This year began with a call for sweeping change in Greece when the Syriza party reached new heights and its leader, Alexis Tsipras, became Prime Minister. With economic instability having plagued the country for the better part of a decade, the election results in January represented yet another shift in the national approach toward escaping debt and taking steps toward financial independence and prosperity.
In negotiating with Greece’s citizens and creditors alike, Tsipras negotiated numerous austerity packages this past summer, essentially scrambling in an attempt to balance citizens’ desire for independence with the national need for additional bailout deals. Most recently, Tsipras secured a third bailout package for his country in August, accompanying further austerity and financial reform measures. Ultimately, the various deals Tsipras made with Greece’s creditors helped to alleviate some immediate financial concerns. It also landed the country squarely beneath the burden of the types of restrictions and reforms the public hoped to avoid when it elected the prime minister in the first place.
In a fascinating decision to follow his latest deal, Tsipras resigned in August, likely in an attempt to ride ongoing voter support to a victory in quick snap elections before the downside of the austerity deals is felt. In short, with some immediate pressure having been lifted off the Greek population, Tsipras hoped to gain quick reelection with a new financial plan—a sort of reset or second chance on his time as prime minister.
In September, Tsipras was indeed elected as prime minister in snap elections, and he promptly introduced a new plan aimed at a more patient, long-term approach to Greece’s financial woes. Specifically, he will now seek to put Greece on track to end its crisis by 2019. In the immediate future, Tsipras’s plan appears to be focused on quick implementation of the latest financial bailout as a means of convincing creditors that the country is taking appropriate internal measures for improving financial stability. If early reviews by creditors go well, Tsipras hopes that some of the debt management agreements can be softened to allow for longer repayment periods and perhaps even lowered interest rates.
In some regards, all of this can be viewed as cause for optimism regarding the Greek economic condition. On the surface, Tsipras’s plan to reset his mandate and aim for austerity and debt relief by way of improved short-term economic performance makes sense. Experts at the International Monetary Fund (IMF) have predicted that Greece is unlikely to recover without a reduced debt burden. Taking that into consideration, Tsipras may essentially be guiding Greece down the only path it has left. However, it’s also important for those monitoring the crisis to recognize that there’s a strong, almost disconcerting element of hope in Tsipras’s plan. As of now, there’s no guarantee that even a strong initial review of the latest bailout deal will lead to reduced debt burden. And for now, the country remains on dangerously uncertain financial footing.
Paul Bryant…writer, student of politics, interested observer of financial crises everywhere.