France’s Francois Hollande congratulated Greek Prime Minister-elect Alexis Tsipras on his election victory while urging a new government to stay the reform course, as a top German official threatened a cut-off in aid.
Hollande stressed Greco-French “friendship,” even as he called on Tsipras’s new administration to adhere to “growth and stability” in the euro area, according to a government statement in Paris late Sunday. While Chancellor Angela Merkel’s government didn’t comment on Tsipras, one of her top lieutenants said Germany could scrap financial assistance if a new anti- austerity Syriza government veers off course.
“The Greeks have the right to vote for whom they want,” Hans-Peter Friedrich, a deputy caucus leader for Merkel’s faction in parliament, told Bild newspaper. “We have the right to no longer finance Greek debt.”
The tremors spreading across Europe with Tsipras’s toppling of the Greek political establishment prompted muted official euro-area responses as governments brace for a potential clash between a Syriza-led coalition and European leaders.
The euro rose 0.2 percent to $1.1227 as of 1:07 p.m. in Frankfurt today after dipping to a fresh 11-year low after Syriza’s win. European stocks climbed for an eighth day, with the Stoxx Europe 600 Index advancing 0.1 percent to 370.74.
Amid German warnings, officials close to Merkel predicted that Tsipras, constrained by Greece’s financial needs and pressure from the euro area, will have no choice but to stand broadly by the reform program already negotiated.
“Tsipras has promised a lot, but he will have to deliver if Greece wants aid disbursements to continue,” Michael Grosse- Broemer, the chief whip of Merkel’s caucus in the lower house, or Bundestag, told broadcaster N-TV.
Germany respects Greece’s vote and will work with whatever new government is formed, Merkel’s chief spokesman, Steffen Seibert, said in Berlin. He reiterated that Greece must adhere to its previously negotiated commitments.
Parties on the European left, which have blamed German-led budget-cutting during the debt crisis for high unemployment and social erosion, celebrated the Syriza victory as the beginning of the end to austerity.
“The results of the elections in Greece show these policies are not inevitable,” Pablo Iglesias, the leader of Spain’s insurgent Podemos party, told broadcaster La Sexta late Sunday. “We think the year of change in Spain is 2015 as well as in Greece and we will go out to win the general elections.”
Podemos has eclipsed Prime Minister Mariano Rajoy’s party in polls as Spain begins campaigning ahead of a general election due around the end of the year.
Syriza’s victory will trigger a “red spring in Europe,” Katja Kipping, the co-leader of Germany’s anti-capitalist Left Party, told Bild newspaper.
“The result is a clear rejection of the savings diktat that’s been a social catastrophe and economically irresponsible,” Kipping said.
Tsipras has set up a confrontation with European leaders with his pledges to write down Greece’s debt and denouncement of Greece’s austerity program, imposed in return for pledges of 240 billion euros ($269 billion) in aid since May 2010. He drew support in Greece by harnessing the public backlash to five years of belt-tightening and social hardship.
Greece must pay its debt and a unilateral default would be a breach of European rules, European Central Bank Executive Board member Benoit Coeure told Europe1 radio today. He said Europe must show it can adapt to the radical change demanded by Greece’s electorate, according to the radio station.
With outstanding debt of 176 percent of gross domestic product, Greece won’t be able to avoid a debt restructuring, Thomas Piketty, the French economist and best-selling author, told France’s Inter Radio on Monday. Other countries that have reached that level have been forced to restructure, he said.
“Europe needs to seize the opportunity provided by Greece to make a wider change in its policies,” Piketty said.
European leaders including Merkel have stanched renewed speculation about a Greek exit from the 19-member euro area this month. Still, an official outside the single currency said that would be the price unless Tsipras retreats from his pre-election commitments.
“If the new prime minister doesn’t go back on his campaign pledges, Greece will be catapulted out of the euro area,” Janusz Lewandowski, chief economic adviser to Polish Premier Ewa Kopacz and a former EU budget commissioner, said in an interview on Polish Television’s First Channel. “I’m a moderate optimist, because I think the new government is aware that they can’t dictate terms to their sponsors.”