Editorial Board

Greece's Vote to Keep the Euro

Happy for now.

Photographer: LOUISA GOULIAMAKI/AFP/Getty Images

The Syriza party's victory in Greek elections is a well-deserved rebuke to the way the European Union and successive governments in Athens have mishandled the country's debt crisis, and the voters' judgment must now be respected. But even as the neo-Marxist party moves to change Greece's dismal economic outlook, it will have to keep in mind that it does not have a mandate to leave the euro.

Three quarters of Greeks still say they want to remain in the currency union. And Syriza's dynamic 40-year-old leader, Alexis Tsipras, has promised voters they will. The trouble is, Syriza's other campaign promises -- to reverse austerity, unwind creditor-mandated reforms and thoroughly restructure Greek debt -- are collectively incompatible with keeping the euro.

Greece's Fiscal Odyssey

Worse, many of Syriza's policies are throwbacks to the tried-and-failed statist strategies of the 1970s. Pledges to rehire the thousands of workers who have been cut from the nation's bloated public sector, for example, won't save the Greek economy; they will condemn it to stagnation. They'll only add to the pain inflicted by the "fiscal waterboarding" (Tsipras's term) imposed by international creditors in return for Greece's 240 billion euro bailout.

Thus, Greece's new leader will need to renege on some of these promises and accept the ire of his party's radical left.

As much as Tsipras, Europe's leaders have to clearly understand the meaning of Sunday's vote in Greece. Germany, Finland and the EU institutions that have lent Greece money must now negotiate with Tsipras in good faith -- as they refused to do with more co-operative governments that preceded his -- to soften the destructive economic policies they have imposed. Although this will encourage Syriza-like protest parties in Spain and elsewhere, such is the cost of ignoring the political dangers of Greek austerity for so long.

The bargain to be struck here will involve both sides taking steps they have resisted: The EU must agree to further meaningful debt relief and reduce budget-surplus targets enough to spur growth in the Greek economy. In return, the Syriza government must embark on more, not fewer, of the reforms that are needed to reignite the economy -- and abandon dreams of sparking a leftist revolution across Europe.

Greece and the euro area have reached a point of potential catastrophe. Now both sides must recognize that neither can win a contest of wills if the euro area is to remain whole.

To contact the senior editor responsible for Bloomberg View’s editorials: David Shipley at davidshipley@bloomberg.net.