Why the Greek election could decide Britain's next government

A Syriza win could put the eurozone back into crisis – and push the economy back to the top of the UK agenda

17 January 2015

9:00 AM

17 January 2015

9:00 AM

Before the eurozone crisis, Greek elections didn’t receive much attention in Westminster. At the moment, however, the polls from Athens are being studied by every politico from the Prime Minister down.

How Greece votes on the 25 January could determine the result of our election. If anti-austerity Syriza triumphs, the eurozone crisis will move from a chronic phase into another acute one. For the second election in a row, the backdrop to a British poll and possible coalition negotiation would be talk of debt defaults and bank runs, as Athens struggles with the eurozone straitjacket.

Syriza does not want Greece to leave the euro. But it does want the ‘fiscal waterboarding’ to stop, as its leader Alexis Tsipras puts it. Tsipras wants a restructuring of Greece’s debts and an end to the most aggressive cuts. But the powers that be in Europe are determined not to grant him this. Berlin, Frankfurt and Brussels are all adamant that there will be no changes to the terms of the Greek bailout deal. The irresistible force is about to meet the immovable object.

As so often with Greece and the euro, this isn’t about a small economy on Europe’s south-eastern edge. Rather, the European establishment is worried that if Syriza succeeds in winning concessions it will prompt voters in other peripheral countries to vote for radical leftist parties in the belief that will lead to a loosening of fiscal discipline. Already, polls in Spain show Podemos – a party founded less than 12 months ago – in the lead, ahead of a general election this year. There are also concerns that vindication for Syriza could make French voters more inclined to back the anti-single currency Front National in the 2017 elections. A victory for the Marine Le Pen, a horribly real prospect, is described by one senior diplomatic source as the ‘ultimate nightmare for German policy’.

The hope of European governments is that the EU’s unbending line will make the Greek electorate conclude that backing Syriza is simply too much of a risk because it brings with it the danger of expulsion from the euro. David Cameron seems to think that this fear strategy will work. When he was asked about the situation in Greece at a meeting with the executive of the Tories’ 1922 Committee on Monday, he replied with a detailed analysis of the polls. He pointed out that Syriza’s advantage is small and has narrowed since the start of the campaign. Cameron is right that Syriza’s lead isn’t huge. But it is consistent. There were ten polls published in the Greek press last weekend and all had Syriza ahead, with the smallest lead being 2.7 per cent.

Under the Greek electoral system, the party that wins the most votes is given an additional 50 seats alongside its proportional share. If Syriza can hold on to its lead it should be able to form some kind of coalition government. However, some suspect that – as in 2012 – no viable government will be on offer in Athens and the country will have to vote again later in the year.

But if Tsipras does end up as Prime Minister, a game of chicken will commence between him and other EU leaders. Having based his entire campaign on the promise that he can improve Greece’s bailout conditions, he can hardly change course. But the Germans, the Finns, the Dutch and the other structural hawks won’t accept any backsliding on reform.

The Germans are more prepared to let Greece go than they have been at any previous point in the euro crisis. They believe, in a way that they simply did not in 2011, that a Greek exit from the single currency is containable. There is confidence, possibly misplaced, that the rest of the eurozone’s banking system would be able to cope with ‘Grexit’. There are also domestic political reasons for Angela Merkel’s CDU and its sister party, the CSU, taking a tougher line. They are concerned about the rise of the anti-euro Alternative für Deutschland, which is hitting seven per cent in the opinion polls. Any concessions to Athens would put rocket boosters under AFD.

There will be no quick resolution to this issue. It is unclear how any state could be kicked out of the single currency. There is no legal mechanism for doing it. But if the problems of the eurozone do become acute once more, that would have a profound effect on UK politics. The backdrop to the general election campaign would be economic uncertainty on the Continent. There would again be talk of sovereign debt defaults, bank runs and the like. The result would be to push the economy up the political agenda and to give more credence to warnings about the dangers of the government borrowing even more money. Both of these things would be to the Tories’ benefit. As one backbencher says, ‘On the economy, what helps us is either very good news or very bad news.’

Some Tories are not so sanguine about the prospect of the eurozone’s problems returning to the front page. They fret that it would boost Ukip by making Europe an election issue; that Nigel Farage would use this moment to bolster his argument that Britain’s membership of a declining trading bloc held it back. Nevertheless, it seems reasonable to calculate that the overall effect of a return of the eurozone crisis would be to help the Tories. In these circumstances, Cameron and Osborne’s achievement in stabilising the British economy would look more impressive by comparison. Voters might also conclude, to borrow a phrase that Gordon Brown came up with to see off David Miliband, that this is no time for a novice.

Far more important than the effect that a Syriza win would have on our politics is what it might do to the eurozone. It is very hard to see how Greece can ever prosper inside the single currency as it is currently constructed; monetary policy alone won’t turn Greeks into Germans. If a Syriza victory brought this crisis to a head and led to Athens being forced out, or Berlin accepting that the eurozone has to become a full fiscal union to succeed, it would be a good thing.

The one thing that is certain is that the last thing that Greece needs is more of the same; four years nailed to a euro cross is long enough for any country. It is time for the Greeks to roll the dice.

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Show comments
  • Diggery Whiggery

    “”Voters might also conclude, to borrow a phrase that Gordon Brown came up with to see off David Miliband, that this is no time for a novice”

    Hmmm, because we all know that Gordon Brown’s vast experience of screwing up our economy and denying economic reality saved this country from ruin.

  • Arden Forester

    Democracy can be a bugger. Give people free choice and they vote accordingly, don’t they. If Marine LePen gets in she does so because Hollande et al have put up a hopeless case and are ineffectual as leaders. Germany’s nightmares are caused by Mrs Merkel not taking the right medication.

    • Ed  

      I once saw an interview with some tinpot dictator from Wheretheheckistan, who was being quizzed about an election he was in the middle of rigging. His answer spoke volumes:

      “But what if the people make the wrong choice?”

      I’ve slowly come to realize that the people in government aren’t that smart; they certainly aren’t smart enough to tell you or me what to do.

      • WTF

        I love it and that happened in Ireland and somewhere else when the EU made them do re-runs of a referendum until they made the “right” choice.

        • Ivan Ewan

          I believe it was Ireland and France.

  • Zanderz

    Greece is a basket case, has been for a long time.

    However, the way the EU are cynically killing the country is disgusting. Greece will never escape it’s debts, it just can’t pay them off.

    It has to be left to stand by itself outside the EU, given a chance to start again and get it’s dignity back. Otherwise it’ll remain a country always under the thumb of German displeasure.

    • WTF

      Its akin to the way many banksters treat their customers, they help get them into heavy debt through credit cards and loans, and once you can only afford to pay back the interest but none of the capital, they own you for life. Thats happened to Greece and the only way out is to default, go bankrupt and start afresh just as an individual would do.

      • Ed  

        You’re half right. The bankers will over-lend to you, given half a chance. There can (and should) be laws about this; Canada’s mortgage limits are excellent. The problem is two-sided, however.

        You also have to be smart enough to not borrow money you can’t afford.

        • WTF

          I learned my lesson over 30 years ago and since then those shysters haven’t got a penny in interest on my credit cards and a fast reducing amount on the mortgage I had as I over paid each month. They hate me !

        • Ahobz

          As a banker you have to be smart enough not to lend to those who cannot repay. Greece’s lenders forgot this and are now trying to escape the consequences.

          • Ed  

            Very true, although in the US the Community Reinvestment Act requires that 20% of a bank’s mortgages be made to borrowers who don’t qualify, to encourage home ownership by the poor. This is the problem at the root of the 2008 crisis. It’s truly nasty.

            I guess Greek bankers figured they’d be bailed out by Berlin. They’re not far wrong in that, yet.

          • global city

            at the heart of this is the ugly truth is that the only way for the Euro crisis to be resolved is for the banking systems of France and Germany to collapse.

          • bobmattfran

            Wrong they wer emade an offer they couldn’t refuse, you know it, Goldman Sachs knew it and the uS Tresury knew it. All part of the US plan for destroying the Eurozone which represents a threat to sharp US business practices.

          • You are aware that Greece already got a big debt cut, are you? And that the state on average pays 2.4% debts now, with money that still comes from the Troika since the government just last years finally managed to get to small primary budget surplus?

            There eventually will have to be another debt cut in the future, sure. But not for helping yet another greek government to shower the voters with unsustainable election gifts! That would be totally counterproductive. Greece still needs more reforms, allthough in a better balanced way, to further improve the competitiveness of the country but with less financial burden on the working class folks. A candidate made of parts of Samaras and Tsipras would be the right PM now. Sadly, there’s no such guy on the ballots.

          • ebonystone

            Unless, like in the U.S., the government forces the banks to lend to those who cannot or will not repay. The banks’ response — probably their only real option — was to stop paying interest on savings accounts, which deprived thrifty middle class savers of a good chunk of income.

      • ArthurSparknottle

        Yes – it is always someone else’s fault, not mine if I make a stupid decision to improve my lifestyle by borrowing untenable amounts of money. I think we had it about right when we pt debtors into dungeons until they paid back every penny.

        • Kenny Fraser

          somebody oughta put you in a dungeon,or more appropriately a secure mental facility.

        • bobmattfran

          Wow lets take that to its logical conclusion shall we. issuing worthless paper (derivatives) and then when your rumbled and go bust an dthen getting the taxpayer to cover your losses from your misdeeds is criminal. Get some sense of proportion, name one Main Board banking director in either the US or the uK who is in jail for fraud, issuing a worthless financial instrument or theft?

        • Jessica Maxwell

          Yes. We should have done this to Germany …the biggest debt defaulter of the twentieth century….and kept it in a dungeon until it paid back every cent it still owes Greece in war reparations and forced loans….all because Germany was also the biggest and worst basket case of the twentieth century….falling into debt and barbarism through wars pursued by the madman it elected as its leader. Cease the moral lecturing,erman histplease.It sits badly alongside the reality of German history

          • ArthurSparknottle

            Pay your debts ans shut up. You had the money. Now we want it back.

          • Jessica Maxwell

            That is exactly what Greece is now saying to Germany.I’m glad you understand. Germany owes Greece a full quota of the debt that Nazi barbarism still owes to the civilised world.Germany hassnivelled,whined and begged its way out of total bankruptcy for near a hundred years,brought on by its own expensive taste for war.It’s time Germany shut up and paid up.’as you so rightly say.

          • ArthurSparknottle

            I seem to have poked a mad person and unleashed a torrent of ridiculous nonsense. What on earth are you talking about? None of the WW2 generation are even alive anymore, or if they are, they’re in nappies and dribbling down their chins. Greece spent huge fortunes of borrowed money in the last fifteen years and couldn’t pay it back. They begged for help and were given it. If they don’t now pay back what they had, the only solution is that we invade and take it from them. If you think that other European savers who funded these loans (banks use ordinary people’s money) are going to let the Greeks steal it, you’ve got another thing coming.

          • Jessica Maxwell

            Still want to invade and steal and slaughter?You already did that,mate.History doesn’t go away….nor,it seems,the barbarian urge to invade and grab

          • md5check

            Nor it seems the inability for some people to look forward with solutions rather than back with blame and recriminations.

    • balance_and_reason

      Of course…it is far too useful to Germany to be allowed to leave…it is very important in the serious job of keeping the Euro down and German exports flowing nicely…

    • protosphere

      It is the Germans who are basket cases reneging on promised relief to Greece’s progress, claiming they underestimated.

      They also didn’t repay the forced WWII loan as promised after reuniting their East where they spent a trillion with enormous gains. This stolen loan repayment would cover Greece’s debt today.

      Germany exists, let alone becoming Europe’s headmaster by being the king of default itself!

      • Jessica Maxwell


      • md5check

        ‘they spent a trillion with enormous gains’. Err, well if you call endless miles of empty motorways an enormous gain then I supposed West Germany can consider handing over money to people who expect government to earn them their living then I guess you’re right. What many seem to forget is Germany has recent (and current) experience endlessly handing over money within their own ‘united’ country, so you can imagine how they cherish handing over hundreds of billions, possibly trillions more, to every other corner of Europe with a ‘well you f**king owe us you bastards’ as their only thanks.

    • robertsonjames

      Like the author of this article you seriously under-estimate the absolute determination of the EU elites, led by the German government, to continue to pursue “ever closer union”.

      That over-riding political objective would be placed in great jeopardy if any current Eurozone member were either allowed to leave or thrown out. It follows that the German hints about the easy practicability of Grexit are more about sounding tough in the interest of placating their own voters and frightening the Greeks into not returning a Syriza-led government than an honest statement of what Berlin and Brussels intend should happen. In fact they will go to any lengths to keep the Greeks in the Euro, just as Syriza also want to stay in, so there is an obvious basis for a negotiated agreement from which both sides get what they want.

      I expect some form or another of the old “extend and pretend” formulation, much loved by those grappling with debtor nations in worsening difficulty. In short, Athens will be given longer to repay and some relaxation of the debt burden (which the new Greek government will flourish as proof that they won concessions) in return for signing up to promises of economic reform and better tax collecting (which, of course, will never be delivered). As a result, a year or two from now Greece will still be facing hefty debt repayments, the Germans will still be demanding rigour and reform and everyone will be back approximately where we are today.

      If the Tories are expecting something dramatic in relation to Grexit to win them a UK election inside the next 3 months they’ve frankly got more chance of waiting for Godot.

  • WTF

    David Cameron seems to think that this fear strategy will work.

    Yep, we all saw his fear strategy collapse over the SNP election for Scotland to leave the UK. Cameron shat his pants and had to bribe the electorate in Scotland using his political opponent Gordon Brown no less to make promises as he knew no Scottish person would trust a lying piece of s*** called CMC (Call Me Chicken)!

    • hopon

      DC was ‘frit’ by one opinion poll and, as you say, panicked. All strangely quiet on the EVEL front at the moment. I expect DC to promise to do something about it ‘if he is elected in May’. His problem though is that we all know that his promises are worthless.

    • antonia beardsley

      And since the referendum,just about everyone in Scotland has joined the SNP

  • James Morrison

    “Voters might also conclude, to borrow a phrase that Gordon Brown came up with to see off David Miliband, that this is no time for a novice.”

    Pretty sure he used it in a conference speech and was talking about David Cameron / George Osborne.

  • Nothing new under the sun

    Greece needs to leave the Euro and make a fresh start with its own currency. This has been obvious for many years.

    • Andrew Smith

      Quite right. The only reason it didn’t happen is because the rest of the Euroclub didn’t want it to happen.

      • hopon

        They needed time to shuffle the debt around to protect their own banks. That shuffling has now been completed so Merkal just may force them out.

    • wotevah

      It was obvious to anyone with functioning critical faculties not wearing ideological spectacles that allowing Greece to join the Euro was asking for big trouble. Everybody and his dog knew Greece was a basketcase all those years ago.

  • alfredo

    Why is a victory for Le Pen a HORRIBLY real prospect? I simply ask for information.

    • ChierDuChien

      It would be great.

    • hopon

      The same reason success by UKIP in the upcoming elections is labeled as a horrible prospect.
      It goes against the cosy cartel of EU loving political parties and their ability to limit electors’ choice. The more the politicians and MSM scream about how bad it would be the more support parties outside of the cartel will get. It is time for change, to challenge the status quo in politics that has overseen the loss of democracy in this country and enabled the erosion of our culture.

    • John Carins

      Is it that they (Spectator writers) can’t abide the consequences of democracy?

      • Kenny Fraser

        probably,its definitely got rightist leanings,i expect its owned/run by some tory party contributer.

    • rapscallion

      You won’t get it alfredo. What is more is that James Forsyth either hasn’t fully understood the meaning behind full fiscal union where he states that “accepting that the eurozone has to become a full fiscal union to succeed, it would be a good thing.” or he does know it means full political union. He can’t have it both ways.

      Given the rest of the article he is cleary rabidly pro-EU and anti UKIP and FN.

      Who’d have thought it eh?

    • Kenny Fraser

      because the millions who died in ww2 to smash fascist trash deserve better than half -witted clods to let them in the back door.

    • bobmattfran

      Perhaps you haven’t bothered to read pre WW2 history and the rise of Nazism. The UK and others fought a war to rid the world of Nazi scum and you think its OK to elect the same!

  • MrJones

    If the Greeks left the Euro, defaulted and then asked to rejoin, the EU would agree after a bit of huffing and puffing because at the end of the day the EU is about empire not economics.

  • global city

    Farage called right (again) last week when he stated that what the EU is worried about is not Greece leaving and collapsing, but rather that they leave and begin prospering again, leading to a chain reaction of other countries being crushed by troikaesque demands to leave too.

    All they care about is their project.

    • PouringForth

      It was Daniel Hannan who first said that. Farage just nicked it.

  • lukeweyland

    The mess that Greece is in – was created both under the Centrist PASOK and Conservative NDP administrations. Whether a Syriza government will clean up the mess I don’t know but one thing is certain the current mob wont.

  • balance_and_reason

    Interesting point about radical left wing parties gaining prominence…I guess for the same reasons the Scot Nats have prospered…not by sound governance or idea’s but by being a protest party grubbing for extra cash.

  • thomasaikenhead

    The real issue about Greece has never been the euro, it is simply the fact that the tax base is too small as the rich and the self-employed do not pay any tax.

  • lojolondon

    “The Germans believe… a Greek exit from the single currency is containable.” Ha ha! Have they thought about the implications? What if the Greeks leave the Euro, default on their debts (as they will!), and the devalued Drachma revives their economy and brings balance back to the embattled country?

    Worst possible scenario for the EU / EUSSR / Fourth Reich, as other countries see the success and want some for themselves. Just like Britain with the Pound. Italy, Spain, France and Ireland are the obvious countries to leave first – this is the best thing that could happen for the people of Europe.

  • paasingby

    No sympathy , they were warned years ago what would happen.

  • If I was a Greek I would vote for Syriza and if that meant a Grexit so be it. I would use the terror of the Eurocrats as a bargaining counter to renegotiate my debts. Getting back control of my own currency followed by a massive devaluation would stimulate one of our most important industries – tourism.

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  • aeroship

    Its a basic human instinct to pull away from whats chocking you. Its an instinct for good reason, that of survival. Its common sense for Greece to pull away, going from “no chance” to “some chance” . It is only oppressed by its own consession.

  • ChierDuChien

    The Mediterranean peoples are simply too lazy to survive in a world traveling at 21st century speed.

    • John

      Basically correct but they also have no industry other than tourism.

  • AdamStrange

    It’s not just Greece is it?
    As someone who is (was) pro EU, what is sickening about the whole thing with Greece is the astounding democratic deficit within the EU and the utter inability of one of the smaller countries to influence the course of events.
    Maybe it was always so, but then again, in the past there was little pretence to democracy and equity in international relations.
    What happened to democracy and equity in Europe? What happened to the idea of human rights and social justice?
    Without these, Europe is just a crude neo-liberal’s idea of mass markets, and crude economic power.
    No thank you – much better for the UK to retain its own democracy and institutions and win markets through efficiency and productive investment.

    • hopon

      The EU as a trading block was a reasonable idea but the politicians and bureaucrats always wanted to expand it into a federal states of Europe. They knew that the majority of Europeans would not vote for a FSoE so they designed the EU to be non democratic fashion. They maintain a facade of democracy with pointless elections of MEPs. The EU gravy train keeps them all onside. People, like yourself, who were supporters of the EU are beginning to see through the illusion and recognise the loss of democracy and ability to self rule. Cameron and the EU leaders know they are losing support, which is why Cameron’s EU re-negotiations and referendum will never happen or will be manipulated to get the result that they want.

      • Bill Kane

        the 1975 referendum (after renegotiation) should be seen as the blueprint for what Cameron proposes. Remember we were promised no more “closer political union” and we had the power of veto as well as no loss of sovereignty with our parliament having the power to repeal the act which committed us to the Union. So the people voted to stay in as these were seen as being good safeguards for the UK. We all know what happened to those, so why should we believe anything about renegotiation “success”. People need to be reminded about how politics really work and the consequences. We have no comeback against being fooled (again)

  • protosphere

    Cameron thinks fear will win when fear and ultimatums created this near humanitarian crisis last time.

    Germany claims it can firewall contagion when they also said reforms would work.

    Until this oxymoron of a union stands united, it is destined to fall.

  • flaxensaxon

    It seems the Greeks want to continue suckling at the German tit, but they want a different flavoured milk.

    • Jessica Maxwell

      No,sir.The Greeks just don’t like the flavour of Fascism.They didn’t like it in 1941….and they don’t like it now. We hope they will show the world again how truly courageous people react to Fascist bullying.

  • Kenny Fraser

    the greeks led the way with governments historically,but were shafted by the parasites of the i.m.f. and self appointed international loan sharks such as standard and poors and moody’s,both unelected and therefore unrepresentative bodies. the people of greece have had enough of monetarist moronity ,and finance orientated faux pas,and syrzia adresses their concerns properly.

  • James Horton

    Running nineteen diverse economies with one currency simply cannot work unless there is political and financial union, i.e. one department controlling the finances of all the Eurozone countries. Of course it will be dominated by Germany and the nations concerned will become part of a Greater German Empire

  • bobmattfran

    Of course don’t mention that it was the arch crooks Goldman Sachs that lent the Greek government the money with hidden string attached. The same rotten bank that is continually sniffing around Ukraine with it other criminal friend Monsanto currently acquiring land with soft loans so that they can grow banned genetically modified crops.

  • david

    Roll on UKIP

  • John

    The UK electorate has already decided the result. Go ask the folk in the street. UKIP is about to take centre stage.

  • dred

    It all stems from the fact that the piigs group of countries were allowed into a currency union that their economies didnt merit.Because of the european project these countries allowed to enter the euro as a means of an ever closer united states of europe.Dont forget if Blair had had his way britain would have joined the euro but gordon brown said no.

  • VSP

    Lets face it, the EU speaks for itself. It is a rotten to the core, elitist, and an undemocratic totalitarian format. This was always a USA formula for independent nations to be subsumed by an incredibly phobic USA who needed obedience to their corporate interests, No hard feelings USA, but we have had enough of it, and so should peoples in the USA realise the pernicious side of letting these naughty fraudsters run amok and dominate politics, We simply want our way out ASAP.

  • Angry Briton

    The euro is on the way out , only countries that have sank so much money into it want it kept alive. more countries will follow greece

  • 1FrancisofAssissi1

    Good, balanced piece.

    Just one thing: many of the Greeks supporting the opposition leftist Syriza party aren’t doing so because they are leftists, but because their lives and livelihoods have been destroyed and they need a change in policy.

    Similarly, in the UK many voters will be forced to vote for parties they do not believe in if issues they hold dear are not solved.

  • Who writes this crap.. whatever happens in Greece will have no bearing on the next election here in the UK.

  • Whether Greece stays in the euro zone or not, they’ll need to create a national system of regional currencies backed by directories of local skills and goods. Here’s how it has been done: http://www.paulglover.org/hourintro.html

  • UKIP Kiddie

    So the crisis is averted (put on hold) for four months. Let me see, oh yes, the British General Election will be out of the way by then. What a coincidence.