New Greek elections imminent amid alarm over potential euro exit

With each of the top three leaders exhausting their mandate to form a government following the May 6 Greek elections, and with Greek president Karolos Papoulias failing in his attempt to bring party leaders together to form a caretaker, technocratic government of non-political leaders, Greece will head to the polls again in June, as concern swept the eurozone that Greece’s exit from the single currency might be imminent.

The election will pit center-right New Democracy (Νέα Δημοκρατία) and center-left PASOK (Panhellenic Socialist Movement – Πανελλήνιο Σοσιαλιστικό Κίνημα) against SYRIZA (the Coalition of the Radical Left — Συνασπισμός Ριζοσπαστικής Αριστεράς)  and a stable of various anti-austerity parties on both the left and the right.  In the prior May 6 election, ND won 18.85% of the vote and 108 seats in the Greek parliament; SYRIZA finished a strong second with 16.78% and 52 seats, besting PASOK at 13.18% and 41 seats. PASOK had won the previous 2009 elections and had joined in a unity coalition in November 2011 alongside ND to support Greece’s bailout and accompanying budget cuts.

The battle for first place — under Greek election law, the first-place winner takes an automatic bonus of 50 seats in the Hellenic parliament, while the remaining 250 seats are distributed proportionally among all parties achieving over 3% support — will be between New Democracy and SYRIZA, however, and their leaders were quick to point fingers at one another Tuesday for the breakdown over a potential government.

ND leader Antonis Samaras (and to a perhaps less central extent, PASOK leader and former finance minister Evangelos Venizelos) will make the case that the only way for Greece to remain in the eurozone is to support parties — such as ND and PASOK — that support the austerity efforts required by the European Commission, the European Central Bank and the International Monetary Fund as a condition to the bailouts that have allowed Greece to avoid default, by and large:

”These upcoming elections will be a struggle between the left-leaning forces of nihilism in league with opportunistic populists,” Samaras said. ”On the other side will be a European front, strong and determined.” Many Greeks seem resigned to the need for new polls, even though that will hold back the country’s commitments to detail new harsh cutbacks next month while implementing pledged reforms.

Tsipras, however, riding a wave of momentum from the May 6 vote as the chief beneficiary of Greek anti-austerity sentiment, and from polls that show SYRIZA would easily win new elections, had argued that any unity government would have to reflect the nearly 70% of Greek voters who supported anti-austerity parties:
“We tried to create a government that would satisfy the minimum demands made by the electorate,” Tsipras said after Tuesday’s talks. “Our main demand was to cancel the new harsh measures cutting pensions and salaries and to restore labor rights.” The conservative New Democracy party won the election, but only received 18.9 percent of the vote as angry voters scattered to smaller parties.
Amid market turbulence at the thought of prolonged political turmoil in Greece, with speculation that the election of an anti-austerity government could result in Greece’s exit from the eurozone, a long piece in Der Spiegel yesterday made the case for why it’s time for Greece to leave the euro:

It’s time to rethink the treatment. The Greeks were never ready for the monetary union, and they still aren’t ready today. The attempt to retroactively bring the country up to speed through reforms has failed.

No one can force the Greeks to give up the euro. And yet it is now clear that withdrawal would also be in the country’s best interest.

It isn’t a matter of abandoning the Greeks. Greece is and remains an important part of Europe. A Greek withdrawal from the euro will have serious social, political and economic consequences — mostly for the Greeks, but also for the rest of Europe. The continent’s solidarity is not tied to the euro, which is why other European countries will still have to support Greece with massive amounts of money.

But only a Greek withdrawal from the euro zone will give the country a chance to get back on its feet in the long term. The Greeks would have their own currency once again, which they could then devalue, making imports more expensive and exports cheaper. As a result, say American economist Kenneth Rogoff and others, the Greek economy could become competitive again.

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