Greece hands eurozone a fresh serving of uncertainty

Greece awoke this morning to a new era, after voters handed a historic victory to the far-left Syriza party, but it's far from clear what the vote will mean for the eurozone.

New government will press EU to reopen terms of Greek bailout

Greece's new government sworn in

The Exchange with Amanda Lang

6 years ago
Desmond Lachman, a resident fellow at the American Enterprise Institute, examines Greece's economic dilemma 9:19

Greece awoke this morning to a new era, after voters handed a historic victory to the far-left Syriza party. 

What's clear — the new leadership has vowed to end years of crushing austerity measures.

What isn't is what that means for the future of the eurozone.

— Amanda Lang

Earlier today, Alexis Tsipras was sworn in as the country's new prime minister.  His party won 149 of the 300 seats, leaving it two seats shy of a majority.

He formed a coalition with the right-wing Independent Greeks party, which brings 13 seats to the power-sharing agreement.

Ideologically, the two parties don't agree on much.

One thing they do share is a mutual disdain for Greece's international bailout deal, and the tough austerity measures that come with it.

Over the last five years, international lenders have loaned Greece 240 billion euros ($336 billion Cdn).

In return, it agreed to impose deep cuts to public spending, jobs, wages and pensions, while also hiking taxes.

Now, the Syriza party wants to renegotiate those terms, saying the policies have created a "vicious circle."

Greece's share of debt to GDP has jumped from 127 per cent in 2009 to 176 per cent last year.  Economic output is 25 per cent lower.

Unemployment is above 25 per cent. More than half of young people don't have a job. And average income is down at least 30 per cent.

Today Europe indicated it may give Greece more time to pay its debts, but would not consider debt forgiveness.

Financial markets largely shook off Sunday's vote.

Moving forward, though, investors will watch those bailout negotiations closely and nervously, as some fear they could force a Greek exit from the eurozone.


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