25 Jan 2015

Exit polls put Syriza on course for victory

The exit polls put the far-left party Syriza on track to win the Greek election with a majority in parliament. Syriza is on 35.5 to 39.5 per cent, the ruling New Democracy on 23 to 27 per cent.

Though there’s a night of vote counting ahead it is clear the deep austerity imposed by the IMF/ECB bailout in 2012 have collapsed support for the old socialist party, Pasok, and shrunk voting for the ruling New Democracy party back to its historic base.

It looks like the neo-Nazi party Golden Dawn are tied with a new Blairite centre party each getting 6.4 to 8 per cent.

If the predictions hold this is an earthquake: for Greece, for the Eurozone and for centrist politics in every advanced democracy.

End to austerity

I’ve interviewed Syriza leader Alexis Tsipras twice during the crisis – and though the party’s politics have moderated, and he’s surrounded himself with solid left social-democrat economists and advisers, he remains wedded to the core principles around which he built Syriza into a viable party of government: an end to austerity, the unpayability of Greek debt, and a war on the corrupt oligarchy which he says has run this country since World War Two.

Opposition leader and head of radical leftist Syriza party,  Tsipras addresses supporters during a campaign in central Athens

Tsipras told me, early in the campaign, that if he won it would not just signal the end of an era that began with the fall of the military junta; it would signal the end of political arrangements going back to the Civil War in the late 1940s.

I understand Syriza’s finance minister will be Yanis Varoufakis, an economics professor at Athens university, who is well connected and respected in the Anglo-Saxon finance industry. Varoufakis is understood to be reaching out tonight not just to potential allies in theĀ  German and French socialist parties, but also to the British Conservatives.

The trio who make economic policy include George Stathakis, who is likely to take over the development ministry, and Euclid Tsakalotos, who is tipped to form a new ministry combining energy, business and industrial development. That will be shaped around Syriza’s micro-economic policies, which favour a mixed economy involving state intervention, shaping the investment climate to boost domestic growth, and fostering a co-operartive sector.

The short version is: the finance minister is a tough, left Keynesian with good links to the Fed and Wall Street; the man in charge of reshaping the economy at grass roots more of a radical, unorthodox New Leftist.

Youth vote

Twenty two per cent of Greek voters are over the age of 70 – but this swing, if confirmed, has happened geographically and among the youth.

Thessaly and the countryside around the second city of Thessaloniki, has seen Syriza make inroads. And many educated, young, entrepreneurial people – who would not be natural supporters of Syriza – have switched to the party in disgust at the way the bailout entrenched the old centrist politicians, many of whose political practises are unashamedly patriarchal.

For Europe this means decision time. Germany, its politicians addicted to rules-based economics, have seen that approach destroy the political centre in Greece. It may work on the spreadsheets of the Bundesbank; it has not worked in a country like this. It has have destroyed the prospects of a generation, caused a collapse in incomes, and shrunk the economy by 25 per cent.

Austerity economics, never massively challenged in the mainstream media, has been judged at the ballot box here in Greece.

Europe’s choices

So Europe will have three choices: whether to give Greece long term debt relief is not the most urgent. Tomorrow, if Tsipras wins a majority, he will unilaterally cancel the austerity programmes demanded by the Troika. He will balance the books – which may give him time to negotiate a longer debt relief programme – but the ECB will be faced with the option of pulling emergency aid to Greece’s banks.

Absent 40bn and rising to keep the banks afloat, they will close: Greece would need another bailout, or be forced out of the Eurozone.

Two scenarios are often propagated: that Tsipras will “sell out” – obeying the Eurozone’s diktat in order to stay in power. I doubt that. Another is that Syriza will split, with a left emerging to try to take the country out of the Eurozone. This is more possible, but not likely in the short term.

And the fate of Greece is no local issue. The way the European authorities handle this country – whose people fought alongside Britian in the war, and suffered massive death and privations at the hands of the German troops they resisted – will be watched carefully across modern Europe.

The ECB and the IMF could, if they wanted, crush a Syriza government in days. That would play badly everywhere there is distrust of Germany and the Euro project. But the existential question is: “in order to do what”?

You could reimpose austerity, with a new coalition of the right and centre here, if Syriza does a crash and burn.

But if austerity does not work, you would still be left with what Greece has become: a fragmenting, angry and impoverished society, whose urban suburbs already contain penury and dysfunction on comparable to that in the developing world.

Tsipras’ aim is to tip the balance now in Europe, in favour of more stimulus on top of the trillion Euro quantitative easing announced last week; looser fiscal rules, massive state investment, and – as he said today – an end to austerity.

Greece, in short, is about to demonstrate there is an alternative to the economics most governments have pursued since 2008. Whether that alternative works will rely on the skill of people who have never seen the inside of a ministry, have few friends in the global elite, and have encouraged the expectations of their voters to fever pitch.

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