Tspiras' Test Hope and Fear in Athens

The new Greek prime minister has a chance to implement overdue reforms and reboot Greece's economy. But he needs to treat his E.U. creditors as partners, not oppressors, writes our Brussels correspondent.
Don't be scared of Mr. Tsipras.

Why is everyone afraid of Alexis Tsipras? The new Greek prime minister hardly behaved any differently in the election than his predecessor, Antonis Samaras, did during his campaign.

Mr. Tsipras, like Mr. Samaras, seduced the people with the most unbelievable, untenable promises. And both constantly assigned blame to the so-called troika (International Monetary Fund, European Central Bank and European Commission). For both men, nearly any means of getting power was acceptable.

Greek elections are won through pure populism. What happens after the elections is another story.

In this respect, Mr. Tsipras' victory seems like a déjà vu. And yet something completely new happened in Greece with his victory – the country will be ruled for the first time in a very long time by a man who has nothing to do with the old elite.

Mr. Tsipras climbed up a very tall tree of unattainable demands during the election campaign. Now he must somehow get back down again.

The few super-rich families who sucked the country dry for decades may finally receive their bill. For years, the clans and friends of former prime ministers Georgios Papandreou, Konstantinos Karamanlis and Constantine Mitsotakis made sure they would not have to make any sacrifices for the restructuring of the country.

That could now change. The left-wing Mr. Tsipras has already announced that the country’s wealthy will be asked to pay up.

The new prime minister now has a great opportunity to distribute the costs of the crisis between all social classes more evenly. But that can only be achieved if the structural reforms that were systematically delayed by the previous governments finally get going.

The Greek government can only cash in the property taxes, which are due as a matter of course in other countries, if it has a land register tied to a responsible office at its command. Up to now, both were lacking. Greece will be able to collect income taxes from well-to-do citizens only if the offices of finance function correctly. That also has not worked up to now.

Setting up a land registry office and an efficient tax administration are exactly the structural reforms that Greece’s international lenders have been pushing for years. Mr. Tsipras must also take a strong interest in these, if he is really serious about his left-wing convictions.

There may well be more commonality between the new Greek government and the troika than one would have expected. Same goes for the relationship between Greece and the European Union commission. Jean-Claude Juncker, the head of the commission, took office with the pledge to make the euro’s rescue policy more social. The new Greek government can definitely consider that a friendly overture.

But it is not without its limits, of course. Mr. Tsipras climbed up a very tall tree of unattainable demands during the election campaign. Now he must somehow get back down again. The whole euro zone is still questioning how he will manage that. Jeroen Dijsselbloem, president of the group of E.U. finance ministers, is travelling to Athens on Friday to find out.

Greece already enjoys large advantages in debt service – the country pays on average only 2.4 percent in interest.

Perhaps Mr. Tsipras will decide for the usual procedure of new governments. He takes stock of the cash pile, "discovers” a big, new budget gap and thus can justify how some costly campaign promises unfortunately cannot be fulfilled after all.

In any case, Mr. Tsipras will have to bury his request for a debt cut. Political conditions in donor countries such as Germany, Holland and Finland will not allow a gift worth billions to be given to Greece. The governments are under too much pressure from the euro-sceptic Alternative for Germany and the anti-Islam movement Pegida in Germany, the French right-wing Front National and other nationalist parties on the right wing.

Furthermore, Greece already enjoys large advantages in debt service – the country pays on average only 2.4 percent in interest to the International Monetary Fund and the euro zone. For most euro countries, refinancing in the capital market is much more costly: Spain and Italy pay on average 3.7 percent, Slovenia and Lithuania 4.8 percent. These countries cannot and do not want to take on Greece’s debts. Mr. Tsipras has to grasp that.

The new Greek prime minister now has to decide his fate. If he wants to keep the euro, he will have to commit to the austerity measures – no matter the election campaign.

He doesn’t have much time. The euro zone aid program for Greece will end in five weeks. And without financial support from European partners, Greece will not be able to stay in the currency union.


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