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Greece's Syriza is gambling on achieving debt deal

Monday, January 19, 2015

Subject

Opposition Syriza's economic policy programme.

Significance

Two weeks before the elections on January 25, in a televised interview on January 12, Syriza leader Alexis Tsipras said that, upon coming to power, the leftist party would seek the restructuring of the majority of Greece's public debt, currently held primarily by EU lenders. In another interview, Yannis Dragasakis, the Syriza second-in-command and head of the party's electoral programme committee, announced that, if Syriza won, it would submit to Greece's creditors a new medium-term economic programme in lieu of the current loan agreement.

Impacts

  • A likely Syriza victory would not destabilise the euro-area economy, because since 2012, financial firewalls have been built around Greece.
  • However, it might in the short run negatively affect EU economic indicators, in a year in which growth is already projected to be meagre.
  • EU policymakers could relax austerity policy, in order to forestall election wins for Syriza-like parties or right-wing populists elsewhere.
  • A left-wing government would test policy-making within EU institutions as other governments range from right or centre-right to centre-left.
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