From Firebrand To PM-In-Waiting, Greek Leftist Smells Power

(Reuters) - Alexis Tsipras, leader of Greece's far-left Syriza party, recently travelled to Frankfurt and Rome to meet European leaders. He is softening his confrontational tone with Greece's international lenders. He has a drafted an agenda for the first 100 days of a future government.

The 40-year-old former student Communist is acting like a prime minister in waiting.

Syriza, once a fringe far-left movement, is now the most popular party in Greece, representing the many voters who feel punished by the country's EU/IMF bailout.

In May, the party easily won European elections and gained the governor's seat for Greece's most populous region. Today, it polls higher than any other party, leading by a margin of between 4 and 11 points over Prime Minister Antonis Samaras's conservatives. One poll shows Tsipras as the most popular political leader in the country.

"The big change has begun. The old is on its way out. The new is coming," Tsipras thundered in a recent speech to parliament. "No one can stop it."

Key to Syriza's ascent, party officials say privately, is a calculated effort to moderate the radical leftist rhetoric that prompted German magazine Der Spiegel to name Tsipras among the most dangerous men in Europe in 2012.

The party still rails against austerity measures and a bailout-driven "humanitarian crisis". It wants to reverse minimum wage cuts, freeze state layoffs and halt state asset sales.

But Syriza no longer threatens to tear up the bailout agreement or default on debt. Instead, officials say it supports the euro and wants to renegotiate the bailout by using the same pro-growth arguments of partners France and Italy.

Syriza's transformation mirrors the political progression of other anti-establishment fringe parties, such as the Northern League in Italy, that changed tactics after gaining parliamentary power and became more mainstream political forces.

It also reflects how Greece has turned a page on the dark days of the eurozone crisis four years ago, when Athens' profligate spending risked bringing down the entire euro project. Then, a Tsipras victory at the polls was widely seen as a trigger for a bank run and Greece's exit from the euro.

Recently, however, Tsipras has held talks with European Central Bank chief Mario Draghi in Frankfurt and Austrian President Heinz Fischer. Syriza's threadbare headquarters, where a portrait of Che Guevara once hung on the wall, is undergoing a makeover to include new desks and an expanded press room.

"This is not the Alexis Tsipras of 2010," said Blanka Kolenikova, European analyst for IHS Global Insight. "Since the last election Syriza's rhetoric has calmed down. Tsipras is preparing for the fact that he might be leading a government so he needs to prove that he is approachable and flexible."

Many people outside Greece say the risk stemming from a Tsipras victory is nonetheless high, especially since Syriza's demands on debt relief are widely considered to be unreasonable. They paint Syriza in a context of rising populism in Europe.

FROM DEFAULT TO RENEGOTIATION

Greek parliamentary elections are scheduled for June 2016. But a parliamentary vote to elect a president in February could change that.

Samaras needs the backing of 180 lawmakers to elect his nominee, but currently has the support of only 155 deputies. He is hoping that ending Greece's EU/IMF bailout a year early will help win additional support, but Syriza and other opposition parties have promised to block Samaras's nominee.

Under Greek law, parliament must be dissolved and fresh elections called if it fails to elect a president. Syriza officials privately say they have already begun talking to small parties about a future alliance.

Fears of snap elections and the prospect of a Syriza-led government have spooked investors and helped send Greek 10-year bond yields briefly past an unsustainable level of 9 percent last month. Syriza officials say they are not worried.

Some people inside Greece ask in how far the party's more hardline elements might block Tsipras's efforts to make Syriza a credible party of government.

Syriza still has some radical voices - like parliamentary spokesman Panagiotis Lafazanis who has vowed to "cancel" the bailout the way it was voted in, that is, by parliament overnight. But more broadly, Syriza's rhetoric began to change noticeably after the party won European elections this year.

"The climate in 2014 is very different from that in 2012. More and more people realize that Syriza is a leftist European political force fighting for change in Greece and in Europe and does not want the euro zone to collapse," Dimitris Papadimoulis, a senior Syriza official and a vice president of the European Parliament, told Reuters. "The illusion that Syriza wants a return to the drachma has gone."

Talk of nationalizing banks, for example, is notably absent. Instead, a senior party official says the party believes in exerting influence through the state bank bailout fund that controls three out of four major Greek banks.

Tackling Greece's mountainous debt remains at the top of the party's agenda. But talk of a debt "default" is gone, replaced with "renegotiation". Syriza wants Europe to write off a big chunk of Greece's 318 billion euros of debt - worth 175 percent of GDP - on a recognition that Greece's problem is Europe's problem too.

Other proposals include linking debt repayments to economic growth, an aggressive ECB policy of buying government bonds and excluding the roughly 38 billion euros spent to prop up Greek banks from national debt.

Some European officials say this is pie-in-the-sky thinking. Bailed out twice with over 240 billion euros over four years, Greece's prospects have improved since it nearly crashed out of the euro but it still needs aid and lacks full market access.

One senior EU official, speaking on condition of anonymity because of the sensitivity of discussions between Greece and its lenders, said that Greece is not in a position to negotiate.

The official said that Greece had already benefited from a 10-year debt service holiday and the return of profits on Greek bonds bought by the ECB and euro zone central banks under the securities markets program.

Pollsters also note that a Syriza-led government is not necessarily inevitable. Samaras still has time to stage a comeback, especially if he manages to pull Greece out of the bailout and win over anti-bailout lawmakers, they say.

"Syriza is currently leading with a very wide margin. But Samaras's image is also very strong," said Takis Theodorikakos, head of GPO pollsters. "The battle will be tough."