It's now clear that Syriza, the anti-austerity party that wants to tear up Greece's bailout deal with international creditors, will win the election in Greece on Jan. 25. The latest polls show Syriza, led by the fiery Alexis Tsipras, running as many as 10 points ahead of incumbent Prime Minister Antonis Samaras's New Democracy party.
After that, the picture gets murky.
Polls suggest Syriza will get no more than 32.5 percent of the vote, short of the roughly 38 percent it needs for a parliamentary majority. (Don't ask how 38 percent makes a majority: Greek election math is complicated.) That means Tsipras would need to line up another party to form a coalition government. The Greek constitution requires him to do that no later than Jan. 29 or face fresh elections.
What party will he choose? What tradeoffs could that require? And will Tsipras really defy the so-called troika of international creditors or even lead a "Grexit" from the euro currency? Here's what to watch for in the days after the election:
Tsipras's choice of partner will signal his next move.
Even though 22 parties are taking part in the election, Tsipras's choices will be limited, because only a handful of parties will achieve the minimum 3 percent popular vote needed for a seat in parliament. (Among those expected to fail: a new party started by former Prime Minister George Papandreou.) Some other parties, such as the former ruling Pasok party that's blamed by many Greeks for their country's economic woes, are probably too unpalatable for Syriza to stomach.
The top contender for a coalition partner may be To Potami (the River), a center-left party headed by former journalist Stavros Theodorakis. Allying with To Potami could signal that Tsipras wants to avoid a showdown with the troika lenders; Theodorakis strongly opposes such a confrontation and says he wouldn't partner with Syriza unless Tsipras promised to keep Greece in the euro currency.
The anti-austerity Independent Greek party is another potential partner. But its right-wing, anti-immigration policies don't mesh with Syriza's, beyond a shared distate for austerity. If Tsipras goes with the Independent Greeks, it's a sign that he's ready to go to the mat during talks with the troika.
Greece's creditors will tighten the screws.
In fact, they've already started to: The European Central Bank on Jan. 22 locked Greece out of its quantitative-easing program for at least six months, essentially demanding that Athens strike a deal with the troika before the bank will buy Greek debt. Tsipras has promised to scrap austerity measures required under Greece's existing bailout agreement, which expires on Feb. 28. At a press conference today in Athens, he said he wouldn't be "held hostage" by lenders. But the troika looks to have the upper hand in negotiating a new agreement, because Greece's finances are so fragile, with bank deposits fleeing the country and reserves so low that the government could run out of money by June.
Tsipras says he doesn't want Greece to leave the euro currency zone, and he's betting that other European governments will bend over backwards to make sure that doesn't happen. But Germany is casting doubt on the wisdom of that wager by signaling that it considers a Grexit to be manageable, if undesirable. The bottom line: "Syriza's belief that the troika will grant the new government significant leeway is likely to backfire," says analyst Wolfango Piccoli of Teneo Intelligence in London.
Syriza's success (or failure) will foreshadow the future of anti-austerity movements elsewhere in Europe.
The Greek vote is being closely watched in Spain, where the anti-austerity Podemos party is now running ahead of Prime Minister Mariano Rajoy's party before a general election later this year. Podemos leader Pablo Iglesias even joined Tsipras at a rally in Athens this week. The government in Madrid has been scrambling to reassure markets that the situation in Greece won't spread to their country. Spain and Greece are "totally different," Spanish Economy Minister Luis de Guindos told Bloomberg Television today in Davos.
The bailed-out economies of Ireland and Portugal also have growing anti-austerity movements. "If a new Greek government wins concessions, then Ireland and Portugal would be first in the queue looking for similar treatment, and other countries would be looking for leeway in meeting EU targets," columnist Cliff Taylor wrote in the Irish Times earlier this month. But leaders of those movements will have a hard time making their case to voters if Tsipras, Europe's No. 1 anti-austerity poster boy, steps back from confrontation.
