What now for Greece after anti-bailout SYRIZA wins vote?

After five years of relentless belt- tightening, Greeks have said enough. It’s now up to the country’s euro-area peers to decide how to respond to the electoral landslide of the anti-austerity Syriza party.

The best-case scenario, according to Stathis Kalyvas, a professor of political science at Yale University, is that leader Alexis Tsipras “gets a few carrots,” signs off on a new bailout agreement under a new name, “and gets his party to approve it.” In this case, to which Kalyvas attaches a low probability, Tsipras will “reinvent himself as a social democrat, reform the Greek state, and dominate Greek politics the next 10-15 years.”

With 99.9 percent of the vote counted, Syriza, an acronym for Coalition of the Radical Left, took 36.3 percent, two seats short of an absolute majority. Tsipras will still get the mandate to form a government today, after securing the support of anti-bailout Independent Greeks party. Led by Panos Kammenos, Independent Greeks have vowed to negotiate a writedown on the country’s “odious debt.”

Stavros Theodorakis, the head of To Potami, or River, a centrist party founded last year, said yesterday he won’t support any coalition that includes anti-European forces. Kammenos told party supporters last week that Europe is governed today by “Neo-Nazi Germans.”

Muddling Along

The most likely scenario is that Tsipras will “put together a coalition that muddles along, perhaps taking advantage of the improved economic outlook,” Kalyvas said in an e-mail before the elections.

If Tsipras attempts to strike a compromise, his party may split, meaning that he’ll need support from other lawmakers to keep his job, according to Kalyvas.

In his victory speech delivered late Sunday in Athens, Tsipras said that Greece is turning the page, leaving behind austerity and the era of the so-called troika of the European Central Bank, the International Monetary Fund and the European Commission.

His remarks set the stage for difficult talks between the new Greek government and its creditors, said David Schnautz, a strategist at Commerzbank AG in New York. Also, Syriza’s alliance with right-wing Independent Greeks “may possibly flame rhetoric towards the country’s creditors and the bailout program,” Thanassis Drogossis, head of equities at Athens-based Pantelakis Securities wrote in a note to clients today.

Not Love-Fest

The new Greek leader may find out the hard way that “EU negotiations is not the love-fest he expected,” Kalyvas said. Even if Tsipras tries to strike a face-saving deal, it is not certain his party would follow.

In the worst-case scenario, Tsipras will “opt for no compromise amid calls to national pride,” said Kalyvas. The Yale professor called this outcome the “Kirchner” scenario, after Argentina’s president, Cristina Kirchner. In that case, Tsipras “manages to harness economic disaster following Grexit and ushers in a radical populist regime.”

A variant of this scenario, the Yale professor said is that Tsipras goes for compromise but fails to take his party with him and collapses in the middle of economic disaster. “Grexit is averted, a period of instability ensues with a subsequent political realignment.”