JARED DE CANHA

The results from the recent Greek national election have seen the country veer to the left towards a more radical form of leadership in the form of 40-year-old Alexis Tsipras. This has not only increased tension among members of the Eurozone, but also across financial markets in response to the sweeping election promises made by the new prime minister, who has already begun implementing reforms in his first week in office.

The European debt crisis has been an ongoing struggle for the Eurozone since the onset of the 2008 global recession. This had a particularly devastating effect on the Greek economy, which has been on the receiving end of necessary bail-outs from neighbouring countries. However, with the election of the left-wing Syriza party, the economic strategies of Tsipras and his cabinet will come under increased scrutiny and could make the difference between whether or not Greece will remain a member of the European Union.

What do the Syriza Party stand for?
The prime minister and his party have a strong belief in reversing the austerity measures which were implemented by previous leaders in response to the large financial deficit faced by the country. Austerity measures refer to a government’s decision to cut expenses and reduce state spending in an attempt to reduce the state deficit. The Syriza Party, on the other hand, have a firm belief that these measures do not benefit the masses of unemployed and struggling Greek citizens.

The Syriza Party have set out to lead a coalition government with the centre-right Independent Greek Party. The Syriza Party were just two seats short of securing an absolute majority, but through their coalition have secured the 13 seats held by the Independent Greeks.

Tsipras also became the first Greek prime minister to decide on being affirmed as prime minister in a non-religious manner instead of the traditional religious ceremony. Tsipras, who is an atheist, avoided the customary blessings from the Athens Orthodox Church and was sworn in by Greek president Karolos Papoulias. His first act as prime minister was the laying of flowers at a Greek memorial dedicated to the Greek resistance fighters who lost their lives during World War II.

 

What reforms have been introduced?
The first noticeable change in Greece was the removal of the barriers surrounding parliament after Tsipras took office on 26 January 2015. The prime minister has also announced significant economic changes including the halting of privatised schemes, the reinstating of pensions, the reintroduction of a minimum wage, the removal of hospital visit and prescription fees, and the rehiring of public sector workers who were previously laid-off. Citizenship has also been granted to migrant children who were born and raised in Greece.

The Syriza Party have also vowed to renegotiate the devastating debts which Greece owes European lenders. Greece has been at the mercy of a trio of lenders, namely the European Commission, the International Monetary Fund and the European Central Bank, for the past five years, who have all insisted on austerity measures being taken by the past Greek leadership. This is said to change under the leadership of Greece’s youngest prime minister in over 150 years.

 

Implications of the election and the introduced reforms.
The election of a new radical leader in Greece has been well received by the Greek public, who have been hit hard by the past years of recession. Tsipras won the election on the promises he made to the Greece public, including the prospect of debt forgiveness and absolution, as well as rebuilding the broken spirit of the Greek people and the renegotiation of the terms of the bail-out which Greece received from the Eurozone. Many Greek citizens are also supportive of the Syriza Party’s reforms which have opposed the cuts in public spending, wages and pensions and increases in taxes, which were necessary for Greece to impose in previous years in order to qualify for the bail-out they received.

European as well as global financial markets, however, have increased fears that the new leadership in Greece and their plans to renegotiate in order to eliminate their debt will increase the potential for another Greek bankruptcy, which will have a ripple effect across not only the Eurozone but also globalised markets. The reforms and promises which Tsipras has made have also caused friction among European lenders. In a recent interview with French newspaper Le Figaro, president of the European Commission Jean-Claude Juncker not only stressed that “There is no question of cancelling the debt,” but that if Greece fails to honour its previous commitments, there “will be no more credit” for Greece.

The election has also increased tensions between Germany and Greece, which were already present in Greece before the election. This is because many Greeks blame Germany, as Europe’s largest economy, for enforcing strict conditions attached to their key role in providing economic relief. The Syriza Party also used the promise that Germany be held accountable for their involvement in Greece during World War II in their election campaign. In fact, the Washington Post recently reported that Tsipras himself said that Greece is “going to demand debt reduction” as well as the money which, in his eyes, Germany owed Greece in reparations for World War II.

In a world of increasing globalisation and interconnection, the actions of a tiny Mediterranean country will have a ripple effect on us all. This is why keeping an eye on the developments in Greece over the next few months will be vital for all of us as global citizens.

 

Illustration: Jaco Stroebel

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