What Is Happening in Greece?
Prime Minister Alexis Tsipras called for new elections. In a nationally televised address on Thursday, Mr. Tsipras said that he would submit his resignation to Greece’s president, a move he hoped would clear the way for his radical left Syriza party to win a new mandate.
Officials said he would seek to schedule the vote for Sept. 20, but it might be later as politicians from other parties jockey for influence. The country’s main conservative opposition said it would try to avert elections by forming a government, as is their right, under the Greek Constitution.
Why Did Tsipras Do This?
It is a bid to consolidate his power and press ahead with the bailout plan he agreed to this summer with European creditors.
Mr. Tsipras has been weighing new elections for weeks amid a deep split within his Syriza party over his embrace of the bailout plan that was approved just last week by the Greek Parliament.
The contentious vote on the bailout after an all-night parliamentary debate exposed a growing schism within Syriza, which splintered on Friday.
Twenty-five Syriza lawmakers announced the formation of a party, Popular Unity, declaring in a letter to Parliament that they intended to “remain true to our pre-election promises.” It was a reference to the anti-austerity movement that brought Mr. Tsipras and Syriza to power in January — a cause that his critics say he abandoned in negotiating the bailout.
That bailout package, worth 86 billion euros, or about $95 billion, puts in place strict spending limits, new tax increases and changes in the way Greece manages its economy in exchange for money to pay the country’s crippling debts.
What Does This Mean for the Bailout?
In calling for the vote after Greece received some €13 billion, or about $14 billion, of new funds from the bailout package, Mr. Tsipras is hoping that voters will endorse his approach — and effectively ratify the bailout.
The money arrived just in time to repay €3.2 billion owed on government bonds held by the European Central Bank. Much of the bailout money will go to repaying debts, not to rebuilding the country’s economy. However, avoiding default could help restore consumer and investor confidence, which could, eventually, improve the economy.
How Did Greece Get to This Point?
Mr. Tsipras was elected in January as an anti-austerity renegade, vowing to challenge Greece’s creditors and win a better deal to pay back and, perhaps, forgive some of the country’s crippling debt.
After several tumultuous months that included heated negotiations with the country’s creditors — the European Central Bank, the International Monetary Fund and the other members of the eurozone — the prime minister reversed course and agreed to the bailout plan.
The deal infuriated Syriza’s far-left factions and was approved by Parliament only with the help of opposition parties. Many of the breakaway Syriza lawmakers oppose the bailout plan because it proposes raising the retirement age and opening parts of the Greek economy to greater competition.
Will Tsipras Be Able to Stay in Power?
That is the gamble he is making. Despite his reversal on the bailout plan, Mr. Tsipras has remained popular, with the most recent opinion polls from late July showing no other leader in a strong position to challenge him.
Mr. Tsipras said Thursday that he would resign as prime minister — a constitutional requirement for new elections. But he will not resign as head of his party, now smaller without his former Syriza allies.
Syriza was left on Friday with 124 lawmakers in the 300-seat Parliament, but local news reports speculated that four more legislators were preparing to abandon the party.
Popular Unity will be led by a former energy minister, Panagiotis Lafazanis, the leader of Syriza’s radical Left Platform faction, with which about 40 of Syriza’s lawmakers were loosely aligned.
Mr. Tsipras is counting on his connection to ordinary Greeks, and hoping that his personal popularity can help his party win enough votes to maintain power without the support of the radical parties.
If he does not, he might have to form a new coalition with other centrist parties in Parliament, some of whom he has depicted as part of Greece’s corrupted establishment.
The euro came off its lows on Monday as the Swiss National Bank said it intervened in the market to weaken the franc, with the single currency little changed on the day after initial steep losses on concerns that Greece was on the brink of default.
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