With Greek voters handing the far left Syriza party a clear election victory, leader Alexis Tsipras is now forming Europe's first anti-austerity government. While it is not surprising that voters have reacted to years of economic pain, the question is what happens next.
The hazard for any party that channels public anger against an incumbent administration is that it is always a lot easier to make bold promises while campaigning than to bring them to fruition when in power – particularly when Mr Tsipras knows he holds few of the trump cards in this game.
Few believe Greece will abandon the euro and revive the drachma because the new currency would be effectively worthless and the country’s debts would still be in euros. The majority of Greeks acknowledge this and want to keep the euro.
Eurozone finance ministers indicated during the campaign that the Syriza party must honour all the existing austerity agreements when they come due on February 28 or it would end negotiations on debt relief. If Greece’s €240 billion (Dh988bn) bailout with the European Union and the International Monetary Fund falls apart, Greece’s banks will go bust and the economy – which returned to modest growth last year – will collapse back into recession.
Despite this, Mr Tsipras remained bullish in victory, declaring that “Greece is leaving behind disastrous austerity” and vowing to negotiate for half of the country’s €318 billion debt to be written off. These are bold words from someone who must realise that an electoral mandate carries little sway beyond his country’s borders.
There is room for compromise. Nobody would dispute that ordinary Greeks have paid a terrible price for the mistakes that led to their current situation. Since the crisis began, the country’s GDP has shrunk by a quarter, more than 500,000 people lost their jobs and the youth unemployment rate is more than 50 per cent.
But those controlling the euro zone are also bound by the danger of setting a precedent. The much bigger economies of Spain and Italy could also find anti-austerity parties ascendant if Syriza wins major concessions. This is the balancing act that is about to begin, in which campaign slogans must be replaced by tough decisions, compromise and hard bargaining.