Syriza win puts Greek bailout in jeopardy

Euro zone finance ministers gather in Brussels tomorrow for a scheduled Eurogroup meeting that will be dominated by the outcome of the Greek elections, following Syriza’s victory in the country’s snap general election.

Just 24 hours after Greek voters went to the polls, Minister for Finance Michael Noonan will join his 18 counterparts for a Eurogroup meeting that begins late afternoon, with all 28 EU finance ministers participating in further talks on Tuesday.

Syriza's historic success in today's elections has thrown the future of the Greek bailout into jeopardy. The party's leader, Alexis Tspiras, has vowed to reverse austerity measures imposed by the five-year Greek bailout, but the ECB and the Eurogroup have ruled out any major concessions to Greece.

In a statement this evening, the head of the centre-left Socialist and Democrats (S&D) group in the European Parliament welcomed the expected victory of Syriza and urged Mr Tsipras to form a strong "pro-European coalition".

‘Greek debt’

“The renegotiation of the Greek debt, and in particular the extension of the terms of its bailout, should no more be considered as a taboo,” said

Gianni Pittella

, the Italian socialist MEP who leads the second-largest group in the European Parliament. “The will of the Greek people should be respected by all EU institutions and member states alike.”

The leader of Alde, the liberal group in the European Parliament, said the strong performance of To Potami [the Greek centre-left party] "proves there is an appetite for a pro-European, pro-reform force in Greek politics". "I hope To Potami will now play a key role in any coalition government," said Guy Verhofstadt.

Existing agreements

On Friday, Eurogroup chief

Jeroen Dijsselbloem

said that while there was “room to manoeuvre” with Greece over its adjustment programme, any new left-wing government must honour existing agreements with the EU-IMF. Taoiseach Enda Kenny appeared to weigh in behind the Eurogroup chief at Davos this week, warning that bailout programmes involve conditions.

“What happens in Greece is a matter for the Greek people but speaking to Greek politicians, they understand that when you sign on for a debt write-down in terms of the bailout and the advantages they have got, there are conditions that have to be applied,” he said on the fringes of the World Economic Forum. “For countries in programmes who have the opportunity [of a programme] there are conditions and regulations attached to it.”

The prospect of further debt writedowns for Greece should the Eurogroup agree to a renegotiated bailout programme would raise significant difficulties for the Irish Government, which appears to have abandoned its quest for retroactive direct recapitalisation of AIB and Bank of Ireland through the ESM fund due to the increased value of the two banks.

The euro fell on Monday morning after the exit polls were published, with the single currency falling against most major currencies in early Australasian trade.

ECB European economics commissioner Pierre Moscovici and Klaus Regling, the head of the ESM rescue fund, will be represented at tomorrow's meeting in Brussels – the first since December's meeting at which finance ministers agreed to extend the EU portion of the Greek bailout until February.

Greece has received two bailouts from the EU and IMF since it became the first euro zone country to move perilously close to default in 2010 during the sovereign debt crisis.