So what's next for Greece after the Syriza win? This relatively new radical left anti-austerity party managed to get a considerable lead over its closest rival in yesterday’s elections. Its leader, Alexis Tsipras, can claim that the vote gives him the democratic mandate to pursue the policies he promised a population that has been ravaged by years of IMF and European imposed austerity.
But whether he will be successful in implementing them as he wishes is a different issue. He wants to raise wages again, re-hire sacked civil servants, re-nationalise privatised utilities and restore fiscal support to its population.
But the money to do so doesn’t exist. In addition he has pledged to partly write off the €320bn debt – €240bn of it through bail-outs arranged since the crisis hit – and to re-negotiate the structure of whatever remains.
Syriza believe they hold all the cards because the Europeans will not want to take the risk of triggering a default and bringing forward a so-called Grexit (ie. Greece leaving the euro) which would threaten contagion across other heavily-indebted countries such as italy, Ireland, Portugal and also Italy and Spain. This, they believe, would threaten the whole Eurozone project.
But Syriza's leaders will soon discover that they need to compromise. The best they will get early on is discussions on lengthening maturities and reductions in interest payments which will go some way to easing the burden of the debt. There are a lot of indications already that the mood about this has softened and something can be done even though it would raise the possibility of other countries also asking for it such such as the heavily indebted Portugal, Ireland, Spain and Italy. Tsipras will also need an agreement to exit the bail-out conditions on reasonable terms so that the banking system can continue to be supported and also that Greece can be allowed to be included at some point into the huge €1.1 trillion quantitative easing injection that the European Central Bank announced last week. For the moment Greece's bonds – which are below investment grade – are ineligible and in any case the ECB's holdings of Greek debt are reported to be at the maximum level that the ECB can hold.
Will there be a solution?Maybe. If Tsipras teams up with a party that is also keen on compromise, that will help. But while the negotiations carry on Europe and the world will be holding their collective breath.