Prime Minister Tsipras faces a cold dawn of Monday realityIn a rapid (and smart) move that demonstrates both energy and planning, Alexis Tsipras is this morning 95% of the way into a Coalition with ANEL – better known in the West as the Independent Greeks. This is an anti-euro Party of right-wing Greek nationalists.
In going for this option, Tsipras shows that – unlike most on the Left – he can unite against a common enemy. I also suspect that his advisers see this as one dimension in an overall strategy designed to calm down bank depositors and bond markets. But shrewd or not, the new Prime Minister is going to face several waves of attack from those hostile to his election – both inside and outside Greece.
The first thing to set off screaming headlines will be the effect on the euro. Overnight, the single currency plunged down to 1.12 against the Dollar – before the weekend it was around 1.15. We should expect to see a further weakening during the day.
A second and highly likely immediate threat is a spike in Greek bond yields – pushing Greece’s borrowing costs through the roof. This will add urgency to the blatant destabilising strategy of the ECB’s Mario Draghi, who for spurious reasons announced last Thursday that Greece would be locked out of the QE programme.
A third issue is the bank withdrawals that preceded Syriza’s stunning victory yesterday. Here too, threats have been forthcoming from both Brussels and Frankfurt to cut off ELA (emergency liquidity assistance) to four big banks in Greece.
Last but not least is the worryingly high poll achieved by the Greek Nazi Party, Golden Dawn – which now becomes the third largest Party in the country with 17 seats. They will, I have no doubt, use that bloc to disrupt as much Parliamentary business as possible…and plot with the hard Right to take over should things look to be spiralling out of control.
A weak euro is technically good for Greek exports, but Syriza will of course be blamed for “beating the euro to death on its sickbed” and the pro-Euro professional classes will weigh in heavily on that angle. So then, apart from Europe-wide opprobrium, soaring borrowing costs, the chance of a Putsch and imminent bank collapses, there’s nothing at all for the new Prime Minister to worry about.
But there is also another side to this. My own hunch is that the Greek voter really did three things in the election: first, vote for a radical change of strategy; two, kick Samaras out with the biggest boot available; and three, decide to give the new generation a chance. I looked up Tsipras’s date of birth last night, and he is of course the leader of that generation who never knew life under the Colonels’ Junta. He is also surrounded by people with zero respect for tradition: Varoufakis has already promised to “completely demolish the Greek oligarchy” as a matter of priority. Corruption in high places has been a Greek given forever; rooting it out would get approval from all but the fatties who support Samaras.
Secondly, the Greeks ignored all the EC/ECB/IMF/Juncker/Schäuble veiled threats and scaremongering. That bullying will now, without any doubt, be stepped up. I predict it will backfire, and further unite the country. Because in the light of the previous paragraph, it will play very badly against the prevailing atmosphere of ‘give them a chance’ and Troika-hatred.
I have made my view clear about Draghi: he has already decided for his own reasons to Grexit Athens from the equation: he’ll be delighted to get the euro down to Dollar parity, and supremely confident in his ability to mess up any plans Syriza have. I expressed the view strongly early last year that Tspiras should never have dropped his opposition to the euro, but it now looks to have been a wise idea: without doing that, he would never have been elected with such power – and with it he can (quite justifiably) evade blame for its collapse…he can play the Good European.
It’s too early to call this kind of stuff. But it’s good to know where the touchlines are. All we need to do now is find the ball.
As for the poppycock streaming nonstop from Brussels-am-Berlin about the ‘zero effect’ Syriza’s success and Grexit is having or might have on the euro – indeed, the EU itself – it is beneath contempt. It will spike ALL Clubmed bond prices, keep liquidity away from Europe, confirm the europhobia in Italy, and encourage the growing Left support in Spain…where they have the added problem of Sovereign fragmentation.
In other areas too, the knock-on effect will have geopolitical consequences. Moscow will I’m sure see this development (and what must inevitably follow) as likely to move Greece more into its orbit: and you can be sure that Viktor Orban in Hungary (and Polish voters) will welcome further opposition to the juggernaut. Orban is one of the few, I think, who has not only grasped that the Brussels Bus is actually being driven by Washington, but is also prepared to talk about it openly.
In the UK, it can only spur on the UKip camp. But Nigel Farage blotted his copybook very badly last night by referring to the Syriza win as “a cry for help”. What a profoundly pompous and patronising twerp he is.