Only hours after the Greek parliamentary elections results were published, Alexis Tsipras, leader of the winning Coalition of the radical left (SYRIZA) was sworn in as Prime Minister of Greece. The Greek president did not wait too long after Mr Tsipras announced successful coalition deal with the Independent Greeks party of Panos Kammenos. Not three days after the elections, Greece had also a new government. The SYRIZA-Independent Greeks coalition holds 162 seats in the 300-seat parliament. Mr Tsipras´s party has all but one government ministers – Mr Kammenos was named defense minister. The nomination of Yanis Varufakis, a non-party expert, as finance minister was not the worst possible outcome, but Mr Varufakis´s history of anti-austerity articles promises tough times for the Eurogroup.
The new government quickly reaffirmed the promises Mr Tsipras made to his voters – to end austerity programs and to cut off a part of the enormous 175-per-cent-of-the-GDP-worth sovereign debt. However, Mr Tsipras and Mr Varufakis made it clear that Greece wants to pay for its debts, just not under the present conditions. Voices from around the EU indicate, that a limited redefinition could be possible. Some indicate that no write-off can be expected, but that maybe the creditors will agree to prolong the payments long into the future – this would effectively mean that a large part of the debt would be erased by inflation. Mr Varufakis also indicated that the government could seek to link the debt repayments to Greek economic growth. France was among the first to accept this as a baseline for future negotiations. Despite the willingness of the eurozone to redefine the Greek debt repayment, worries remain that Mr Tsipras´s promise to end austerity would lead Greece off-track to economic recovery. If he really reintroduces some measures the previous government cancelled or limited (generous pension system, expansive government employment, very high minimum wage), the Greek primary deficit would once again rise – forming new debt.
3rd September 2021