by Chris Becker
Change is no change in Greece, with the return to power of Syriza, still led by Alexis Tsipras over the weekend in a snap general election.
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 based on more than half of votes counted. The center-right New Democracy, whose leader Evangelos Meimarakis conceded defeat, was expected to get 28 percent.
With Syriza set to fall short of a majority in the 300-seat parliament, Tsipras, 41, will enter negotiations to build a viable government with the same coalition partner as before, scotching expectations he might do a deal with a more moderate party.
Talk about being caught between a rock and a hard place? Same team – sans the firebrand economist Yanis Varoukafis – with the same coalition, facing the same boots on the neck. Surprised that they were returned given the 70% pebliscite result to say “no” to austerity?
Its because barely anyone showed up, with absentee rates nearing 50%! So much for democratic involvement.
The first review of Greece’s reforms is due soon, with all sides of Greek politics agreeing to the conditions of the bailout agreement. Agreement and acquiescence will not lead to any long term solution as the bailout, rallies in Greek stock market, now 25% above its terminal low aside.
The only real change here is confidence, as a successful review could lead to expanded bailout monies and down the road, allow the ECB to expand its QE program into buying Greek government bonds, which have rallied significantly in the past month.
What remains of course is the base case that any debt servicing relief cannot be transformed into growth without debt principal relief. Even the IMF is backing away from the ECBs boot on the neck austerity approach and without significant foreign private investment in the beleagured nation, there is little hope for change.
This is another can kick down the road that is slowly turning into a deadend.