After thumping Tsipras victory, pain ahead for Greece

ATHENS - Greece's left-wing prime minister-elect Alexis Tsipras has won a thumping poll victory that hands him a mandate to drive through unpopular reforms agreed under an austerity deal struck with international creditors.

The unexpected margin of his victory Sunday came after a mutiny within the ranks of his radical Syriza party over a U-turn on tough tax hikes and pension reforms felled his government, sending Greek voters to the ballot box for the third time this year.

With 99 percent of votes counted - the final toll could take hours to come - Syriza secured close to an absolute majority in the country's 300-seat parliament, with a far smaller nationalist party to join a coalition government due to be announced Tuesday.

"Syriza proved too tough to die," Tsipras, at 41 the country's youngest premier in 150 years and the EU's first radical left leader in office, told a victory rally in Athens attended by hundreds of cheering, flag-waving supporters.

"The Greek people gave a clear mandate to rid ourselves of what is holding us in the past." Tsipras, who had justified the austerity deal he signed in July with European leaders as saving Greece from a chaotic exit from the eurozone, said the election victory would "change the balance" in Europe and strengthen Greece's fight against endemic corruption and hidden wealth.

"We have difficulties ahead," he told supporters. "Recovery cannot come through magic but through lots of work, stubbornness and struggle." And EU partners wasted no time in reminding Greece to get down to work with reform.

"Looking forward to swift formation of new government with strong mandate to continue reform process," said Eurogroup president and Dutch finance minister Jeroen Dijsselbloem.

With 99.66 of results tabulated, Syriza won 35.46 percent of the vote against 28.09 percent for their main rivals, the conservative New Democracy party.

That means Syriza will likely end up with 145 lawmakers, and once again join with the 10 MPs from the Independent Greeks party , already their coalition partners in the first Syriza government formed in January.

Tsipras will later Monday receive a mandate to form a government from President Prokopis Pavlopoulos.

"We unite our flags and our forces under the banner of honesty," he said.

'Gamble paid off'

The scale of Syriza's triumph was substantially bigger than had been expected, with opinion polls ahead of the election projecting a narrow lead over New Democracy of between 0.7 and 3.0 percentage points.

Tsipras even managed to weather the defection of 25 of his lawmakers who formed a rival anti-austerity party in the wake of his deal with international creditors for a new 86 billion euro (US$97 billion) rescue - and who in the end failed to pick up the required three percent of the vote to enter parliament.

And in an indication of Greece's weariness with five years of economic crisis and political tumult, nearly 44 percent of voters sat out the election - the third vote for Greeks this year including a referendum on austerity - a significant rise in the previous abstention rate of 36 percent in January.

Post-victory celebrations also indicated crisis fatigue with only around 500 jubilant Syriza supporters turning out to congratulate Tsipras on a hot Athens night against 8,000 in January.

"We know people are tired, that tomorrow's measures will be tough, that people have had enough of elections, that this isn't really a night for celebration," a Syriza voter told AFP.

French President Francois Hollande was among the first leaders to congratulate Tsipras, and is expected to visit Athens in the coming weeks.

"Alexis Tsipras's gamble has paid off," Berenberg bank analyst Holger Schmieding said in a note.

"Given the scale of the turmoil he caused in Greece and the dramatic nature of his policy U-turn... his victory at the snap elections today is remarkable." By now a familiar face in the corridors of power in Brussels and European capitals, Tsipras has pledged to soften the edges of the bailout to help his country's poorest citizens weather the austerity storm.

'Open issues'

"I could say the deal we brought is a living organism," Tsipras said ahead of the election, listing a number of "open issues" including debt reduction, privatisations, labour relations and how to deal with non-performing bank loans.

But the clock is ticking, with a review due in October by the lenders on whether Athens is abiding by the cash-for-reforms programme. At stake for the new government will be the release of a new three billion euro tranche of aid.

Greece's new parliament, expected to convene on October 1, will have to revise the 2015 budget, taking into account pension and income tax reforms, including taxes on farmers' income that are set to double by 2017.

The government must also finalise a procedure to recapitalise Greek banks by December, before new EU-wide bank rescue regulations that could affect depositors come into play in 2016.

Tsipras must also move quickly to remove capital controls that his previous administration imposed in June to avert a deposit run.

A total of eight parties look set to win seats in the next parliament, with partial results showing the neo-Nazi party Golden Dawn in third place, followed by the Pasok socialists.