Tsipras Heads for Another Decisive Victory in Greek Election - Bloomberg

by Nikos Chrysoloras, Jonathan Stearns and Matthew Campbell
Alexis Tsipras is set to return to power in Greece with another emphatic election victory, vindicating his decision to seek a new mandate after yielding to the demands of European leaders for more austerity in the crisis-hit country. The former prime minister’s Coalition of the Radical Left, or Syriza, received 35.5 percent of the vote, according to an official projection by the Interior Ministry. The center-right New Democracy, whose leader Evangelos Meimarakis conceded defeat, was expected to get 28 percent.

With Syriza likely to fall short of a majority in the 300-seat parliament, Tsipras, 41, must now enter negotiations with smaller parties to build a viable coalition. In a year marked by the standoff between Greece and its creditors, the new government will have little room to maneuver after Tsipras acceded to demands led by Germany for spending cuts and tax hikes in exchange for a new bailout of Europe’s most indebted country.

The most important question for Greece now "is whether the incoming government will be able to successfully conclude the bailout’s first review," Mujtaba Rahman, the head of the Europe practice at political consultancy Eurasia Group, said in an e-mail. "That is what economic and political stability will depend upon."

Bailout Test

That international review of Greece’s progress is due before the end of the year, with a positive verdict necessary for money to flow from the 86 billion-euro ($97 billion) aid package. Of particular importance will be the disbursement of funds to recapitalize Greek banks, which have been battered by deposit outflows that prompted capital controls.

The vote was Greece’s sixth national ballot since 2009, including the surprise July referendum on austerity measures called by Tsipras as he upped the stakes in talks with euro-region leaders.

Both Syriza and New Democracy said in the campaign that they would not challenge the bailout agreement and would push to implement its terms, though a number of smaller parties didn’t share that view. Investors have nonetheless signaled confidence in recent weeks that the worst is over for Greece, with government bonds posting the biggest returns in the euro zone over the past month, and the Athens stock market also rallying.

One or more of several less-popular parties could enter government with Syriza to give it a majority of seats.

Potential Partners

Center-left Pasok, which governed in a coalition with New Democracy until January, was set for 6.4 percent of the vote, according to the projection. Independent Greeks, the junior coalition partner in Tsipras’s last government, was forecast to take 3.7 percent, exceeding the threshold to enter parliament. The centrist To Potami, or The River, was on 4 percent.

Tsipras struck his deal with creditors in July despite the emphatic decision by Greeks to vote "no" to further austerity measures in the referendum. The agreement came amid threats to expel Greece from the euro if it continued to reject creditors’ demands and was a major about-face for Tsipras, whose first election victory was on a platform of strident opposition to austerity.

A subsequent split in Syriza led to Tsipras’s resignation as prime minister in August, triggering the election. Syriza lawmakers who revolted against the bailout agreement formed a new party, Popular Unity, to advocate a return to the drachma. Popular Unity was projected to garner less than the 3 percent needed to enter parliament.