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1 OF 2. Greece's President Karolos Papoulias
(R) welcomes Alexis Tsipras, Syriza party leader and winner of the Greek
parliamentary elections, before Tsipras' swearing-in ceremony as Greece's first
leftist prime minister in Athens January 26, 2015.
CREDIT: REUTERS/SIMELA PANTZARTZI/POOL
(Reuters)
- Greek left-wing leader Alexis Tsipras was sworn in on Monday as the prime
minister of a new hardline, anti-bailout government determined to face down
international lenders and end nearly five years of tough economic measures.
The
decisive victory by Tsipras' Syriza in Sunday's snap election reignites fears
of new financial troubles in the country that set off the regional crisis in
2009. It is also the first time a member of the 19-nation euro zone will be led
by parties rejecting German-backed austerity.
Tsipras'
success is likely to empower Europe's fringe parties, including other
anti-austerity movements across the region's economically-depressed south. The
trouncing of the conservatives represents a defeat of Europe's middle-ground
political guard, which has dallied on a growth-versus-budget discipline debate
for five years while voters suffered.
Sporting
his trademark no-tie look, the 40-year old former student Communist Tsipras
became the first prime minister in Greek history to be sworn in without the
traditional oath on a Bible and blessing of basil and water from the Greek
Archbishop.
At
a brief secular ceremony where he pledged to uphold the constitution, Tsipras
told President Karolos Papoulias: "We have an uphill road ahead." In
a symbolic move, his first action as prime minister was to commemorate Greek
resistance fighters with red roses at a memorial in Athens to those executed by
Nazis.
Defying
predictions that he would turn from populist to pragmatist after taking power,
Tsipras quickly sealed a coalition deal with the small Independent Greeks party
which also opposes Greece's EU/IMF aid programme.
Syriza
won 149 seats in the 300-seat parliament with its campaign of "Hope is
coming!", leaving it just two seats short of an outright majority and in
need of a coalition partner. The Independent Greeks, at odds with Syriza on
many social issues like illegal immigration, won 13 seats.
The
alliance is an unusual one. The parties, at the opposite end of the political
spectrum, share only a mutual hatred of the 240-billion-euro bailout programme
keeping Greece afloat at the price of budget cuts.
Stavros
Theodorakis, leader of To Potami, a new centrist party once seen as a potential
Syriza coalition partner, said he could not join a government that included the
Independent Greeks, whom he called "far right" and
"anti-European". But he said he would wait to see the government's
programme before deciding whether to support a vote of confidence in
parliament.
The
tie-up suggests Tsipras will keep up his confrontational stance against
Greece's creditors, who have dismissed his demands for a debt write-off and
insisted the country needs reforms and austerity to get its finances back on
track.
"At
first sight this looks like a very strange marriage, but both parties share a
strong opposition to austerity," said Diego Iscaro, an analyst at IHS
Global Insight.
"SELF-REINFORCING
CRISIS"
Yanis
Varoufakis, an economist and outspoken blogger crusading against austerity, was
expected to become finance minister when the cabinet is unveiled on Tuesday,
senior party officials said.
He
wrote on Monday that Greeks had "put an end to a self-reinforcing crisis
that produces indignity in Greece and feeds Europe's darkest forces".
Reaction
from financial markets to Syriza's victory was largely muted, with the euro
recovering from a tumble to an 11-year low against the dollar on initial
results. Greek stocks fell 3 percent, led lower by bank stocks including
Piraeus Bank which fell 17.6 percent. Greek 10-year bond yields rose but stayed
below the levels seen in the run-up to the vote. [ID:nL6N0V52TT]
For
the first time in more than 40 years, neither the New Democracy party nor the
centre-left PASOK, the two forces that had dominated Greek politics since the
fall of a military junta in 1974, will be in power, beaten by a party that has
until recently always been at the fringe.
Together
with last week's decision by the ECB to pump billions of euros into the euro
zone's flagging economy, Syriza's victory marks a turning point in the long
euro zone crisis.
It
signals a move away from the budget rigour championed by Germany as the
accepted approach to dealing with troubled economies, though it is unclear what
concessions Syriza will be able to wring from creditors. [ID:nL6N0V51MV]
Both
IMF head Christine Lagarde, who said the Fund would continue supporting Greece,
and the chairman of the eurogroup of euro zone finance ministers, Jeroen
Dijsselbloem, said they wanted to work with the new government.
Irish
Finance Minister Michael Noonan said there could be some room for a deal to
adjust debt maturities and cut interest rates rather than writing the debt off.
But
Tsipras can expect strong resistance to his demands from Germany in particular
and a series of European policymakers urged Syriza not to renege on previous
governments' commitments.
"There
is no room for unilateral action in Europe," ECB Executive Board member
Benoit Coeure told Europe 1 radio, saying it was important to play by the
"European rules of the game".
Tsipras
has drawn the ire of lenders with his pledge to end budget cuts and heavy tax
rises that have helped send the jobless rate over 25 percent and pushed
millions into poverty.
But
with Greece unable to tap the markets because of sky-high borrowing costs and
facing about 10 billion euros of debt payments this summer, he may find himself
with limited room to fight creditors. The new prime minister will also need a
deal to unlock more than 7 billion euros of outstanding aid to make debt
payments in the summer.
Standard
and Poor's sent an early warning shot to Greece's new government, saying it
could downgrade its credit rating even before its next planned review in
mid-March if things go badly.
(Additional
reporting by Angeliki Koutantou, Lefteris Papadimas and George Georgiopoulos,
Tim Ahmann in Washington, Padraic Halpin in Dublin; Writing by James Mackenzie
and Deepa Babington; editing by Anna Willard, Sophie Walker and Pravin Char)
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