Tsipras forges anti-austerity coalition in challenge to EU

Greek Prime Minister-elect Alexis Tsipras forged an anti-austerity alliance within hours of his election victory, challenging European peers with a declaration that the era of bowing to international demands for budget cuts is over.

Tsipras’s Syriza party and the Independent Greeks announced their coalition in Athens Monday morning after Syriza won an historic victory in elections by harnessing a public backlash against years of belt-tightening, job losses and hardship. In his victory speech, Tsipras said his priority is “for Greece and its people to regain their lost dignity.”

The Independent Greeks party will support Syriza in a vote of confidence in Parliament slated for Feb. 5, party leader Panos Kammenos told reporters after meeting with Tsipras. The Syriza leader will meet with President Karolos Papoulias at 3:30 p.m. in Athens to receive the mandate to form a government.

“As of this moment there’s a government in Greece,” said Kammenos, a former cabinet minister who defected from outgoing Prime Minister Antonis Samaras’s New Democracy to form Independent Greeks. “The prime minister will meet with the president today for his swearing in ceremony, and will announce the government’s composition, in which we will take part.”

Anti-Austerity Mandate

The election result hands Tsipras a mandate to confront Greece’s program of austerity imposed in return for pledges of 240 billion euros ($270 billion) in aid since May 2010. The challenge for him now is to come good on his election pledges, including a writedown of Greek debt, while persuading creditors from the European Central Bank, the International Monetary Fund and the European Commission to keep aid flowing.

The tenor of Syriza’s coalition partner, Independent Greeks, suggests compromise may be hard to achieve. Kammenos said as recently as last week that Greek debt should be audited and its “odious” part written down, whether creditors like it or not. Europe, he said, is being governed by “German neo- Nazis.”

“What we will come to Frankfurt and Berlin and Brussels with is a plan to minimise the cost of that Greek debacle to the average German,” Yanis Varoufakis, an economist and Syriza lawmaker who is tipped as a potential Greek finance minister, said in an interview on BBC Radio 4. “We must be very careful not to toy with fast or loose talk of Grexit,” he said, referring to the prospect of Greece’s exit from the euro area. “Grexit is not on the cards.”

The euro climbed for the first time in three days against the dollar after initially dropping on the Greek election result, as markets came to terms with the reality of a Syriza government. The single currency gained 0.4 percent to $1.1246 as of 12:02 p.m. in Athens.

Greek three-year bond yields rose 117 basis points to 11.25 percent, while 10-year yields rose 39 basis points to 8.8 percent. The impact was confined to Greece, as yields on equivalent government debt from Portugal, Spain, Italy and Ireland declined.