Greece’s election has brought a sea change in the country’s political dynamics that opens up the gaping prospects of an ungovernable nation, another election, and even default.

Sunday’s result has ended a grand coalition of socialists and conservatives that since November had managed to keep the country solvent through abiding by the terms of a euro-zone bailout.

Voters have now produced a Parliament so hostile to the austerity and reform program accompanying that bailout that socialist leader Evangelos Venizelos said there is no point in attempting to continue the collaboration.

“An old-fashioned, bipartisan coalition government will not enjoy sufficient legitimacy. Nor will it have domestic or international credibility, even if it achieves a marginal parliamentary majority,” Venizelos said.

Venizelos saw that a resumption of that alliance carried two problems: it would now require a third party (the Panhellenic Socialist Movement and New Democracy are two seats shy of an outright majority), and the very collaboration of two parties to continue a deeply unpopular bailout policy that has cost them half their popular support would raise cries of illegitimacy.

New Democracy has come in first with just a fifth of the vote—nowhere near the 37 percent it would need to govern alone. It owes almost half its parliamentary bloc to a 50-seat bonus—once a winner’s trophy, now an embarrassing distortion to Greece’s system of proportional representation.

“I asked for a strong mandate; the people decided otherwise,” conservative leader Antonis Samaras wearily told supporters outside party headquarters. It was the first time in four decades that the winner of a Greek election has not delivered a victory speech or been able to form a single-party government.

In contrast, more than 40 percent of the vote went to parties that want Greece to abandon the European bailout altogether—albeit not necessarily the euro.

The party that exemplifies that trend is Syriza, or the Alliance of the Radical Left with Left Socialists and Radical Ecologists. It is a once-moribund, breakaway communist party that quadrupled its previous performance to 16.76 percent, a mere 2 points behind the winner.

In Syriza lies the true message of the election. It has promised to annul Greece’s two bailout loans worth $270 billion (it calls them “leaden jackets”), along with the reforms that accompany them, and cast off the oversight of the European Union and International Monetary Fund.

"The debt is the taxes the rich did not pay," the party is fond of saying, and it advocates a dizzyingly expensive slate of tax-and-spend policies. Its idea is to tax the rich to the tune of 75 percent and renationalize every privatized state company, including all banks (see below).

This in theory would pay for a reinstatement of the recently abolished national collective minimum wage, extend unemployment benefits to illegal migrants, restore the 35-year working lifetime, and bring pensions up to 100 percent of salary.

The socialists have campaigned on the basis of austerity, stability, and June’s salaries and pensions being paid on time. The conservatives have campaigned on the basis of growth as the true father of state revenue. Both have supported the bailout. Syriza, on the other hand, has won enormous appeal by arguing that the bailout does not avoid bankruptcy but leads directly to it. Socialists, conservatives, and their friends at the IMF want a country of limited sovereignty, it says. Some leftists believe Berlin plans to match China’s low unit costs by outsourcing production to an impoverished Mediterranean basin.

Syriza considers even the vaunted restructuring of $260 billion of debt in private hands as a bad thing, as it mortgages public wealth and legitimizes billions in taxpayer-sponsored refinancing of banks.

Samaras, the conservative leader, has to seek alliances. He has three days to form a government. Should he fail, Syriza assumes the task. Should the process drag on two weeks, as it may, Greece would fall behind on more than $15 billion in cuts to social spending, government restructuring, and health-care costs, failing to qualify for its June installment. That, in turn, could lead to nonpayment of salaries and pensions, driving the country closer to a social meltdown.

George Pagoulatos, legal adviser to outgoing Prime Minister Loukas Papademos, pointed out a contradiction in the election result that helps illustrate the extent to which this was a protest vote: while at least two thirds of Greeks have consistently been polled as wanting Greece to remain within the euro, that proportion did not vote for parties backing the bailout loan and the attached program of austerity and reform. Greece’s creditors have, since last November, been drilling in the message that implementing that program is a condition for remaining within the euro zone.

Venizelos was the first party leader to react to the result. “We embittered the people to save the nation,” he said. “Now it is up to others to realize their promises.”

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Syriza’s Plan

Financial sector

(1) Make European Central Bank fund social programs in member states.

(2) Ban pan-European derivatives.

(3) Establish pan-European Tobin tax. Place higher taxes on high incomes and companies.

(4) Nationalize the Greek banking system and give it over to public bodies such as cooperatives, repurposing it to deliver liquidity to small and medium-size enterprises.

Growth

(1) Tax the rich at a top rate of 75 percent for incomes of half a million or more.

(2) Have higher tax on companies and “ostentatious consumption.” Remove tax exemptions (for example, on the church).

(3) Record all estates of 1 million euros or more and tax them.

(4) Use every available EU euro.

(5) Renationalize every privatized or partly privatized company (OSE, OTE, Eydap, PPC, etc.) and stop privatizations. Restructure companies to operate profitably and transparently for the state.

(6) Rebuild economy along lines of high-end agricultural produce for export, renewable energy, and nonintensive, ecofriendly tourism.

Social policy

(1) Restore national collective agreement on minimum wage. Reverse the 22 percent wage cut in the private sector. Extend part-time workers to full time. Abolish part-time labor. Prohibit freelance work when the task calls for a full-time job. Fire no one from the public sector. Bring back firing limits in the private sector.

(2) Put the homeless in empty properties of state, church, and banks.

(3) Feed all students twice a day.

(4) Extend full health services to the poor, homeless, and unemployed. Consolidate all social services. No hospital closures or mergers. Bring staff levels back up. Abolish copayment for the unemployed, students, the handicapped, and poor pensioners. Bring the health budget to 6 percent of GDP.

(5) Adjust interest and maturity on loans so monthly payment does not exceed 30 percent of income. Write off loans to those not meeting “dignified means of living.”

(6) Extend the unemployment benefit indefinitely, extend it to immigrants, and raise it to 80 percent of salary for the first two years.

(7) Reduce (control) prices on basic goods.

(8) Abolish property tax on “small” properties.

(9) Make state pay social-security system all arrears and debts from mismanagement of its assets; ensure efficient dues collection from the private sector. Restore 35-year working lifetime and pension at 100 percent of salary.

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