By Charles Forelle, Nektaria Stamouli and Alkman Granitsas
ATHENS--Greek voters were set to hand power to a radical leftist
party in national elections on Sunday, a popular rebellion against
the bitter economic medicine Greece has swallowed for five years
and a rebuke of the fellow European countries that prescribed
it.
With nearly all votes counted, opposition party Syriza was on
track to win about half the seats in Parliament. In the wee hours
of the morning, it clinched a coalition deal with a small
right-wing party also opposed to Europe's economic policy to give
the two a clear majority.
"Today the Greek people have written history," Syriza's young
leader and likely new prime minister, Alexis Tsipras, said in his
victory speech late Sunday. "The Greek people have given a clear,
indisputable mandate for Greece to leave behind austerity."
A Syriza victory marks an astonishing upset of Europe's
political order, which decades ago settled into an orthodox
centrism while many in Syriza describe themselves as Marxists. It
emboldens the challenges of other radical parties, from the
right-wing National Front in France to the newly formed left-wing
Podemos party in Spain, and it sets Greece on a collision course
with Germany and its other eurozone rescuers.
Within minutes of the close of the polls, Germany's powerful
central-bank chief, Jens Weidmann, pushed back.
"It is clear that Greece will remain dependent on support and
it's also clear that this aid will be provided only when it is in
an aid program," he said in an interview with television
broadcaster ARD.
A message on U.K. Prime Minister David Cameron's usual Twitter
account, meanwhile, warned that the Greek result will "increase
economic uncertainty across Europe."
Mr. Tsipras staked his campaign on resistance to the policies of
fiscal austerity--budget cuts and tax increases--demanded by
Germany in return for a EUR240 billion ($269 billion) bailout, and
many Greek voters embraced him.
"Europe is self-destructing," said Polyxeni Konstantinou, a
56-year-old public-sector worker voting in central Athens. "I voted
for Syriza because I hope that it will help change the tragic
circumstances that now govern Europe. Will Syriza be able to
achieve everything it says? Probably not. But whatever it does
achieve, then that will be good for Europe."
It may be less positive for financial markets, which had
reckoned on a narrower victory that would have tempered Syriza's
ambitions by forcing it to seek partners in a coalition. The euro
slid slightly in the very earliest whispers of trading in New
Zealand overnight.
"Greece is two years ahead of the curve" when it comes to
politics, said Bill Blain, chief strategist at Mint Partners, a
brokerage. "Other countries' [radical parties] are all going to
have their day fairly soon and it's really about markets trying to
anticipate how other countries will follow Greece."
Europe's financial markets are far more resilient today than
they were three years ago, when troubles in Greece sent investors
fleeing from government bonds of other troubled countries.
Nonetheless, the specter of strained conflict in Greece could cause
a selloff of riskier assets.
Mr. Tsipras has promised to roll back austerity, first with a
spending package aimed at Greece's struggling poor, and to win
forgiveness of some of Greece's towering debt.
He will have a mammoth task at home and abroad.
For one thing, Syriza is a broad coalition of the left that
includes factions that believe Greece should leave the eurozone.
Those factions would pressure Mr. Tsipras if he moves to compromise
with Europe.
The pressure to compromise will be intense. Under the bailout
program's rigorous schedule, Greece is required to complete a
review of its progress with the so-called troika of bailout
inspectors by the end of February. Mr. Tsipras has said he doesn't
recognize the troika's authority.
If negotiations to revive the bailout falter, Greece would be
without an umbrella of protection. That program ensures that
Greece's government has access to a stream of cheap financing, and
ensures Greek banks have access to cheap funding from the European
Central Bank.
The next hurdle will be EUR7 billion in bonds held by the ECB
that mature in July and August. Greece doesn't have the cash to
repay them, and failure to do so could ultimately lead to Greece's
exit from the eurozone.
The country is already deeply strained. In the past three
months, Greece's main stock index has shed roughly a fifth of its
value, while nervous depositors have withdrawn several billion
euros from the country's banking system.
At the same time, the rest of Europe is financially
healthier--even as it is mired in economic stagnation. The ECB's
newly announced program of government-bond purchases, while
primarily designed to boost sagging inflation, will likely "muffle
any contagion effects" by damping financial-market volatility, said
Lucy O'Carroll, chief economist at Aberdeen Asset Management.
After midnight local time, with more than 80% of the ballots
counted, Syriza had 36.3% of the vote, trouncing the incumbent New
Democracy party, with just 27.9%. The polls also showed voters
backed a handful of smaller parties--including the extreme-right
Golden Dawn party and the centrist To Potami party.
But in the early hours of Monday, even before the final votes
were counted, Syriza officials said a deal had been struck with the
Independent Greeks--a party that shares little common ground with
Syriza except for its rejection of the austerity measures. The
party, which is poised to win 13 seats in Parliament, would mean
the coalition would have 162 or 163 seats--a comfortable governing
majority in Greece's 300-seat legislature.
A meeting between Mr. Tsipras and Independent Greeks party
leader Panos Kammenos is scheduled to take place Monday morning,
Syriza officials said.
Since first seeking a bailout in 2010, Greece has undertaken
broad economic overhauls and cutbacks that have helped mend its
public finances and nudged the economy back to growth following six
years of deep recession. Those cutbacks have come at a cost: Some
25% of Greeks remain jobless, while a quarter of households live
close to the poverty line.
Syriza has promised to change all of that, pledging immediate
relief to the poor, rolling back unpopular taxes and negotiating a
debt write-down with the country's creditors to free up spending on
social programs.
Stelios Bouras, Juliet Samuel and Friedrich Geiger contributed
to this article.
Write to Charles Forelle at charles.forelle@wsj.com, Nektaria
Stamouli at nektaria.stamouli@wsj.com and Alkman Granitsas at
alkman.granitsas@wsj.com