that Greece has been through so far,” Philippe Gudin, the chief European economist at Barclays Plc, told reporters in Paris on Jan. 20. “Tsipras isn’t coming to power to cause that. It would instantly be the end of him.”
Unlike in 2012 when Tsipras was portrayed as a maverick in European politics threatening the euro’s integrity, his message is resonating beyond Greece as joblessness and widening income disparities fuels discontent with ruling elites.
Tsipras, who lives in Athens with his two young sons and their mother, grew up in the suburb of Ambelokipi, far from the elite schools and foreign universities that fostered generations of leaders like outgoing premier Antonis Samaras. Both Samaras and his predecessor George Papandreou were educated at the prestigious Athens College, then at Amherst College in the U.S.
Polytechnic uprising
Tsipras studied civil engineering at the National Technical University of Athens, better known as the Polytechnic, the site of a 1973 uprising against the military dictatorship the year before he was born.
That came after he earned his political spurs during a high-school revolt in 1990, becoming one of the leaders of the protests. He joined the Communist Youth of Greece just after the Berlin Wall fell the year earlier.
The election of his party will pave the way for policy changes across Europe, Tsipras has said, and be followed by victories for Podemos in Spain and Sinn Fein in Ireland. Days before the election, Tsipras shared a stage during his main campaign rally in Athens with Podemos leader Pablo Iglesias, and spoke on the phone with Gerry Adams, the leader of Sinn Fein.
“A wind of democratic change is blowing in Europe,” Iglesias said after what he called an emotional night in Athens during the campaign. “The change in Greece is called Syriza. In Spain, it’s called Podemos. Hope is coming.”
Hope or fear
Tsipras based his campaign on that sentiment, a contrast to Samaras’s warnings that a Syriza government would take Greece back to the brink of leaving the euro.
Syriza soared to second place in 2012 on a pledge to tear up the bailout agreement underpinning Greece’s finances. It included the packages of spending cuts and tax increases ordered by the International Monetary Fund, European Union and European Central Bank, known as the troika.
At the peak of unrest in Athens’s central Syntagma Square at the steps of the Parliament, graffiti was daubed on the wall of a foreign bank. It read: “Please stop saving us.”
He now must keep a diverse group of lawmakers in line, including some annoyed at his Texas speech on the euro.
Tsipras aims to persuade some of Greece’s international creditors that they should accept a writedown on their holdings to bring the Greek government’s debt down to a sustainable level. He has promised a social spending program of about 11.5 billion euros ($12.8 billion), or almost 6 percent of the country’s gross domestic product.
Party control
“The biggest challenge Tsipras faces is controlling Syriza’s left wing,” said Piccoli at Teneo. “Any concessions to the troika will be highly scrutinized internally and might cause political infighting.”
His government has just over a month to reach a deal with European authorities before the existing financial lifeline expires, and with it, the waiver that allows the ECB to accept Greek assets in its financing operations.
German government officials said Jan. 16 Chancellor Angela Merkel believed that Tsipras will do business with other euro-region governments if he wins and scale back the demands that put him on a collision course with creditors.
Greeks are accustomed to abrupt reversals from their leaders. Samaras opposed Greece’s first bailout before changing his mind when he became prime minister. Pasok, Samaras’s junior coalition partner, came to power in 1981 promising to lead Greece out of the EU: instead, Greece ended up joining the euro.
“There will be no U-turn, but there will be compromise and it will be compromise from every party, from the European Central Bank, the International Monetary Fund, from Merkel, Schaeuble, from us,” said Yanis Varoufakis, a professor of economics at the University of Athens who organized Tsipras’s speech in Texas. “This is how Europe works.”

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