Two years ago, news that a left-wing, anti-austerity party had won power in Greece would have sent seismic waves through Brussels and the money markets.

The fear was this: the new Greek Government would threaten to default on its debt, forcing its expulsion from the euro. Conceding to its demands for easier terms would ravage the belt-tightening policies set by the EU's paymaster, Germany. Resisting them would punch a hole in the single currency, opening up the possibility other countries would leave it.

Today, those factors still exist, and the situation is indeed set for a standoff. But the consequences seem nowhere near as dramatic as before.

For one thing, the victorious leftwing Syriza party insists Greece will still remain a member of the euro. And for another, the European Central Bank (ECB) has strung out a safety net under the euro, seeking to prevent contagion by other badly indebted countries. Last week, it set down a quantitative easing programme - a bond-buying initiative that should help struggling eurozone economies.


Syriza's 40-year-old leader, Alexis Tsipras, has declared he will restore "dignity" to Greece after years of cuts that have driven down wages and forced unemployment up to a record 25 per cent, with youth joblessness affecting one person in two.

He opposes further liberalisation of Greece's labour market, reduction in its state payroll and privatisation of state assets, wants to lift the minimum wage from 580 ($870) to 751 a month, dish out vouchers for electricity and food for more than 300,000 needy people, abolish the tax on heating oil and bar people's primary residence from being seized if they fail to pay their mortgage.

These measures are estimated by the party to cost around 12 billion, which it claims it would raise mainly by reducing repayments on Greece's mountain of 318 billion of debt, equivalent to 175 per cent of its GDP. Most of the money is owed to the EU and IMF, which in 2010 put together a bailout package for an economy that was within a few weeks of collapse. Germany has taken the toughest line in demanding that reforms be carried out.

A period of grace will follow as analysts assess whether Syriza has the votes in Parliament, or the political will, to push hard on its demands.

US investment bank JPMorgan says the likelihood of a Greek exit from the euro is "a stretch" and a negotiated deal is the likeliest outcome. But US bank Goldman Sachs says if push came to shove, Greece might be left to twist in the wind.

In a statement issued after the Syriza victory became evident, the German Finance Ministry reiterated earlier remarks by Finance Minister Wolfgang Schaeuble warning Greece not to abandon the bailout programme. "Agreements reached with Greece remain valid," it read.

In northern Europe, frustration with the Greeks runs deep, especially among German taxpayers. Many see Greece as emblematic of the corruption, tax fraud and poor governance that afflicts other parts of southern Europe.

Kicking Greece out of the euro would be a high price, but it would deliver a salutary shock to bigger backsliders, according to this thinking.