While less Greeks were eager to go to the polls for the third time (a turnout of only 56%), they made a clear decision: continuing with Tsipras. His opponents were defeated.
The continuity means no immediate impact for the euro, but the fresh mandate could spell more trouble along the road.
The PM that vowed to fight austerity but capitulated to stay in the euro, enjoyed a very decisive win with over 35% of the votes. He is returned as PM with the same coalition, with ANEL, the Independent Greeks.
The main opposition party, New Democracy, received only 28% of the vote. It was not so close as the polls had showed. In addition, the rebels from his own party which created the Popular Unity party, didn’t even enter parliament.
SYRIZA, and Tsipras in particular, have a stronger mandate now. But if Tsipras walks the same walk as previous governments with accepting the so-called “bailout” programs which only deteriorate the Greek economy, what differences can he offer?
There are two differences:
- Fighting for debt relief: Perhaps the only achievement of the first SYRIZA government, which lasted 7 months, was to put the topic of debt relief fully on the agenda. The IMF sees it as a pre-condition for its participation in the third bailout. It also visions Greece’s debt to GDP ratio ballooning to 200%. The ECB already said it isn’t controversial that some kind of arrangement is needed, but Germany still opposes. According to the deal, the debt issue will surface after the first review, around November. This is the first crucial test to see if Tsipras is serious and different.
- Corruption: Groups with vested interests in the Greek economy haven’t really been hurt in the austerity years. The previous political elite was too close to the oligarchy and the troika didn’t really care about corruption. SYRIZA already promised to battle corruption, but nothing happened. With a fresh mandate, Tsipras has his chance to prove he’s different.
The next Greek crisis is around the corner, around November.
And what does it mean for EUR/USD? Well, we have already seen how bad news can be good news for the euro and the other way around.
This could be true once again: if a deal on debt relief is reached, it could involve the ECB printing money, and this means a weaker euro. On the other hand, another crisis in Greece could trigger safe haven flows into the euro, boosting its value.
What do you think?
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