Syriza divorce. The “Popular Unity” party is born…lead by former energy minister Panagiotis Lafazanis

Original post appeared on Bloomberg.

The lawmakers, whose names were read out on Friday by a deputy parliament speaker on television from Athens, will be called “Popular Unity” and led by former Energy Minister Panagiotis Lafazanis. Twenty-five lawmakers form the new bloc, while local media reported another four parliamentarians quit Syriza without joining the breakaway.

“We won’t accept being in the euro area and having bailout programs imposed on us,” Lafazanis told reporters in Athens on Friday. If resisting the bailout means the nation exiting the euro area “this is in no way a catastrophe. It’s a path that can create hope and prospects for our country.”

Tsipras stepped down as prime minister on Thursday evening, triggering a process that leads to a ballot next month. He is seeking to renew his mandate after surrendering to the euro area’s conditions for budget tightening and economic overhauls in return for financial help.

Tsipras’s call for snap elections was expected and is welcome as it will achieve a “clearer structure” in the Greek government, Thomas Wieser, the Austrian who leads the European officials who prepare meetings of euro-area finance ministers, told radio Oe1 on Friday.

While the move may slow Greek economic overhauls in the short term, “what’s more important is how a new government, which many people expect to be led by Alexis Tsipras again, will execute the reform program,” Wieser said.

Elected in January on an anti-austerity platform, Tsipras faced a revolt from within his own party after pushing through the kind of tax increases and spending curbs that he had vociferously opposed while in opposition.

Greek stocks and bonds fell on Friday, with the yield on two-year notes rising 138 basis points to 14.17 percent at 3:12 p.m. local time. The Athens Stock Exchange dropped 2.7 percent. Greek stocks have fallen 20 percent since the stock exchange reopened on Aug. 3 following a five-week halt prompted by the imposition of capital controls.

Though his eight months at the helm of Europe’s most-indebted country were beset by turmoil and brought the economy to the brink of ruin, Tsipras used a televised address on Thursday to list his achievements, from clinching a new aid package to securing a firmer commitment from euro-area partners to consider debt relief.

Tsipras remains popular with Greek voters, who gave Syriza 33.6 percent support, a 15.8 percentage-point lead over the main opposition New Democracy party, in a July 25 poll by Metron Analysis. Polls haven’t yet offered an indication of how much support Popular Unity would siphon off.

With the support of smaller pro-European Union parties such as To Potami and Pasok, the election winner “could create a strong coalition that will be able to pass and implement reforms,” said analysts at Axia Ventures Group Ltd. in Athens led by Constantinos Zouzoulas.

Earlier Friday, Greece’s President Prokopis Pavlopoulos invited New Democracy leader Evangelos Meimarakis to try to form a government, part of the constitutional procedure set in motion by Tsipras’s resignation.

While Meimarakis and Lafazanis’s rebel group, the third-largest in the 300-seat parliament, both get three days to try to form a governing coalition, neither is likely to succeed and the process will probably culminate in elections on Sept. 20.


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