Tensions high as Greece's new government swings left

Greece's new government is saying "enough" when it comes to the nation's punishing austerity policies. This new defiance in Athens is putting the rest of Europe on edge.

The left-wing Syriza party won Sunday's national elections after pledging to end the government spending cuts and other painful austerity measures, wide-ranging financial restrictions imposed by international creditors in exchange for loans to prop up the Greek economy.

The immediate goal: renegotiate the terms of Greece's $270 billion bailout package with the "Troika" -- the European Union, European Central Bank and International Monetary Fund -- and with private lenders. More broadly, the talks could decide if Greece remains within the 19-member eurozone or leaves the currency union, potentially sending shock waves across the global economy.

The new Greek prime minister, Alexis Tsipras, is already acting on his promises to secure debt relief. On Tuesday his government announced it was halting the privatization of the port of Piraeus, one of Europe's top 10 container ports, while freezing sales of stakes in Greece's biggest electric utility and a major oil refiner.

Analysts are also looking closely at the new Greek government and its cabinet of political outsiders for clues about how far Syriza is willing to go in seeking debt relief. Greece's new finance minister, Yanis Varoufakis, left his position as an economics professor at the University of Texas at Austin to join Syriza's efforts ahead of the elections.

Varoufakis has criticized the austerity policy in Greece as "a cynical transfer of banking losses onto the shoulders of the weakest taxpayers." He's also described the terms imposed on Greece by the financial bailout as "fiscal waterboarding."

And indeed, most Greeks have been hurt greatly by the ongoing austerity measures. The nation's unemployment rate still hovers at around 25 percent, while a 2013 poll found that nearly one-third of Greeks could no longer afford to heat their homes.

The hardships and subsequent political unrest that helped Syriza come to power have also prompted concerns that Greece could choose to exit the eurozone and abandon the euro.

Mujtaba Rahman, a Europe analyst with consulting firm Eurasia Group, says that while a so-called "Grexit" remains unlikely, its odds have increased from 5 percent to 15 percent.

If Greek leaves the eurozone, he said in a research note, "it would be more by 'accident' than intended -- government inexperience that causes Syriza to overplay its negotiating hand and delays a deal, and financial stress, especially deposit flight, that undermines government and political stability ahead of critical repayments to the IMF and ECB."

Michael Martinez of Société Générale, the French banking giant, says Greece's departure from the eurozone would be a "lose-lose" situation, and not what the Greek people want.

"The fact is that however we twist and turn the equations, Greece needs debt rescheduling," he said.

Tsipras has called for a eurozone debt conference, similar to the 1953 conference in London that cancelled half of post-war Germany's debts and gave that nation the financial breathing room to recover and become one of the strongest economies in Europe.

But Martinez says some European policy makers are concerned that any debt concessions to Greece would send the wrong signal to Ireland, Portugal, Spain and other indebted eurozone countries. The fear is they would demand equal treatment, especially as popular opposition to austerity appears across Europe, often in the form of extremist political parties.

Meanwhile, other analysts say the new Greek government is moving the eurozone, and the rest of the global economy, into unknown territory.

"We still maintain that Syrzia does not have the popular mandate to take the country out of the common-currency area," said Blanka Kolenikova, a senior analyst at IHS, "although the possibility that the negotiations could result in unintended consequences is not negligible."