The result of the Greek election sent shockwaves across Europe. In the first few weeks since the government took office, Prime Minister Alexis Tsipras and his Minister for Finance, Yanis Varoufakis, embarked on a short tour of European capitals to drum up support for their agenda.

They face a domestic situation which can only be described as dire: 26 per cent of the population are unemployed and most cannot rely on social benefits; wages have been reduced by 38 per cent and pensions are down by 45 per cent. Thirty-two per cent of the population lives beneath the poverty line.

Eurozone countries and the IMF have lent Greece a total of €240 billion as part of an extensive bailout package offered by a tripartite committee which includes the European Commission, the European Central Bank and the International Monetary Fund

The troika – as this committee is known – financed the Greek bailout on the condition that a number of cuts are introduced. These cuts affected public spending, wages and pensions. They included much resented public sector layoffs and tax increases.

The Syriza Party’s political manifesto seeks to address some of these issues. Some might argue that this programme is laudable in its social vision; however, its economic foresight remains poor and ill-judged.

The entire manifesto hinges on the premise that Greece may renegotiate its debt and make major revisions to the terms of repayment of its international bailout. The programme is also in breach of some of the austerity measures imposed by the troika.

Tspiras has promised to introduce subsidised rents and restore free health care. In addition, he has promised a new job creation scheme aimed at reducing unemployment levels.

There are other dangerous elements to this manifesto. Tsipras is promising to revise the bank debts of people who are likely to default. Moreover, he promised to increase taxes on wealth and introduce levies on luxury goods. The tourist industry is also likely to suffer as the government plans to increase taxation of all-inclusive resorts.

These measures are likely to unsettle the domestic market and stifle any potential for growth and investment.

Concurrently, the incoming government plans to cut defence expenditure and possibly withdraw from Nato. It has also distanced itself from the EU’s stand on Russia. Such measures are likely to further alienate Greece’s international partners and have a ripple effect on other Eurozone partners.

Investors have not reacted positively to these proposals. The international credit rating agency Standard & Poor’s has downgraded Greece’s credit rating to ‘B with a negative outlook’.

Should he fail he might lead Greece into an ever increasing financial and economic black hole

This is largely due to the increasing constraints placed on the Greek banking system now that the government has a shorter timeframe to develop a financing programme with official creditors. The European Central Bank has since refused to accept Greek debt as collateral.

Analysts are concerned that Greece has very little time and limited options. Funds from the bailout will cease to arrive at the end of February and some have voiced concern that Greece could run out of funds by the end of March if no further help is forthcoming.

The bailout – necessary after years of irresponsible and reckless public spending, a burdensome public sector and inadequate checks by the EU – was given subject to a number of commitments.

Greek officials would like to put an end to such restrictions. Eurozone officials are, rightly, not as accommodating.

The eurozone is now haunted by the spectre of further decline. Syriza’s victory saw the euro plummet to its lowest point since 2003. Tsipras insisted that he would not like Greece to leave the eurozone; however, this would be inevitable if he remains intransigent in his demands. Some fear that, if Greece defaults, other struggling eurozone states would follow suit thereby putting the single currency in jeopardy.

However, Tsipras’ intransigence may come to haunt him. Syriza is a coalition of Maoists, Trotskyites, Socialists and Communists. On the other hand its coalition partner, the Independent Greek, is a eurosceptic, right-wing party. Their only common ground is their belligerent and uncompromising attitude towards the EU. Whether this coalition will survive depends on the ability of both sides to reach a compromise.

Tspiras must also be willing to reach a compromise with international partners. Should he fail, he might lead Greece into an ever increasing financial and economic black hole.

Politically, Tsipras’ victory will undoubtedly energise similar groups throughout Europe. Spain will go to the polls in 2015. The left-wing populist Podemos party led by Pablo Iglesias Turrión is campaigning on a similar anti-austerity platform. During a mass rally in Athens attended by both Tsipras and Iglesias Turrión, the two leaders, declared defiantly: “The bailout is over, blackmail is over, subservience is over.”

The British electorate, due to go to the polls by May 2015, will also have to make decisions regarding relations with Europe. UKIP, known for its right-wing euroscepticism, is likely to increase its share of the vote nationally.

The Conservative Party has also promised a referendum over Britain’s EU membership – the second referendum on the matter since Britain joined the EEC in 1973. Britain’s relationship with the EU hangs in the balance.

The future of the EU lies, perhaps, in the one area which it has long been reluctant to discuss – genuine reform which takes into account citizen concerns.

andre.deb@gmail.com

André DeBattista holds a Masters of Arts in international relations.

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