Alexis Tsipras in Athens, January 2015. Photo: ANGELOS TZORTZINIS/AFP/Getty Images
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Never mind the Euro: Syriza's win could threaten mainsteam politics across Europe

New Greek Prime Minister Alexis Tsipras may be the man who consigns centrist politics to history.

When Syriza’s Alexis Tsipras first surged in the opinion polls in 2012, many in the eurozone feared that his election would destroy Europe’s economic order by forcing Greece to give up its currency. Three years on, the talk is of a political rather than an economic domino effect. Now that Tsipras has been inaugurated as Greek prime minister, it seems he could be the man to save the euro by allowing it to adjust its economic policies, upending the continent’s established political order in the process.

A couple of years ago I watched Tsipras introduce himself to the American foreign policy elite. “We are psychologically prepared for a clash,” he told a startled audience at the Brookings Institution in Washington, DC, “because in politics there is no such thing as tea and crumpets: there are interests that are conflicting with each other.”

The clash is now real: battle lines are drawn between Syriza and the eurozone. The party has set out a trifecta of goals: a €2bn welfare programme, an attack on “antisocial oligarchs” and a write-down of at least half of Greece’s public debt. At the same time, Jeroen Dijsselbloem, leader of the Eurogroup of finance ministers, is already warning about the dangers of not sticking to prior agreements.

There is a danger of miscalculation because both sides think they have the upper hand. When I saw Tsipras speak, he said: “If Greece was not in the eurozone, I have no doubt that nobody would care about Greece’s situation. [But] Greece is one of the links that make up the eurozone. And if one breaks, it won’t only be bad for the link, it’ll be bad for the entire chain. We know this, and our friends in Germany know this as well.”

On the other hand, the consensus in Berlin is that the fallout from a Grexit could be contained. There is now a bailout fund for sovereign nations and a European banking union. Private banks have divested themselves of Greek debt and the markets seem becalmed.

Most analysts think there is a deal to be made by extending the length of the debt, lowering interest rates and offering more flexibility on social spending. When I spoke to a political friend in Greece who strongly opposed Syriza, even he had to concede that Tsipras had a better chance of getting a good deal than Samaras and the mainstream parties. “If he gets some resources to alleviate poverty and a symbolic way to escape the clutches of the Troika, he will be able to sell an agreement. Berlin, on the other hand, has to be very careful. Imagine if there was a Greek exit as a result of confrontation with Germany. There would be uproar across Europe.”

The markets appear to agree. Economic commentators, from the Wall Street Journal to the Guardian, seem to think that Syriza could save the euro by tempering Berlin’s self-defeating austerity.

Mainstream social democrats – including the prime ministers of France and Italy – hope to use Tsipras’s victory to persuade Angela Merkel to agree a settlement that caters to Europe’s social problems and helps avoid deflation. For much of Europe, the biggest danger of the Syriza win is less the collapse of the euro than the collapse of mainstream politics.

Tsipras’s election – and the annihilation of the once-dominant PASOK, which scraped barely 5 per cent in the election – is part of a larger trend of political fragmentation in which Europe’s established parties have been crowded out by insurgents from the left and the right. The most immediate challenge will be in Spain, with the emergence of Podemos, the Latin American-inspired party founded in 2014 with a mission “to stop Spain being a colony of Germany and the Troika”.

José Ignacio Torreblanca, who is writing a book about Podemos, thinks it significant that Syriza immediately went into alliance with the right rather than exploring alliances with centrist forces. “It shows that their goal is to change the axis of political competition from left v right to one that pits Europe against the nation,” he says. Torreblanca fears that Tsipras’s victory opens the door to a clash of populisms, with the anti-solidarity right rising in Germany, Finland, Austria and Sweden to counter southern populists of the left.

Last year’s European elections pitted insurgent parties (Ukip, Syriza, the Front National) against the technocratic elite who have driven the EU for the past few decades. But if the mainstream parties fail to find a way of reinventing themselves, politics in Europe may soon move beyond a battle between populism and technocracy.

Alexis Tsipras may be the bearer of a new settlement that confronts populism with populism, leaving the established centrist parties on the scrapheap of history. 

This article first appeared in the 30 January 2015 issue of the New Statesman, The Class Ceiling

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Brexit has opened up big rifts among the remaining EU countries

Other non-Euro countries will miss Britain's lobbying - and Germany and France won't be too keen to make up for our lost budget contributions.

Untangling 40 years of Britain at the core of the EU has been compared to putting scrambled eggs back into their shells. On the UK side, political, legal, economic, and, not least, administrative difficulties are piling up, ranging from the Great Repeal Bill to how to process lorries at customs. But what is less appreciated is that Brexit has opened some big rifts in the EU.

This is most visible in relations between euro and non-euro countries. The UK is the EU’s second biggest economy, and after its exit the combined GDP of the non-euro member states falls from 38% of the eurozone GDP to barely 16%, or 11% of EU’s total. Unsurprisingly then, non-euro countries in Eastern Europe are worried that future integration might focus exclusively on the "euro core", leaving others in a loose periphery. This is at the core of recent discussions about a multi-speed Europe.

Previously, Britain has been central to the balance between ‘ins’ and ‘outs’, often leading opposition to centralising eurozone impulses. Most recently, this was demonstrated by David Cameron’s renegotiation, in which he secured provisional guarantees for non-euro countries. British concerns were also among the reasons why the design of the European Banking Union was calibrated with the interests of the ‘outs’ in mind. Finally, the UK insisted that the euro crisis must not detract from the development of the Single Market through initiatives such as the capital markets union. With Britain gone, this relationship becomes increasingly lop-sided.

Another context in which Brexit opens a can of worms is discussions over the EU budget. For 2015, the UK’s net contribution to the EU budget, after its rebate and EU investments, accounted for about 10% of the total. Filling in this gap will require either higher contributions by other major states or cutting the benefits of recipient states. In the former scenario, this means increasing German and French contributions by roughly 2.8 and 2 billion euros respectively. In the latter, it means lower payments to net beneficiaries of EU cohesion funds - a country like Bulgaria, for example, might take a hit of up to 0.8% of GDP.

Beyond the financial impact, Brexit poses awkward questions about the strategy for EU spending in the future. The Union’s budgets are planned over seven-year timeframes, with the next cycle due to begin in 2020. This means discussions about how to compensate for the hole left by Britain will coincide with the initial discussions on the future budget framework that will start in 2018. Once again, this is particularly worrying for those receiving EU funds, which are now likely to either be cut or made conditional on what are likely to be more political requirements.

Brexit also upends the delicate institutional balance within EU structures. A lot of the most important EU decisions are taken by qualified majority voting, even if in practice unanimity is sought most of the time. Since November 2014, this has meant the support of 55% of member states representing at least 65% of the population is required to pass decisions in the Council of the EU. Britain’s exit will destroy the blocking minority of a northern liberal German-led coalition of states, and increase the potential for blocking minorities of southern Mediterranean countries. There is also the question of what to do with the 73 British MEP mandates, which currently form almost 10% of all European Parliament seats.

Finally, there is the ‘small’ matter of foreign and defence policy. Perhaps here there are more grounds for continuity given the history of ‘outsourcing’ key decisions to NATO, whose membership remains unchanged. Furthermore, Theresa May appears to have realised that turning defence cooperation into a bargaining chip to attract Eastern European countries would backfire. Yet, with Britain gone, the EU is currently abuzz with discussions about greater military cooperation, particularly in procurement and research, suggesting that Brexit can also offer opportunities for the EU.

So, whether it is the balance between euro ‘ins’ and ‘outs’, multi-speed Europe, the EU budget, voting blocs or foreign policy, Brexit is forcing EU leaders into a load of discussions that many of them would rather avoid. This helps explain why there is clear regret among countries, particularly in Eastern Europe, at seeing such a key partner leave. It also explains why the EU has turned inwards to deal with the consequences of Brexit and why, although they need to be managed, the actual negotiations with London rank fairly low on the list of priorities in Brussels. British politicians, negotiators, and the general public would do well to take note of this.

Ivaylo Iaydjiev is a former adviser to the Bulgarian government. He is currently a DPhil student at the Blavatnik School of Government at the University of Oxford

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