Triumphant Tsipras returns to fight for Greek economy

Tsipras has announced that his 'first crucial battle' will be be securing debt relief.

Voters gave Tsipras and his Syriza party a second chance to tackle Greece’s problems. Picture: AFP.

ATHENS - Alexis Tsipras said on Monday he would revive Greece's banks and its crippled economy, while demanding debt relief from creditors in his "first big battle" following an unexpectedly clear election victory that returned him to office as prime minister.

Preparing to be sworn in for a second term, he set those priorities at the top of a dauntingly long "to do" list that also includes implementing austerity polices and dealing with waves of migrants landing on Greek shores.

In Sunday's election, voters gave Tsipras and his Syriza party a second chance to tackle Greece's problems, and with it the benefit of the doubt over a dramatic summer U-turn, when he ditched his anti-austerity platform to secure a new bailout and avert 'Grexit'- a Greek exit form the euro zone.

His immediate objective would be the full restoration of stability in the economy and Greek banks, a Syriza official quoted Tsipras as telling party officials on Monday. The banks were shut for three weeks and the wider economy set back sharply in July before Tsipras caved in to accept austerity terms and an €86 billion( £62,31 billion) bailout.

The official said Tsipras had also announced that his "first crucial battle" would be securing debt relief.

Tsipras has promised to implement the tax increases, spending cuts and market reforms mandated by creditors under the bailout programme, which restrains much of his ability to set policy. But his party says there is still enough flexibility to cushion the impact on the most vulnerable Greeks.

Its election manifesto refers to "grey areas" in which details can still be adjusted, such as labour reforms - important in a still heavily unionised country - pension cuts, and plans to tackle the non-performing loans that have crippled banks.

Creditors say that if Greece seeks to adjust the terms by easing austerity in one area it must tighten somewhere else.


Syriza's stronger-than-expected win secured it 145 of 300 parliamentary seats, meaning the party requires only one small coalition partner to form a government in Greece's notoriously fractious legislature.

It will govern with the same junior party it teamed up with in January, the once stridently anti-bailout right-wing Independent Greeks (ANEL), which won 10 seats. Its leader Panos Kammenos said Tsipras would announce his cabinet by Wednesday.

That alliance gives Tsipras more authority to steer the implementation of the bailout than he might have enjoyed with a broader coalition. He says his victory gives him a mandate for a full four-year-term, extraordinary in a country that has gone through five general elections in six years.

"This is a major personal triumph for Tsipras," said political commentator Aristides Hatzis. "His political hegemony is (now) unprecedented."

But some analysts said creditors would have preferred Tsipras were restrained by a broader coalition, and that his stronger position would keep the threat alive of a future quarrel with the creditors - and even Grexit.

"Tsipras managed to convince a large part of the electorate that he was a tougher negotiator than previous governments," said Mujtaba Rahman, of political risk consultancy Eurasia Group.

"The return of a second Syriza-ANEL government will concern Greece's creditors ...(and we) maintain a 30 percent risk of Grexit over the next two years."

The big victory makes it easier for Tsipras to reinstate trusted members of the cabinet that served during the often turbulent seven-month coalition he formed after his first election win in January.

Euclid Tsakalotos, who brokered the bailout accord in August after succeeding anti-austerity hard-liner Yanis Varoufakis as finance minister, was "most likely" to be reappointed to the same post, a Syriza source said on Monday.


With the low election turnout meaning only one in five eligible voters actually chose Syriza, Tsipras also wants to build a broader consensus in a society fractured by years of austerity and one of the worst depressions in an industrialised country in modern times.

In a financial market that looked to have factored in a Syriza win, Greek shares lost ground on Monday and government bond yields edged higher, mirroring a generally cautious reaction elsewhere to Tsipras's return.

Tsipras - along with most Greek political leaders and many international economists - argues that the country cannot recover from years of crisis without easing its huge debt burden.

JP Morgan analyst Malcolm Barr said some form of restructuring of Greece's euro zone debt should be in place by the end of March.

Some European governments, particularly Germany, are opposed to writing off part of Greece's debt but less averse to stretching out its repayment schedule.

Euro zone officials told Reuters last week that governments are ready to cap Greece's annual debt-servicing costs at 15 percent of its economic output over the long term. That would mean nominal payments would be lower if the Greek economy struggles.

With the first review of the €86 billion bailout programme due next month, Tsipras must work fast to recapitalise the banks while trying to stave off recession.

He must also deal with Europe's refugee crisis, in which Greece plays a central role as the main arrival point for tens of thousands of migrants who arrive by sea and trek over land across the Balkan peninsula for richer countries further north.

His first international summit is on Wednesday in Brussels to discuss the crisis. In a reminder of the stakes, 13 migrants died in Turkish waters on Sunday when a boat carrying 46 people en route to Greece collided with a cargo vessel and capsized, a Turkish coast guard source said.

Tsipras plans to form a national council for European policy, including representatives of other parties which would advise the finance minister, a Syriza source said.

Ralph Brinkhaus, a senior parliamentary ally of German Chancellor Angela Merkel, urged Tsipras to stick to the reform agenda.