(By Fisher Investments) Alex Tsipras has a message for those who think he wants Greece out of the eurozone: "It is not something we desire, it is not something we are seeking."
That may seem a giant U-turn for the head of Syriza, who only just claimed Greece's voters gave him a mandate to cancel Greece's bailouts. To us though, it's likely plain old politicking. The first election was a protest vote. Two years of public sector cuts have worn on Greeks, and many sought to punish the parties implementing them. But many see the second election as a referendum on euro membership, which over 75% of Greeks favor, and recent polls suggest pro-bailout, pro-euro New Democracy and Pasok would win a combined majority on June 17. Thus, it seems Tsipras is trying to curry pro-euro favor and claw back votes.
His new strategy: Betting that Greek voters don't want to reject the euro or socialism. He still objects to the bailout terms, but now he's arguing only his program can keep Greece in the euro. As he toldThe Wall Street Journal: "It's a contradiction to think the policies of the [Greek bailout agreement] and keeping Greece in the euro zone can go together. It's the [policies] that would lead to the collapse of Greece and its possible exit from the euro zone."
Essentially, it seems he's trying to shift the conversation from the euro, a battle he was losing, to a battle he thinks he can win: One between (relatively) supply-side reform and demand-side stimulus. Under current bailout terms, Greece is taking some supply-side tactics—trim the public sector, liberalize markets and tear down barriers to productivity. Over time, that's probably Greece's (and peripheral Europe's) best bet. It helps the economy become more competitive, laying the foundation for more sustainable long-term growth. But the required public-sector job, wage and pension cuts can cause painful short-term dislocations, which Greeks have borne the brunt of for two years. Tsipras posits this short-term pain will break Greece before the long-term benefits materialize (not that he thinks they ever would—radical leftists aren't known for faith in the private sector).