The Greeks gone Left

The Greek general election earlier this month saw a change in the government of Prime Minster Antonis Samaras and the left wing Syriza gaining 149 seats out of the 300 in the parliament. The win of Alezis Tsipras led Syriza s deemed by many as a changing point in European politics. It seems to answer the question why the left has failed to reemerge despite the growing economic tensions in the EU. The question at hand is what will be the outlook of the new anti-Austerity Greece be.

Election result

The Syriza needs two more seats in the parliament to form an absolute majority but it has formed coalition with Right wing Independent Greeks. The coalition might seem unlikely as the two parties have entirely different ideologies but it is very clear that both partners agree on what matters most in the Greek agenda: Anti- Austerity measures.

What is Austerity?

For those of us who might find the term unfamiliar it refers to the government policies to reduce the budget deficit at times of financial crisis.

A state of reduced spending and increased frugality in the financial sector. Austerity measures generally refer to the measures taken by governments to reduce expenditures in an attempt to shrink their growing budget deficits.

The Grexit?

Will the Greeks leave the Euro? Will the EU let it leave? The International World is waiting with all eyes on the Greece-EU discussions.

The Euro crisis began in Greece 5 years back and the economist finds it fitting that it is where the denouement is played out. All parties involved including Prime Minister Tsipras have declared that they won’t leave the Euro, but the Grexit seems to be at hand.

Right now the main question is will others follow the Greeks? The Spanish, the Portuguese, the Italians are also looking for their way out of austerity. If they too follow the Grexit the Euro might be no more.

2 out of 3 for Greece

The Economist shows that the current government got 2 out of 3 big things right. But the one big thing they got wrong might be there undoing.

1.      Europe’s Austerity has been excessive:

The Germans have led the EU for the last few years and Chancellor Merkel has been the main figure behind EU’s actions. However it is now becoming clear that the Austerity in Europe is excessive. The policies are now troubling the EU. The economies are failing and deflation has ushered in throughout the euro zone

2.      Debt Unpayable:

The Greek owe 60% of its debt to the Euro Zone and finds a debt of 175% of the national GDP over the past six years despite tax raises and spending cuts. One cannot be optimistic in this outlook and thus to be realistic the debt is unpayable.

3.      Abandon reforms at home

The Syriza got this wrong or so the economist believes. The plans to rehire 12000 public sector employees, abandon privatization and raising the minimum wage might just not work for the Greeks

Is the Grexit on the table?

On realistic grounds it seems to be on the table. Mrs. Merkel has declared that there will be no debt cuts and yet still urges the Greeks not to leave the Euro. Mr. Tspiras has shown his confidence in the ability to reach an agreement with the creditors over repayment.

However the new finance minister Varoufakis has refused to work with the “Troika” of global institutes which comprise of the European Commission, The World Bank and the IMF. 

On a positive note the EU Economic and Financial Affairs Commissioner has said to the BBC that "We believe that the place of Greece is in the Euro Zone, the Euro nedds Greece and that Greece needs and wants to be in the Euro Zone."

Greek economy in numbers

       Average wage is €600 (£450: $690) a month

      Unemployment is at 25%, with youth unemployment almost 50%
        Economy has shrunk by 25% since the start of the eurozone crisis

        Country's debt is 175% of GDP

        Borrowed €240bn (£188bn) from the EU, the ECB and the IMF

                                                                                          (BBC)

Why make the sudden noise?

Of course the Greek debt crisis and the Euro financial crisis has been on the table for the last half a decade but the collapse of the right wing Greek government and the rise of the far-left populists Sysriza seems to have threatened the Euro Zone’s higher powers.

This is the reason why Greece started to make headlines yet again. One can feel as if the outcome of the Greek policies that may threaten the existing powers’ advancement is the only concern of them. The bailout in 2012 also came with much debate only as the Germans did not want the blame on itself. But right now it might be clear that the concern is not on the struggling Greeks but their own personal national economies.