May 22 (Bloomberg) -- Shortly before Francois Hollande was elected president of France, he went to London to reassure the financial community that he wasn’t “dangerous.” Alexis Tsipras, the breakout phenomenon of Greece’s recent parliamentary elections, is on a similar European tour this week -- and he really is dangerous.
Tsipras and his Syriza party are selling the Greek people a falsehood: namely, that Greece can renounce the terms of its bailout agreements with the euro-area governments and still receive their money. If voters believe him, and he attracts enough votes in elections on June 17 to follow through with his threats, then his country, Europe and the global economy will live for years with the consequences.
Until a few weeks ago, Tsipras was a marginal career radical. He joined the Communist youth party in high school, is a fan of Venezuelan President Hugo Chavez and now heads Syriza, a quixotic coalition of small leftist parties. When he was made president of one of them, Synaspismos, the party announcement described their “comrade” as someone who “attended all the international protests and marches against neoliberal globalization.”
Now 37 years old, Tsipras says he wants Greece to stay in the euro area. Yet, if he tears up the bailout agreements and Greece defaults on its remaining debts, how will that be possible? When challenged, he says Greece’s creditors are bluffing when they threaten to pull the plug. They know, according to Tsipras, that a Greek exit from the euro could pull down the economy of the entire continent, so they won’t risk it.
Maybe -- but stop to think about that. If Tsipras believes what he’s saying, then he’s willing to gamble with the future of Greece and that of an entire continent in order to play poker with German Chancellor Angela Merkel. Other Greek politicians say they’ll seek to renegotiate the austerity package, and Europe may now listen. But Tsipras says he’ll tear up the agreement, forcing a showdown.
What if he doesn’t believe what he’s saying and he knows Greece would probably be cut loose? In that case, he is placing his own country at risk of a chaotic meltdown in order to gain power. In the first case he is being reckless, in the second, cynical.
Bloomberg View has criticized the piecemeal, austerity-alone strategy that the euro area, led by Germany, has taken to the sovereign debt crisis. We’ve welcomed the shift in debate to focus on more measures to boost growth since Hollande’s election, even if we don’t agree with his proposals for France. Tsipras says he wants to lead a pro-growth change of course for all of Europe. That would be fine, except that what’s being discussed in Europe has nothing to do with what he’s selling to Greek voters.
Greece’s stock market plummeted last week, when Tsipras said he planned to nationalize the country’s banks and to tear up the austerity program in its entirety. That included, specifically, refusing to cut 150,000 public servants. This isn’t a dispute between politicians or countries, he told the Guardian newspaper: “It’s a war between peoples and capitalism, and Greece is on the frontline of that war.”
In Greece, at least, capitalism was not the cause of the crisis; the culprit was a vastly oversized and incompetent bureaucracy, built over decades by essentially corrupt governments. Worse, much of the austerity that’s now causing genuine pain and disorientation among ordinary Greeks is also a result of the failure of previous Greek governments to follow through on the terms of the first bailout package they were given. That has bunched the fiscal tightening forward.
Tsipras hardly has a mandate -- he won 16.8 percent of the vote on May 6, and may increase that to 20 percent or more in June. But polls suggest Syriza is now fighting for first place with the center-right New Democracy party. In Greece, that matters, because the top party gets an extra 50 seats in the 300-seat parliament.
Europe’s politicians, across the political spectrum, need to make clear the distinction between Syriza and other parties that disagree with Europe’s austerity strategy. They need to say, repeatedly, that they want to help Greece, but they cannot, and it cannot remain in the euro, if its leaders simply abandon the commitments the country signed.
Greeks need to know that when they vote on June 17. And they need to know that what Syriza and its young leader are telling them is a lie.
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