What SYRIZA says about Greece’s economy, its debt and the euro

Led by Alexis Tsipras, Syriza is Greece’s biggest opposition party and has pledged to annul the country’s bailout agreement should it take power.

An acronym for Coalition of the Radical Left, Syriza vows to renegotiate repayment terms on loans from euro member states and on Greek bonds held by the European Central Bank.

Tsipras, 40, as well as all other opposition leaders in Greece, have said they will block the appointment of a new president this month, forcing the governing coalition led by Prime Minister Antonis Samaras to call early elections.

Syriza won last May’s ballots for the European Parliament and has been ahead in every opinion poll since then. Its lead has recently narrowed to between 2.8 and 4.9 percentage points

Here’s an overview of Syriza’s policies:

Greek Public Debt

Syriza says Greece’s 322 billion euros ($397 billion) of public debt is not sustainable and the target set by the troika of creditors — the European Commission, the International Monetary Fund and the ECB — is unattainable. The party also says austerity suppresses growth and exacerbates debt sustainability.

Syriza’s head of economic policy, John Milios, 62, said that if the party assumes office, it will fully repay and service debt owed to private investors. Milios also said Syriza expects to have good relations with bond investors and the negotiation on repayment terms of debt owed to euro members won’t put Greece on a collision course with its partners.

“It will not be a war,” Milios said in a Dec. 8 interview, adding that talks could drag on.

Fiscal Policy

Tsipras has said Syriza will follow prudent fiscal policy, without running a budget deficit. Syriza’s commitments will be achieved in “conditions of budgetary balance,” Tsipras said in a Dec. 2 speech in Athens.

If Syriza forms a government, it will immediately unveil a “non-negotiable” social spending program, Milios said. The program for the “medium term” will cost about 11.6 billion euros and come from funds within the country, such as improving tax collection and won’t require additional borrowing.

Tsipras said the program will ease Greece’s “humanitarian crisis.” It includes subsidized electricity and food stamps for 300,000 Greek households living below the poverty line, free health care for unemployed Greeks, subsidized transport and a Christmas bonus on pensions below 700 euros a month.

Syriza plans to achieve the targets without extra borrowing because after a writedown on debt, Greece will not need to sustain such a high primary budget surplus. Also, increased social spending and a new private-debt restructuring financed by the bailout loans originally earmarked for banks will boost consumer demand and economic growth, it says.

The Finance Ministry has said Syriza’s pledges will cost 17.2 billion euros, triggering an immediate budget crisis, with the deficit soaring to 9 percent of GDP.

Europe

Syriza says it is fully committed in keeping Greece in the euro. The party rejects austerity measures Tsipras says are imposed by Germany and wants the ECB to buy sovereign bonds. He also wants a euro-region accord on public debt, similar to the London Debt Agreement of 1953, in which it was agreed to write off 50 percent of some of Germany’s external borrowing.

“While generosity was extended to Germany, Germany refuses to extend the same generosity,” Tsipras said in a speech earlier this month.

European Union officials say that Greece can’t stay in the euro without fulfilling its bailout commitments. The pledges for economic overhauls are attached to the bailout lifeline. “Belonging to the euro zone is also a matter of obligations,” EU Commissioner for Economic Affairs Pierre Moscovici said on Dec. 15. “Contemplating the possibility not to reimburse a huge debt is suicidal.”

Investment

“We want to attract investors to Greece who will kick- start an investment shock and restart the economy,” Tsipras said in a May interview, pledging to maintain stable tax for companies. “There are two conditions for attracting those investors: to feel safe about the euro area and the prospects of the Greek economy and to see serious public investment.”

Syriza has so far opposed all privatization in Greece, either on grounds of poor pricing or citing national interest. The party has said the government will maintain its stake in banks at the core of the financial system, which have been bailed out with public funds. Syriza has said it will also create a state-run investment bank.

“We will welcome all investments, private and public, as long as tenders and bids are transparent, and environmental, planning and labor legislation is being upheld and respected,” economic policy chief Milios said in an interview.

[Bloomberg]