ATHENS Greek left-wing leader Alexis Tsipras was sworn in on Monday as the prime minister of a new hardline, anti-bailout government determined to face down international lenders and end nearly five years of tough economic measures.
The decisive victory by Tsipras' Syriza in Sunday's snap election reignites fears of new financial troubles in the country that set off the regional crisis in 2009. It is also the first time a member of the 19-nation euro zone will be led by parties rejecting German-backed austerity.
Tsipras' success is likely to empower Europe's fringe parties, including other anti-austerity movements across the region's economically-depressed south. The trouncing of the conservatives represents a defeat of Europe's middle-ground political guard, which has dallied on a growth-versus-budget discipline debate for five years while voters suffered.
Sporting his trademark no-tie look, the 40-year old former student Communist Tsipras became the first prime minister in Greek history to be sworn in without the traditional oath on a Bible and blessing of basil and water from the Greek Archbishop.
At a brief secular ceremony where he pledged to uphold the constitution, Tsipras told President Karolos Papoulias: "We have an uphill road ahead." In a symbolic move, his first action as prime minister was to commemorate Greek resistance fighters with red roses at a memorial in Athens to those executed by Nazis.
Defying predictions that he would turn from populist to pragmatist after taking power, Tsipras quickly sealed a coalition deal with the small Independent Greeks party which also opposes Greece's EU/IMF aid program.
Syriza won 149 seats in the 300-seat parliament with its campaign of "Hope is coming!", leaving it just two seats short of an outright majority and in need of a coalition partner. The Independent Greeks, at odds with Syriza on many social issues like illegal immigration, won 13 seats.
The alliance is an unusual one. The parties, at the opposite end of the political spectrum, share only a mutual hatred of the 240-billion-euro bailout program keeping Greece afloat at the price of budget cuts.
Stavros Theodorakis, leader of To Potami, a new centrist party once seen as a potential Syriza coalition partner, said he could not join a government that included the Independent Greeks, whom he called "far right" and "anti-European". But he said he would wait to see the government's program before deciding whether to support a vote of confidence in parliament.
The tie-up suggests Tsipras will keep up his confrontational stance against Greece's creditors, who have dismissed his demands for a debt write-off and insisted the country needs reforms and austerity to get its finances back on track.
"At first sight this looks like a very strange marriage, but both parties share a strong opposition to austerity," said Diego Iscaro, an analyst at IHS Global Insight.
Yanis Varoufakis, an economist and outspoken blogger crusading against austerity, was expected to become finance minister when the cabinet is unveiled on Tuesday, senior party officials said.
He wrote on Monday that Greeks had "put an end to a self-reinforcing crisis that produces indignity in Greece and feeds Europe's darkest forces".
Reaction from financial markets to Syriza's victory was largely muted, with the euro recovering from a tumble to an 11-year low against the dollar on initial results. Greek stocks fell 3 percent, led lower by bank stocks including Piraeus Bank which fell 17.6 percent. Greek 10-year bond yields rose but stayed below the levels seen in the run-up to the vote.
For the first time in more than 40 years, neither the New Democracy party nor the center-left PASOK, the two forces that had dominated Greek politics since the fall of a military junta in 1974, will be in power, beaten by a party that has until recently always been at the fringe.
Together with last week's decision by the ECB to pump billions of euros into the euro zone's flagging economy, Syriza's victory marks a turning point in the long euro zone crisis.
It signals a move away from the budget rigor championed by Germany as the accepted approach to dealing with troubled economies, though it is unclear what concessions Syriza will be able to wring from creditors.
Both IMF head Christine Lagarde, who said the Fund would continue supporting Greece, and the chairman of the eurogroup of euro zone finance ministers, Jeroen Dijsselbloem, said they wanted to work with the new government.
Irish Finance Minister Michael Noonan said there could be some room for a deal to adjust debt maturities and cut interest rates rather than writing the debt off.
But Tsipras can expect strong resistance to his demands from Germany in particular and a series of European policymakers urged Syriza not to renege on previous governments' commitments.
"There is no room for unilateral action in Europe," ECB Executive Board member Benoit Coeure told Europe 1 radio, saying it was important to play by the "European rules of the game".
Tsipras has drawn the ire of lenders with his pledge to end budget cuts and heavy tax rises that have helped send the jobless rate over 25 percent and pushed millions into poverty.
But with Greece unable to tap the markets because of sky-high borrowing costs and facing about 10 billion euros of debt payments this summer, he may find himself with limited room to fight creditors. The new prime minister will also need a deal to unlock more than 7 billion euros of outstanding aid to make debt payments in the summer.
Standard and Poor's sent an early warning shot to Greece's new government, saying it could downgrade its credit rating even before its next planned review in mid-March if things go badly.
(Additional reporting by Angeliki Koutantou, Lefteris Papadimas and George Georgiopoulos, Tim Ahmann in Washington, Padraic Halpin in Dublin; Writing by James Mackenzie and Deepa Babington; editing by Anna Willard, Sophie Walker and Pravin Char)