Mitsotakis Is Breaking Out of the Box Greek Leftists Put Him In

(Bloomberg) -- Prime Minister Kyriakos Mitsotakis didn’t just defy the pollsters with his landslide election victory in Greece on Sunday. He also bust open the constraints that his main political opponent had tried to place on him.

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Investors are pricing in a clear victory for 55-year-old Mitsotakis in a second ballot expected on June 25 that should deliver an absolute majority and a clear mandate to continue his program of economic reforms.

In doing so, Mitsotakis defeated his leftist opponent Alexis Tsipras on Sunday, but he also outmaneuvered the far more powerful version of Tsipras’s Syriza party from 2015. Back then, Syriza brought Greece close to being kicked out of the euro and a year later changed the electoral law in order to prevent parties like Mitsotakis’s New Democracy from winning majorities.

The benchmark Athens Stock Exchange General Index jumped to its highest level in almost a decade while the yield on Greece’s 10-year bonds dropped by 14 basis points to 3.877%. That was the lowest since December and underlined the disconnect between Greece and Italy, another weak spot in during the euro crisis of the previous decade.

Tsipras had argued that a proportional system that pushed parties into coalitions was more democratic. But with 41% of the vote compared to about 20% for Syriza, Mitsotakis has signaled that he’s not interested in an electoral pact and instead will look to press home his advantage with a fresh ballot.

“New elections should be held as soon as possible,” he said on Monday, touting June 25 as a potential date.

Ahead of the vote, New Democracy had been polling in the mid 30s.

Sunday’s election was the first and only one to be held under the system that Tsipras introduced that effectively meant that a candidate needed around 48% of the vote to form a majority. A second ballot — and future Greek elections — will award a bonus of as many as 50 seats to the winner, lowering the threshold for a majority to about 38% under certain conditions.

The prospect of Mitsotakis claiming a strong mandate for his second term sets Greece apart from most of its neighbors, who’ve seen allegiances fragment during a decade that’s included a financial crisis, a global pandemic and the return of war in Europe.

Spanish Prime Minister Pedro Sanchez leads a minority coalition dependent on ad hoc alliances to pass legislation. Giorgia Meloni needed a three-party coalition to claim power in Italy after emerging from the political fringes. Even in Germany, where coalition building is part of the political fabric, Olaf Scholz is leading the first three-party government in more than half a century.

France’s presidential electoral system makes Emmanuel Macron something of an outlier among Europe’s biggest economies, although even he lost his parliamentary majority at the start of his second term.

“New Democracy is the largest center-right party in Europe,” Mitsotakis said right after his Sunday victory.

Voters were particularly focused on Greece’s economic transformation, which has seen gross domestic product recover to just about where it was when Greece lost its ability to repay its debt in 2010. Unemployment has more than halved from its peak of 28% and the country’s stocks and bonds have soared.

The election shows that many people just want that to continue.

They want a government that can stick to the sustainable fiscal path Greece had followed before the pandemic and keep taking full advantage of European Union funds that are helping to boost growth.

And that means a majority for Mitsotakis.

--With assistance from Paul Tugwell.

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