Shockwaves have rippled throughout Europe as the
anti-austerity party, Syriza romped to victory in the elections held in Greece
on Sunday. Alexis Tsipras, the leader of Syriza has promised to renegotiate the
bailout terms with Greece’s international backers known as the Troika (a
coalition of Eurozone countries, the International Monetary Fund and the
European Central Bank). His aim is to end the devastating austerity that has
caused the Greek economy to experience near perpetual recession for the past
six years. When asked what Syriza’s victory meant, Tsipras responded “the vicious
cycle of austerity is over.”
Following the financial catastrophe of 2008, Greece’s
debt became a massive problem for government finances. Greece needed to borrow
money to keep the country running, but was unable to borrow from the banks due
to the extortionate interest rates it was being charged. To save the Greek
economy from collapse the Troika offered the Greek government a bailout. In
exchange the Greek government would have to slash spending by huge amounts to
balance its books. However this was the wrong time for austerity, private spending
was already low due to the crash, so government spending was required to keep
the economy afloat. Unfortunately the terms of the bailout resulted in
plummeting private and public spending,
creating a vicious cycle of decline. As many Greeks lost their jobs or had
their pay cut, government tax revenues went down and welfare payments went up.
However since the government was required to try and balance its budget, this
created a bigger imbalance and forced further cuts. This meant less money in
the economy, so more people were made unemployed, which in turn made government
finances even worse off.
No wonder people voted for the most viable anti-austerity
party; Syriza.
In the election Syriza managed to win 36.4% of the vote
and 149 seats (just two short of a majority) compared to 27.8% and 76 seats for
New Democracy, the senior party in the ruling coalition. This victory for
Syriza is a line in the sand for both Greece and Europe. It has shown what will
happen when you unleash harsh austerity on your people. Greece is far from
unique, in Spain the anti-austerity and left-wing party Podemos was leading in
the polls at the end of last year, despite only being founded in January! It
also serves as a warning to establishment left-wing parties across Europe,
including Labour hear in Britain. The rise in popularity of Syriza has been
possible thanks to the collapse of the establishment left-wing party, Pasok. It
entered into a collation with the conservative New Democracy and helped to
unleash the austerity Greece has had to undergo. Other establishment left-wing parties
should be wary before carrying out similar programs back home.
It is a new day in Europe, what happens next with Greece
will decide the fate of the European integration project that is the European
Union.
Syriza supporters celebrate following victory in the election Souce: BBC |