Alexis Tsipras, leader of the far-left Syriza party, was sworn in Monday as Greek prime minister, setting the stage for a showdown with creditors over painful budget cuts and tax increases that could have potential ripple effects across the European Union.
Tsipras has vowed to renegotiate the austerity measures demanded by European leaders in exchange for a $270-billion lifeline that has kept Greece's economy afloat since 2010. His party's sweep to power is being closely watched across the region, where frustration is building among voters over policies that many blame for years of recession and relentless unemployment.
Tsipras, a youthful and charismatic figure long seen as a political outsider, has called for a write-down of Greece's nearly $360-billion public debt to allow more government spending, which he says would stimulate growth and create jobs in a country where more than 25% are unemployed. He also has pledged to raise the minimum wage, reverse pension and welfare cuts and rehire thousands of laid-off public sector employees.
"Greece is leaving behind the destructive austerity, fear and authoritarianism," Tsipras, 40, told a crowd of cheering supporters late Sunday. "It is leaving behind five years of humiliation and pain."
European leaders moved swiftly to damp hopes of debt forgiveness, although they said they might consider giving Greece more time to repay its loans. Dutch Finance Minister Jeroen Dijsselbloem, who chaired a meeting of his Eurozone counterparts in Brussels on Monday, said members should "abide by the rules and commitments."
"We are very motivated to work with the new Greek government to maintain the recovery path," Dijsselbloem told reporters. But, he said, "the Greek people have to realize that the major problems in the Greek economy have not disappeared … overnight because of the simple fact that an election took place."
There is little time to resolve the impasse. The European portion of Greece's bailout expires at the end of February and the country needs the final $8-billion tranche to keep the government running and pay off billions in debt obligations that will be due in the coming months.
Syriza's choice Monday for a governing partner signaled that it intends to take a tough line in negotiations with its creditors, which include other European countries, the European Central Bank and the International Monetary Fund. The Independent Greeks are a small, right-wing party with whom Syriza has little in common apart from opposing the terms of the bailout.
Germany, which has contributed more than any other country to the rescue plan, has been among the most insistent that Greece honor its commitments. "There's no question of a debt haircut," German Finance Minister Wolfgang Schaeuble told the national broadcaster ARD.
Those opposed to reducing Greece's debt burden worry that such a concession could encourage other bailout recipients, including Portugal and Ireland, to demand similar consideration.
"If we enter that game, where the more radical you are, the more debt is forgiven, we have opened the door for the dismemberment of the European Union," said Esteban Gonzalez Pons, a spokesman for Spain's Popular Party in the European Parliament. "If Greece decides to leave the euro, it would ruin Greece, but the euro would not suffer."
Syriza's victory could lift the prospects of other left-wing, populist parties that are gaining ground in countries such as Spain, which also holds elections this year. But "there is a big caveat," said Nick Malkoutzis, deputy editor of the Kathimerini English Edition, a Greek daily. "And that's whether Syriza succeeds or not. If it all ends in glorious — or not so glorious — failure, it would be pretty damaging for the left."
Though it might appear that the two sides are engaged in a high-stakes game of chicken, many European analysts expect a compromise.
"It is in no one's interest that the Greek economy defaults or exits the Eurozone," said George Pagoulatos, a professor of European politics and economy at the Athens University of Economics and Business.
Kevin Featherstone, head of the London School of Economics' Hellenic Observatory, said he expected European leaders to give Greece an extension of several months to allow negotiations to take place in a considered way.
"There are many economists who would say ... the Greek debt is unsustainable and there is some mutual interest in getting Greece back to a sustainable economic growth path," he said. "But no serious voice in the rest of Europe is saying compromise on the debt without also insisting that Greece must publicly commit to continued structural reform."
Syriza won more than 36% of the vote Sunday, putting it 8 percentage points ahead of former Prime Minister Antonis Samaras' conservative New Democracy party. The neo-fascist Golden Dawn party, whose leaders are in detention awaiting trial on charges of running a criminal organization, came in third with a little more than 6% of the vote.
Although Syriza fell two seats short of a governing majority in the 300-seat Parliament, Tsipras moved quickly Monday to secure the support of the Independent Greeks' 13 lawmakers. In return, the party is expected to be given seats in a new Cabinet.
Breaking with tradition, Tsipras did not wear a tie to his swearing-in ceremony and took a secular oath rather than a Greek Orthodox one.
His first act as prime minister was to lay roses at a memorial in the Athens suburb of Kaisariani for 200 Greek resistance fighters killed by the Nazis in May 1944, seen by some as a jab at German Chancellor Angela Merkel, a driving force behind Europe's austerity measures.
Despite hand wringing by investors in the run-up to the election, international stock markets were "surprisingly calm" Monday, Featherstone said. But, he warned, "the markets could start to get much more jumpy if after the next four weeks we still have a standoff and no compromise."