A good outcome for Greece – and markets
After waiting three years, Kyriakos Mitsotakis is finally Greece’s prime minister. His New Democracy party swept to power in legislative elections on Sunday, commanding a wide and comfortable majority over Alexis Tsipras’ SYRIZA.
While the size of New Democracy’s majority is partly the consequence of Greece’s electoral system – which greatly benefits the largest party in the allocation of seats – its victory is unambiguous, giving the party and Mitsotakis a very strong political mandate to govern for the coming years. Though until recently something of a liberal outsider in a party dominated by conservative and populist politicians, Mitsotakis’ leadership within New Democracy is now unchallenged. His comfortable majority will also give him ample margin to manage any internal dissent in the future.
New Democracy’s election program – though scarce on detail – will prioritize improving both the sentiment and operating environment for businesses in Greece to encourage investment and restore investor confidence. This will help improve the country’s credit rating and could, eventually, grant Greece full access to capital markets, which have been largely closed off following its decade-long debt crisis that involved three bailouts, debt restructuring and capital controls.
Although SYRIZA lost Sunday’s election, however, it would be unwise to count them out. The result – 31.5 percent of the vote – is short of a crushing defeat and clearly establishes Tsipras as head of the opposition, with the center-left Movement for Change (KINAL) a very distant second.
Out of government, SYRIZA is likely to revert to its more militant roots and – at a minimum – vocal opposition. This suggests that any further liberalizing reforms the new government introduces will face more substantial public opposition. In a worst-case scenario, this could result in demonstrations and large-scale labor unrest, as had been the norm until 2015.
The first few weeks of the new administration will therefore be important in setting the tone of the next government. But we should be clear. The outcome of Sunday’s election is good news for Greece, its creditors and investors.
Mujtaba Rahman is managing director for Europe at Eurasia Group. He wrote this piece for Kathimerini.
