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Brussels Shaken as New Greek Leader Challenges Europe’s Austerity Drive

Brussels Shaken as New Greek Leader Challenges Europe’s Austerity Drive
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Greece’s youngest ever prime minister, 40-year-old Alexis Tsipras, was sworn in Monday after his victorious far-left Syriza party entered a coalition with far right rivals. Tsipras says he will restore dignity to Greece by ending spending cuts.

From the outset Tsipras appears determined to shake up Greek politics. Arriving at his swearing-in ceremony wearing an open collar with no tie, he refused the traditional blessing from Orthodox priests.

As he entered the prime minister’s office for the first time, supporters applauded and embraced their new leader.

His popularity is based on a promise of ending austerity. He has pledged to re-negotiate the terms of the $268 billion EU and IMF bailout, and he may stand a chance, says Dionyssis Dimitrakopoulos, political analyst at Birkbeck College, University of London.

“Institutions of the EU and other member states realize that the program that been implemented in Greece is not producing the desired results to the extent that they wanted," he said. "So something has to change. In my book this is common ground for negotiation.”

Far-left Syriza fell just short of an outright majority and entered a coalition with the far-right Independent Greeks Party. They are unlikely partners, says Dimitrakopoulos.

“The glue that is opposition to austerity can be powerful, but I am not sure it is going to be powerful enough," he said. "Because Greece is faced with a lot of problems that require broad consensus domestically.”

EU Commission President Jean-Claude Juncker gave a diplomatic response when questioned on the Greek demands for re-negotiation.

"The European Union has its rules, which were established through a common agreement with Greek authorities," he said. "We are going to see what the demands of the new Greek government will be.

Germany is seen as the driving force behind austerity. Government officials have stated that it may be better for Greece to leave the euro currency - but that is posturing to the German public, says Christian Odendahl, chief economist at the Center for European Reform in London.

“Angela Merkel herself is a very careful politician," he said. "So before considering a eurozone exit she would need to be sure that it does not have negative implications for the rest of the eurozone. And I can not imagine that she is sure of that, so I do not see German politicians pushing actively for a eurozone exit of Greece.”

The costs of a Greek exit may be too high for both Athens and Brussels, agrees Dionyssis Dimitrakopoulos.

“It is in nobody’s interests, and that concerns not only Greece but also Germany, France and so on, for Greece to withdraw from the eurozone," he said. "Because the next question will be, ‘who will be the next country to withdraw?’”

That question has echoed across European capitals.

Spain also received a bailout, and faces elections this year. Leader of the anti-austerity Podemos Party, Pablo Iglesias, hailed the Greek result. He said that Syriza's victory in Greece has proven the failure of austerity policies.

As Syriza supporters celebrate, Brussels and the IMF now face tough negotiations with Athens. Give too much ground and analysts say other indebted European countries will be next in line. But forcing Greece to stick to the bailout terms could drive Athens to leave the euro currency, potentially delivering the first cut to one of the key threads that binds the European Union.