Greece’s anti-austerity Syriza party moved fast to form a coalition government on Monday after its stunning election win put the country on a collision course with its international creditors.
Syriza and its 40-year-old leader Alexis Tsipras took 149 seats in the 300-seat parliament in Sunday’s election, heralding a new mood of defiant anti-austerity in Europe.
The Israeli Foreign Ministry “praised the elections in Greece and looks forward to a continuing special relationship between Greece and Israel, which has only grown in the past few years.”
But renewed fears that Greece could be forced out of the eurozone if it defaults on its debt repayments saw the euro briefly hit an 11-year low against the dollar while Greek stocks also sank.
Tsipras will be sworn in as prime minister at 1400 GMT — the youngest in Greece in 150 years — after he moved swiftly to forge a coalition with small nationalist Independent Greeks (ANEL) party.
ANEL leader Panos Kammenos said after meeting Tsipras that his party was prepared to join Syriza in government.
“From this moment on there is a government, we will give a vote of confidence to the new prime minister,” Kammenos told reporters.
A Syriza source said the two parties “will ally themselves to secure a majority in parliament and form a government”.
Thousands of jubilant party supporters had poured into the streets after polls closed on Sunday, waving Syriza’s red and white flags, as Tsipras vowed that “Greece is leaving behind disastrous austerity.”
His first priority as leader will be to rework the terms of Greece’s massive 240-billion-euro ($269 billion) EU-IMF bailout.
In exchange for the emergency funds, Greece was forced to embark on a series of painful austerity measures — slashing public sector spending, cutting wages and pensions and introducing a far-reaching program of privatization.
‘A just solution’
Tsipras promised his supporters Sunday that he would work with Greece’s partners to find “a just, mutually beneficial and viable solution” to the bailout terms.
European finance ministers will have the first chance to discuss the Syriza victory when they meet in Brussels on Monday.
But Chancellor Angela Merkel of European paymaster Germany swiftly made her views clear.
“In our view it is important for the new government to take action to foster Greece’s continued economic recovery,” spokesman Steffen Seibert told reporters. “That also means Greece sticking to its previous commitments.”
And analysts warned that the eurozone was set for fresh turbulence.
“A period of uncertainty and heightened market nervousness now seems likely,” said Jonathan Loynes of Capital Economics.
An EU source conceded Sunday that an improved deal on the bailout would have to be struck with the new force in Greek politics, telling AFP: “We will not escape a renegotiation.”
Europe’s top selling newspaper, Germany’s Bild, called Syriza’s platform “dangerous” for trying to reverse the economic reforms championed by Germany.
“Sorry, Mr Tsipras, but that goes too far!” Bild said.
“A treaty is a treaty,” it declared, saying that “Europe had upheld its end” of the deal since 2010 by providing “more than 200 billion euros” ($225 billion) to Greece.
Swedish Finance Minister Magdalena Andersson admitted the Greek debt was “a nearly unimaginable amount,” but downplayed fears of financial instability with Syriza in power.
“Europe is much more stable economically now compared to a few years ago. If we had been discussing this two or three years ago, one would maybe have felt greater worry than today,” she told Swedish Radio.
‘Syriza incompatible with rigor’
But Britain’s finance minister George Osborne said Syriza had made pledges to voters that were “incompatible” with eurozone policies.
“Ultimately if you take at face value all the things that the new Greek government has promised — including big increases in public expenditure — you know, I think that is going to be very difficult to deliver, and incompatible with what the eurozone currently demands of its members,” Osborne told the BBC.
Sunday’s poll was Greece’s fourth in five years, including back-to-back votes in 2012.
During that time the economy has shrunk by a quarter and unemployment has soared beyond 25 percent.
Outgoing conservative prime minister Antonis Samaras had pleaded with voters not to turn away from the painful public sector spending cuts he had supported, saying they were helping Greece emerge from recession.
But in a somber statement conceding defeat, he said: “I hand over a country that is part of the EU and the euro. For the good of this country, I hope the next government will maintain what has been achieved.”
Syriza’s victory could inspire other radical parties opposed to austerity in Europe, such as Spain’s Podemos.
Podemos leader Pablo Iglesias told a rally of his supporters in Spain on Sunday: “Hope is coming, fear is fleeing. Syriza, Podemos, we will win.”
British Prime Minister David Cameron tweeted that it would “increase economic uncertainty across Europe”.
However other European countries struck a warmer tone, saying they were prepared to work with a Syriza government.
French President Francois Hollande congratulated Tsipras on his party’s victory and “expressed his desire… to continue the close cooperation between our two countries,” the presidency said.
Italy’s EU affairs minister Sandro Gozi said: “After this vote we will have new opportunities to pursue change in Europe to create growth and investment and fight against unemployment.”
The neo-Nazi Golden Dawn party performed strongly in the election despite a criminal investigation that has seen many of its top leadership awaiting trial on charges including murder. It will have around 17 seats in the new parliament.