Greece’s Leader Starts Big Economic Overhaul

By SUZANNE DALEYSEPT. 21, 2015

The New York Times

ATHENS — Alexis Tsipras moved swiftly to form a new Greek government on Monday after his convincing victory in the national election a day earlier, with some officials close to him suggesting that he would create a new ministry solely dedicated to carrying out the tough bailout package he reluctantly agreed to last summer.

While Sunday’s election consolidated his power and rid his leftist Syriza party of its most rebellious faction, Mr. Tsipras has a daunting job ahead by almost any standard, starting with the need to push through Parliament legislation carrying out widespread changes to business and the economy.

But he has achieved something that no other Greek leader has managed since the start of the economic crisis in 2009. He has won two consecutive elections and a national referendum, despite widespread speculation that his popularity would be short lived and that one of Greece’s more established parties would soon be back in office.

In a news conference before beginning the formal steps to form a government, Mr. Tsipras said his re-election would give him the time he needed to deliver on his promises to distribute the pain of austerity measures more fairly, to root out corruption and special interests, and to get Greece back on its feet.

After initially taking office as prime minister in January promising to end the austerity policies imposed on Greece by its international creditors, Mr. Tsipras agreed over the summer to a new bailout package. It allowed the country to avert default and the collapse of its banking system, but at the cost of imposing a new round of budget cuts, tax increases and regulatory changes that challenge many entrenched interests.

“Now we have the chance with steady steps in the next four years to stop our people from bleeding,” Mr. Tsipras said.

He will need to move quickly, however, to keep the country’s creditors happy and aid flowing. In the next few months, Parliament will have to pass a mountain of legislation, in many cases measures that previous governments found too politically difficult to tackle, including higher taxes on farmers, further cuts to pensions and a stepped-up program to sell government assets.

This alone will test anew Mr. Tsipras’s now slightly smaller majority in Parliament. But he also has to produce a budget in the next two weeks before Greece’s creditors — the other nations that use the euro, the European Central Bank and the International Monetary Fund — will even consider the long-term debt relief that many experts say Greece needs to get on the road to recovery.

There is also the need to recapitalize the banks and oversee the unwinding of capital controls.

And if Greece’s financial troubles were not enough, thousands of migrants and refugees are landing here on their way to other parts of Europe.

Greek voters gave Mr. Tsipras a solid victory, handing him 35.5 percent of the vote and 145 seats in the 300-member Parliament. He quickly announced that he would again form a partnership with the right-wing Independent Greeks party, which won 10 seats.

Some experts, including Mr. Bastian, said they worried about the sustainability of Syriza’s very slim majority. Past governments watched their majorities shrink over time as unpopular measures came up for votes. In the previous government, Mr. Tsipras’s coalition with the Independent Greeks controlled 162 seats, though more than two dozen of those were rebellious Syriza members on the far left who broke with Mr. Tsipras over the new bailout package.

“There are still a lot of factions in his party,” Mr. Bastian said, “and it will be hard to keep them all in line.”

Perhaps the biggest losers in the election were the breakaway Syriza leftists, who formed their own party, Popular Unity, and campaigned urging a return to the drachma rather than an acceptance of new austerity measures.

The party got so few votes that it will not even get into Parliament, leaving the former speaker of Parliament, Zoi Konstantopoulou, who is one of the country’s most ardent corruption fighters, on the sidelines.

Mr. Tsipras did not make any official announcements about who would replace her. Nor did he name any others to ministerial posts. But it was widely reported in the Greek press that he was considering a new ministry to manage the bailout requirements, modeled on a system in place in Portugal.

Because both Syriza and the main opposition party, New Democracy, supported enactment of the bailout package, the outcome of the election was taken in stride in European capitals, where many leaders had clashed with Mr. Tsipras’s government earlier in the year. Some European leaders publicly congratulated him, though most also took the opportunity to urge him to stick to the terms of the bailout.

Jeroen Dijsselbloem, who heads the Eurogroup of finance ministers and had openly warred with Mr. Tsipras’s former finance minister, Yanis Varoufakis, posted his congratulations on Twitter Monday evening. He added that he was ready to “work closely with the Greek authorities and to continue accompanying Greece in its ambitious reform efforts.”

Martin Schulz, the president of the European Parliament, said on a French radio station that he could not understand Mr. Tsipras’s decision to again form a government with the right-wing Independent Greeks.

Although Syriza and the Independent Greeks have deep ideological differences, they stuck together on the biggest issue faced by the previous government, with the Independent Greeks voting for every bailout measure needed this summer even as members of Syriza turned against Mr. Tsipras.

Dimitris Bounias contributed reporting.