Greece has been thrown into a political turmoil, with a split in the ruling left-wing Syriza party and snap elections expected next month. Prime Minister Alexis Tsipras is gambling that fresh elections can deliver him a stronger mandate, because currently, he has no parliamentary majority and relies on support from opposition MPs. But the uncertainty adds to worries about Greece’s third eurozone bailout, worth about €85bn, which has only just been approved. The big question is: how strongly can the new left wing party called Laiki Enotita (Popular Unity), challenge Mr Tsipras? So far it has 25 rebel Syriza MPs, who object to Mr Tsipras’s acceptance of more austerity demanded by Greece’s creditors. He argued- reluctantly- that more budget cuts and higher taxes were inevitable conditions for Greece to stay in the euro and get the third bailout. Popular Unity is led by former energy minister Panagiotis Lafazanis, who argues that Greece would be better off leaving the euro and going back to the drachma. Constitutionally the Greek President, Prokopis Pavlopoulous, had to ask the next biggest party- center-right New Democracy- to try to form a government. That meeting has happened, and New Democracy has a three day deadline. If it’s effort fail, the next in line is Popular Unity, with 25 MPs. But it has only just been set up, so there is much uncertainty. It is ahead of far right Golden Dawn and the moderate center-left The River (To Potami), both of which have 17 seats. None of the opposition parties is thought capable of forming a new government. So probably Greeks will go to the polls again on 20 September- just eight months after Syriza was elected on an anti-austerity platform. On Thursday, Mr Tsipras announced his resignation and called a snap election because he knew it would be hard to get key economic reforms passed, with so many fellow Syriza MPs opposing austerity. More than a quarter of Syriza’s 149 MPs rejected the bailout.
Despite his dramatic policy reversal over austerity- accepting cuts he had previously rejected- a Metron analysis opinion poll last month gave him a 61% approval rating. It also showed support for Syriza at about 34%. If elections are set for 20 September, that deadline gives the new rival left-wing party very little time to organise and rally support to fight Mr Tsipras. Greece’s economic crisis is so deep that it has dramatically eroded support for New Democracy and other parties of the old political elite. Many observers expect Mr Tsipras to win re-election, with a stronger mandate to push through the reforms demanded by the creditors. He can argue that political continuity would help Greece to negotiate better loan repayment terms- that is, debt rescheduling. Greece’s eurozone lenders have reacted cautiously. The chair of the Eurogroup (the eurozone finance ministers), Jeroen Dijsselbloem, said: “it’s crucial that Greece maintains it’s commitments to the eurozone.” Martin Selmayr, the top aide to European Commission chief Jean-Claude Juncker, tweeted that snap elections “can be a way to broaden support for ESM stability support programme,” referring to Greece’s third bailout. The loans are coming from the EU’s European Stability Mechanism (ESM).