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European Union, Germany, Italy, Norway, Switzerland, The Netherlands

Is the European ‘Christian democracy’ party model dead?

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When Dutch voters go to the polls on September 12, we don’t know whether they’ll favor prime minister Mark Rutte’s Volkspartij voor Vrijheid en Democratie (VVD, the People’s Party for Freedom and Democracy) or Emile Roemer’s Socialistische Partij (SP, the Socialist Party) or even Diederik Samsom’s Partij van de Arbeid (PvdA, the Labour Party) as their top choice.

What we do know is that the election could well be the worst post-war finish for the traditional Christian Democratic party in the Netherlands, the Christen-Democratisch Appèl (CDA, Christian Democratic Appeal).  It’s currently on track to finish in fifth place (or even sixth place) in a country that it had a hand in governing virtually without break in Dutch post-war politics until 2010.

In 2010, the CDA won just 21 seats in the lower house of the Dutch parliament, and it could win just 15 seats or less this time around.

So it goes all across Europe:

  • In Italy, the Democrazia Cristiana controlled the government (or participated in governing coalitions) for nearly 50 years of post-war Italian politics.  The Tangentopoli (‘Bribesville’) scandal led to its demise under the weight of massive corruption allegations in 1992, and the remaining core of that party, the Unione dei Democratici Cristiani e di Centro (UDC, the Union of Christian and Centre Democrats), led by Pier Ferdinando Casini, plays a significant, but minor role in Italian politics today.
  • Norway’s Christian Democratic Party, the Kristelig Folkeparti (KrF) once dominated Norwegian politics as well, but now holds just 10 out of 169 seats in the Norwegian parliament.
  • In Bavaria, the Christlich-Soziale Union (CSU, Christian Social Union) has controlled Bavaria’s state government since 1957.  It’s still the overwhelmingly largest party in Bavarian politics, but it lost 32 seats in the Landtag in 2008 and now holds just 92, and it looks likely to lose even more seats in the Bavarian state elections that must be held in 2013.
  • In Switzerland, the Christlichdemokratische Volkspartei der Schweiz (CVP, Christian Democratic People’s Party of Switzerland) has steadily declined since the 1970s.

Only in German federal politics does Christian democracy seem to be holding on — in the form of Angel Merkel’s Christlich Demokratische Union (CDU, Christian Democratic Union), which is allied at the federal level with Bavaria’s CSU.

So what’s happened to Christian democracy? And is it a concept whose time is up?

Christian democracy emerged as a political movement in the 19th century, as much as anything a reaction of the Catholic Church to the Industrial Revolution — and to the Marxist ideas that had so effectively challenged industrial capitalism in the mid-19th century, in the same way that the social democratic movement that gave voice to (and moderated) the growing labor movement.  (Some political scientists see a parallel in the “justice and development” strand of moderate Islamist parties that have emerged in Turkey and through vehicles like the Muslim Brotherhood in Egypt and Jordan).

It reached its heyday during the Cold War as a bulwark against the communist influences of Soviet Russia, but today seems increasingly an anachronism as the European right divides into, on the one hand, a free-market liberal ideology untroubled with cultural issues and, on the other hand, a nationalist ideology that is increasingly both anti-Europe and anti-immigrant.  That fragmentation provides yet another complication in navigating the European Union out of its current debt and currency crisis — the European Union was formed and the eurozone conceived in a world where Christian democracy largely controlled the initial EU member states. Continue reading Is the European ‘Christian democracy’ party model dead? →

The Netherlands

Rutte and Roemer hope to consolidate support in Dutch election, as Europe watches nervously

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As Dutch voters and the wider international world begin to pay attention to the Sept. 12 election, it’s becoming clear that ‘anti-austerity’ and ‘pro-austerity’ forces are coalescing behind the party of prime minister Mark Rutte (pictured above, top) and the Socialistische Partij (SP, the Socialist Party) of Emile Roemer (pictured above, below), leaving both newer and traditional parties of the Dutch political landscape floundering. 

The election, which is typically followed by months-long coalitions talks, will have a significant impact on the ongoing political and economic eurozone crisis: a Rutte victory would bolster German chancellor Angela Merkel in her cause for Europe-wide austerity, while a Roemer victory would embolden a growing ‘pro-growth’ cause that includes French president François Hollande and, to some degree, Italian premier Mario Monti.

After a relatively quiet election season, Rutte, leader of the Volkspartij voor Vrijheid en Democratie (VVD, the People’s Party for Freedom and Democracy), is back in the spotlight with a promise to increase an existing tax break for workers (arbeidskorting) by €300 in 2013 and by €1,000 in 2014.  The move is designed to sweeten the otherwise harsh effect of budget cuts that would lower the 2013 budget deficit to within 3% of GDP — last year’s budget was 4.7% of Dutch GDP, a shortfall that undermined Dutch credibility on the European stage.  Since Rutte came to power in a minority coalition government in 2010, he has made broad cuts across the entire spectrum of government spending, and the Dutch retirement age is set to rise from 65 to 67.

Rutte’s attempt to pass more budget cuts in the Netherlands in April led to the fall of his government, when Geert Wilders, the leader of the Partij voor de Vrijheid (PVV, the Party for Freedom) refused to support further cuts — although the PVV had not been a formal member of the coalition, it had provided crucial outside support to Rutte’s government.

Wilders, who rose to prominence and much electoral success in 2010 on his anti-Muslim, anti-immigration platform, is campaigning in 2012 on a full withdrawal from the euro and from the European Union altogether (even though the Netherlands was one of the original six members of the European Coal and Steel Community in 1951).  For whatever reason, however, voters are turning away from Wilders — much to Roemer’s benefit.

The subtext to Rutte’s drive to cut the Dutch budget is simple — he wants to retain the country’s pristine ‘AAA’ rating and keep the country out of any sovereign debt crisis and the ballooning yields that follow.  Above all, Rutte is determined to keep the Netherlands within the terms set by the Maastricht Treaty that establishes the 3% target.  The Netherlands is just one of four eurozone countries that has maintained its ‘AAA’ rating from each of the three major credit ratings agencies (joining Germany, Luxembourg and Finland).  Continue reading Rutte and Roemer hope to consolidate support in Dutch election, as Europe watches nervously →

The Netherlands

The incredibly shrinking Geert Wilders

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The past decade in Dutch politics has been fraught with what in the United States would be called “culture war” issues.

It may be surprising when you think of the Netherlands and its liberal attitude towards many of the hot-button issues in the U.S. — marijuana legalization, euthanasia, prostitution, same-sex marriage — but the Netherlands has had more than its share of tensions over Muslim immigration in the past decade.

The current standard-bearer of anti-Islam politics is Geert Wilders, somewhat of a Dutch Cultural Warrior, version 2.0 (following in the tradition of the late Pim Fortuyn, filmmaker Theo van Gogh and, to some degree, former Dutch parliamentarian Ayaan Hirsi Ali).  Wilders, the platinum blonde enfante terrible of Dutch politics, has highlighted the influx of Muslim immigrants to the Netherlands as a threat to the culture and way of life of the Netherlands (and Europe, generally).

His Partij voor de Vrijheid (PVV, Party for Freedom) swept the last general election in 2010, winning nearly one-sixth of the seats in the Tweede Kamer, the third-highest total.

Wilders dominated that election campaign with his views — he would ban all Muslim immigration to the Netherlands, pay current immigrants to leave and ban the Koran. He then dominated the months of coalitions talks that resulted when no party won enough seats to govern.  And then, as an outside supporter of Mark Rutte’s government, he has dominated Dutch governance — right up to April 2012, when he withdrew his support for additional budget cuts, leading to the snap elections on September 12.

So it’s with some surprise to see that the PVV is not dominating this election campaign: polls show that Rutte’s liberal, free-market Volkspartij voor Vrijheid en Democratie (VVD, the People’s Party for Freedom and Democracy) is tied with Emile Roemer’s Socialistische Partij (SP, the Socialist Party).  Rutte is running a campaign defending his push to bring the Dutch budget within 3% of Dutch annual GDP, while Roemer (and not Wilders) has emerged as the voice of opposition to austerity.

What’s clear is that, for the first time in over a decade, next month’s Dutch election is about spending, growth and the economy and less about Muslim immigration and ‘culture war’ issues — and early polls indicate that Wilders has not been as germane to the 2012 debate as he was in 2010.

Maybe it’s because Wilders has been so thoroughly identified as an anti-Muslim candidate (rather than an anti-Europe or anti-austerity).  Maybe it’s because there’s no mistaking the message of anti-austerity that voting for the Socialists sends.  Maybe it’s because Wilders originally provided support to prop up Rutte’s minority government.

But for whatever reason, Wilders has watched Roemer’s party rush to the front of the pack.  Although Wilders would normally seem mostly likely to benefit from a strong protest vote this year, he’s been relegated to watch as the unlikely Roemer drinks his milkshake — Wilders and the PVV remain trapped in a four-way tie for third place alongside the progressive Democraten 66 (Democrats 66) bloc, and the two struggling parties that dominated postwar Dutch politics until the last decade, the center-right Christen-Democratisch Appèl (CDA, Christian Democratic Appeal) and the center-left Partij van de Arbeid (PvdA, Labour Party).  It’s a little odd, considering that Wilders has a populist style that dwarfs that of either the technocratic Rutte or the plodding Roemer.

That doesn’t mean Wilders is going down gently, and Dutch voters are just starting to tune into what’s been a subdued campaign that coincides with summer holiday season.

His latest bid has been to expand his brand of populism to Europe — the PVV’s platform for 2012 reads, “Their Brussels, Our Netherlands.”  In typical Wilders fashion, it’s not nuanced — it proclaims, “other parties may choose Islam or EU nationalism, our party is for the Netherlands!”  Continue reading The incredibly shrinking Geert Wilders →

Greece

How many days (weeks) away are we from another Greek solvency crisis?

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When the world last left Greece, it was breathing a sigh of relief upon the news that Antonis Samaras would be able to cobble together a coalition following a narrow win in the June elections — the second such election in as many months.

Samaras (pictured above), now a little over six weeks into his government, is finding it increasingly difficult to get his coalition to agree on €11.5 billion in cuts, required by Greece’s bailout from the European Central Bank, the European Commission and the International Monetary Fund.  Those entities, known as the ‘troika,’ have pushed off a long-delayed review of Greece’s bailout program from September to October, but that means only that Greece’s government will have until mid-September to make the cuts. The ‘troika’ will then make a decision about disbursing the next €31 billion tranche of bailout funds to Greece, and Greece will then try to push for a renegotiation of the bailout terms to lighten the austerity that has added pressure to Greece’s downward economic spiral.

It’s clear that the ‘troika’ is getting impatient: the IMF has started to balk at throwing more money at Greece, has called on the European Union to take the lead on any further bailouts and the ECB in late July stopped accepting Greek bonds as collateral altogether.

But the Greek economy is in shambles, and is expected to contract by a full 7% this year — much more than an original forecast of 4.7%.  Greece’s recession is only getting worse, not better, and that’s after the economy contracted almost 14% in the past four years.  As tax receipts correspondingly shrink, Greece’s debt sinkhole becomes ever larger.  Greater debt requires more austerity, which cripples the economy, which leads to greater debt, and so on.

The only solutions seem to be:

  1. a miraculous economic turnaround. Not likely anytime soon.
  2. a full bailout from the European Union. Whether that means a direct cash bailout or “eurobonds” or a more inflationary ECB monetary policy, it all boils down to a transfer of wealth from Germany to Greece  — it’s an option that German chancellor Angela Merkel has resisted and which has become increasingly unpopular in domestic German politics.
  3. the “Grexit”. Greece leaves the eurozone, adopts a new drachma, and devalues it until its debts are manageable and its exports are cheap.  But that could lead to snowballing worries about Spain, Portugal, Italy and the rest of the eurozone and precipitate Europe’s own “Lehman” moment of financial panic.

The next deadline is August 20, when Greece must pay a €3 billion maturing to the ECB — and the ECB (despite its edict that it will no longer accept Greek bonds as collateral) is weighing the option of lending money directly to the Greek central bank (which can accept Greek bonds as collateral), so that Greece in turn can pay back the debt it owes to the ECB.

It’s a tidy Alice-in-Wonderland arrangement in which only a central banker could delight.

ECB president Mario Draghi deserves credit for getting Greece past yet another hurdle, but it doesn’t inspire any long-term confidence in either Europe or Greece to get the country out of its nosedive.  It takes little imagination to see how Greece could bumble out of the eurozone in short order without further intervention if and when it runs out of cash (which could now still happen in September): Greece would then be forced to pay its employees and pensioners in IOUs (think of the kind of IOUs that California issued — registered warrants — when it fell short of cash reserves in 2009), Greece would take longer and longer to pay back the IOUs, individual Greeks would start trading the IOUs for euros, and a market would develop that sets a price for the IOUs in euros.

In time, the IOUs will have become de-facto drachmas.

Meanwhile, the coalition that everyone thought would easily come to an agreement on those additional budget cuts has stalled. Continue reading How many days (weeks) away are we from another Greek solvency crisis? →

The Netherlands

Who is Emile Roemer?

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Europeans, including the Dutch, may well be unplugged and disengaged this month.

But ready or not, September 12 is nearly a month away, which means yet another European election — this time in the Netherlands, one of the six founding members of the European Economic Community in 1957, that body would develop into today’s European Union.  Dutch voters will elect 150 members to the Tweede Kamer, the lower house of the parliament of the Netherlands.

And today, after years of elections on social issues, the Dutch parliamentary election is poised to be fought, won and lost on one issue: budget austerity and bringing Dutch fiscal policy in line with the European ideal.

Given what we’ve seen this year all across Europe — the success of Alexis Tsipras’s anti-austerity SYRIZA coalition in Greece, the emergence of the anti-austerity Victor Ponta in Romania and the surge of Jean-Luc Mélenchon’s Front de gauche in the first round of the French presidential election — it’s no surprise that the breakaway pace-setter in the Dutch election has been not any anti-Muslim group, but the Dutch Socialistische Partij (SP, the Socialist Party), led by Emile Roemer.

As I noted last week, the prior 2010 election saw unprecedented levels of fragmentation among the Dutch electorate, and it led to six months of talks before a governing coalition emerged — Mark Rutte and his free-market, liberal Volkspartij voor Vrijheid en Democratie (VVD, the People’s Party for Freedom and Democracy) ultimately formed a weak minority government in coalition with the once-strong, now-withering center-right Christen-Democratisch Appèl (CDA, Christian Democratic Appeal), with outside support on a vote-by-vote basis from Geert Wilders’s right-wing populist and anti-Muslim Partij voor de Vrijheid (PVV, the Party for Freedom).  Rutte’s government fell in April when Wilders denied his support for a budget that would have reduced the Dutch budget deficit to just 3% of GDP next year.

In the current campaign, Wilders has attempted to deploy anti-Europe sentiment with as much gusto as he previously deployed anti-Muslim sentiment in 2010 (including wild rhetoric that would pull the Netherlands out of the eurozone).  But according to the latest IPSOS poll, both Wilders’s PVV and the CDA are sinking.  Even though Rutte’s VVD is holding steady as the top vote-winner, Roemer’s Socialists have vaunted into second-place — and are gaining.  Currently, the Socialists are projected to take 29 seats to 35 seats for Rutte’s VVD.  Other polls, moreover, give the Socialists a lead or put them in a tie with the VVD.

What does that mean? Even if the Socialists cannot form a coalition with, say, the longtime center-left Partij van de Arbeid (PvdA, Labour Party), which is currently polling in third place (projected to win 23 seats), the Socialists will nonetheless be a force to be reckoned with as never before.

And that means Emile Roemer will become a key power broker in Dutch — and European — politics.

So who is Roemer — and what can we expect from him?

Roemer remains a bit of a blank slate within the international media — for now, at least.

Continue reading Who is Emile Roemer? →

Romania

Ponta takes Romania to ‘cusp of dictatorship’ as Sunday’s presidential referendum approaches

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Hungary’s Viktor Orbán seems to be in good company these days.

As it turns out, he’s no longer the only Eastern European leader who gives pause to European Union leaders worried about a backslide to democracy.

Since becoming prime minister of Romania in May of this year, Victor Ponta (pictured above) has taken an unorthodox approach to respecting Romania’s constitutional framework.  Ponta’s biggest gamble so far comes to a climax this weekend — on Sunday, Romania will hold a referendum on whether to remove Romania’s president, Traian Băsescu.  Ponta and his political allies argue that Băsescu overstepped his authority, and have moved to have him suspended from office pending the referendum.  Romania’s Constitutional Court has ruled otherwise, but the referendum is still going forward.

Accordingly, if over 50% of eligible voters turn out, and a majority vote to remove Băsescu, it could trigger even more worries about a quasi-constitutional coup d’état.  The European Union earlier this month issued a stinging report about Romania’s new government since Ponta’s ascension as prime minister, and European Commission president José Manuel Barroso minced no words about his concern:

“Challenging judicial decisions, undermining the Constitutional Court, overturning established procedures and removing key checks and balances have called into question the government’s commitment to respect the rule of law,” Barroso said. “Party political strife cannot justify overriding core democratic principles. Politicians must not try to intimidate judges ahead of decisions or attack judges when they take decisions they do not like.”

Romania, a country of 19 million people centered on the eastern edge of the EU, joined the EU only in 2007 after emerging in 1989 from a Communist dictatorship under longtime strongman Nicolae Ceauşescu — EU leaders are currently assessing whether to permit Romania to join the Schengen Area — Europe’s free-travel zone which has no internal border controls.

Like most countries in Europe, Romania’s political climate has been altered by difficult budget choices in light of the sovereign debt crisis across the EU.  The country is dependent upon loans granted initially in 2009 from the International Monetary Fund in exchange for commitments to bring down Romania’s annual budget deficit from a high of nearly 7% in 2009.  Despite rapid growth throughout the 2000s, Romania’s economy contracted by almost 10% in 2009 and 2010, and grew at only an anemic 1.5% in 2011.

Emil Boc, whose Christian democratic/conservative Partidul Democrat-Liberal (PD-L, the Democratic Liberal Party, and which is also Băsescu’s party) won the greatest number of seats in the 2008 Romanian legislative election, governed until February 2012 and attempted to enact austerity measures in order to bring Romania’s budget under firmer control.

When Boc’s government fell, Mihai Răzvan Ungureanu of the free-market liberal Partidul Naţional Liberal (PNL, the National Liberal Party), attempted to build a new government, with the support of the social democratic Partidul Social Democrat (PSD, the Social Democratic Party), the third of Romania’s three major parties.*  Although Ungureanu attempted to continue economic reforms, his government fell on a no-confidence vote on May 7, when the PSD’s Ponta replaced him.

Since then, it’s been an incredible two months for Ponta, whose government has attracted concern with staggering speed. Continue reading Ponta takes Romania to ‘cusp of dictatorship’ as Sunday’s presidential referendum approaches →

The Netherlands

Up next in the spotlight during the EU’s summer of discontent: the Netherlands

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It may seem hard to believe, especially as yet another bond crisis envelops Europe, but the Netherlands has less than two months to go before a new general election on September 12.

As with so many elections in Europe lately, this one will be fought and won primarily on the issue of austerity.

The early election was called at the end of April following the resignation of Mark Rutte (pictured above, right) over disagreements on the Dutch budget.  Rutte, whose fragile minority government was being supported by Geert Wilders’s Partij voor de Vrijheid (PVV, the Party for Freedom), had been in talks with Wilder and other government partners for weeks in an attempt to cut €16 billion from the Dutch budget, lowering the 2013 budget deficit from 4.7% of GDP to just 3% of GDP.

Wilders (pictured above, left), whose PVV vaunted to the heart of Dutch politics following the particularly fractured 2010 general election, refused to accept the cuts.

In no small part due to the populist, anti-Muslim Wilders, previous Dutch elections have focused on identity politics: protecting the particularly liberal social rights in the Netherlands (as to same-sex marriage, drug legalization and euthanasia, among others), immigration and the role of Muslims in Dutch society.

This campaign, however, is focused squarely on austerity, and while polls today show that voters are inclined to reward Rutte and his free-market, liberal Volkspartij voor Vrijheid en Democratie (VVD, the People’s Party for Freedom and Democracy), voters are also inclined to give Emile Roemer’s Socialistische Partij (SP, the Socialist Party) its best showing in Dutch political history — with projections of 30 to 32 seats.  This would only further fragment the Dutch Tweede Kamer, the 150-seat lower house parliament of the Netherlands.

After the 2010 elections, it took Rutte six months of long discussions to put together a minority government.  As it turned out, Rutte entered into a formal coalition with the center-right Christen-Democratisch Appèl (CDA, Christian Democratic Appeal), with outside support coming from Wilders’s populist, right-wing and anti-immigrant PVV.  The latest Ipsos Netherlands poll shows that both the CDA and the PVV will lose seats in September, which could complicate Rutte’s ability to form any government and which could also prevent the adoption of the 2013 budget.

Here’s the latest composition of the lower house of the Dutch parliament:

Continue reading Up next in the spotlight during the EU’s summer of discontent: the Netherlands →

Greece

Who is Yiannis Stournaras?

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After a rough start for Greece’s newly inaugurated center-right government — Greece’s new prime minister Antonis Samaras remains immobilized from an emergency eye surgery over the weekend and his first pick for finance minister (Vassilis Rapanos, the head of the National Bank of Greece) resigned after falling ill last Friday — it looks like Greece finally has a finance minister.

Samaras has appointed Yiannis Stournaras as the new finance minister, although Stournaras will not attend the European Union summit in Rome that kicks off Thursday.  Samaras will not be able to attend, nor will the party leaders of his two coalition partners, Evangelos Venizelos, the leader of the center-left PASOK and Fotis Kouvelis, the leader of the more anti-austerity Democratic Left.  Instead, Greek president Karolos Papoulias, will lead the Greek delegation.

Meanwhile, in another blow to the Samaras government, newly installed deputy shipping minister George Vernikos resigned Tuesday after opponents pointed to his use of offshore companies, which are often used by Greeks to avoid taxes.

Stournaras is a generally respected professor and economist — most recently, he has served as the general director of the influential Foundation for Economic and Industrial Research, a Greek economic think tank and as development minister in the caretaker government between the May 6 and June 17 elections.

He is most well-known for his role in designing economic policy in advance of Greece’s accession into the eurozone and is known in Greece as “Mr. Euro” — it’s certainly difficult to miss the symbolism in that.  Stournaras has also worked as special adviser to Greece’s finance ministry and the Bank of Greece in the 1980s and 1990s.

Reuters reports that the Stournaras appointment, although widely applauded, does not guarantee any quick solution for the Greek economy’s future:

He faces a difficult juggling act – pushing for more time and money from sceptical foreign lenders while coaxing reluctant officials at home to push through unpopular reforms.

“Stournaras is a serious, respected person who will inspire some confidence in the markets. But he is entering a bad government, where many old-style, spendthrift politicians are occupying key positions,” said political analyst John Loulis.

“He will have to wage a hard battle against them. He is entering the wolf’s lair and he won’t survive without the prime minister’s solid support.”

A troubling nugget comes from The Financial Times, whichreports that none other than PASOK leader Venizelos, also the former finance minister who negotiated Greece’s second bailout (that the government now hopes to renegotiate), just last week vetoed the reappointment of Stournaras as the permanent development minister.

Cyprus, Greece

No country for old men

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It’s not been the best week for the new Greek government.

Later this week, the key decision-makers of the European Union will be engaged in the latest attempt at ending the eurozone’s crisis at a conference in Rome.

But the new Greek prime minister won’t be there. And neither will his finance minister, a post that may now be vacant.

A week after his center-right, pro-bailout New Democracy won a narrow victory in Greece’s parliamentary elections, Antonis Samaras had emergency surgery over the weekend to repair a detached retina.

Meanwhile, his nominee for finance minister, Vassilis Rapanos, the president of Greece’s national bank, has resigned (or turned down the offer — he was never formally sworn in) after falling ill on Friday and being rushed to the hospital.

Newly sworn-in foreign minister Dimitris Avramopoulos won’t attend.

Neither will Evangelos Venizelos, a former finance minister and leader of the center-left (and also pro-bailout) PASOK nor Fotis Kouvelis, the leader of the more leftist (and moderately anti-bailout) Democratic Left.  Both PASOK and the Democratic Left are supporting Samaras’s government, but have refused to take any ministerial roles in the new government — indeed, both Venizelos and Kouvelis seem incredibly terrified that the staunchly anti-bailout and radical leftist SYRIZA will steal even more of their support base.  SYRIZA placed a strong second in the June 17 elections and now threatens to displace PASOK as the dominant party of the Greek left.

Greece’s president, Karolos Papoulias, will lead the delegation instead.

Leading Greek newspaper To Pontiki calls out the government for its “sloppy handling” of Greece’s representation in Rome, but it is hard to blame Samaras too much for the unfortunate timing of two medical emergencies.  But the incident marks an ominous tone for Greece at a time when the country seems to have days or weeks (not months) to shore up Greece’s position in the eurozone.  After a campaign in which even Samaras agreed that the bailout package should be renegotiated in a way to help the Greek economy out of recession, it will be a massive blow to Samaras’s government that he will not be in Rome, nor will his initial choice for finance minister, nor will the leaders of the two parties that are his coalition partners.

In other news likely to be depressing to Athens, the country with the largest exposure to Greece’s banks has now requested a bailout from the European Union as well — Cyprus needs €1.8 billion this week to shore up Cyprus Popular Bank.  The amount, tiny by EU bailout standards, represents 10% of Cyprus’s GDP.  Although the European Central Bank will want to impose some conditions on the bailout, Cyprus has also been talking to Moscow and Beijing about a cash infusion, making the Cyprus situation not only a financial headache for Athens, but a strategic headache for Berlin and Brussels as well (and it’s not as if the EU doesn’t have one or two problems that make even Greece seem like an afterthought).

Greece

Samaras pieces together coalition after ND places first in Greek election

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The rest of the eurozone — indeed, the rest of the world — may have breathed a sigh of relief Sunday when it turned out that the pro-bailout parties appeared likely to secure a majority of the seats in the second of two highly divisive parliamentary elections in Greece.

As shown above, New Democracy (Νέα Δημοκρατία) has won the largest share of votes, taking with it the 50-seat “bonus” in the Hellenic parliament.  It is now very likely to form a coalition with the pro-bailout PASOK (Panhellenic Socialist Movement – Πανελλήνιο Σοσιαλιστικό Κίνημα), and possibly even with the Democratic Left (Δημοκρατική Αριστερά), according to reports of the latest coalition talks.  New Democracy’s leader Antonis will likely be Greece’s new prime minister, with the only question being whether PASOK and Democratic Left figures will take positions in the government or merely provide support to the coalition.

Samaras is allegedly favoring the appointment of Vassilis Rapanos, the president of National Bank, as finance minister.

Athens News has a full blog of Tuesday’s coalition talk developments.

In the meanwhile, here’s a look at where each of the main political actors stand in the fallout of Sunday’s vote, looking onward to what should still be a hot, wearisome summer for Greece and its position in the eurozone: Continue reading Samaras pieces together coalition after ND places first in Greek election →

Greece

Post-‘Spailout’ climate pulls Samaras even closer to SYRIZA’s position

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As the second Greek legislative campaign in as many months winds down for Sunday’s vote, it is becoming difficult to spot the difference between the leaders of the two parties most likely to win.

Oh what a difference a month can make.

Antonis Samaras, leader of the center-right New Democracy (Νέα Δημοκρατία), has been moving toward a “renegotiation” position for some time, but his latest comments about a potential renegotiation of Greece’s bailout terms today vary astonishingly little from what Alexis Tsipras, leader of the leftist SYRIZA, the Coalition of the Radical Left (Συνασπισμός Ριζοσπαστικής Αριστεράς), has been arguing all along:

Overhauling Greece’s debt deal, known as the memorandum, was also at the top of his party’s agenda, he said. “We will change the memorandum, the relentless recession cannot go on.”

He indicated that European leaders were open to renegotiating Greece’s debt deal. “Europe is changing, Greece has a chance for a fair negotiation within this climate of change,” he said.

Samaras said ND had set two conditions for joining other parties in a coalition government: securing Greece’s position in the eurozone and modifying the memorandum.

It’s a staggering evolution by Samaras, even since May.  Regardless of whether SYRIZA wins on June 17, it has cleared moved the terms of Greece’s national debate.

Meanwhile, read Tsipras’s op-ed in The Financial Times from yesterday — he sounds much more like Samaras than the marching-in-the-streets radical of the first election campaign (indeed, the idea of Tsipras writing an op-ed in The Financial Times back in April would itself have been risible).  It’s clear that, with even-or-so odds of becoming Greece’s next prime minister, Tsipras is looking to project an image of sober competence:

The systemic fiscal problems of Greece are, in large part, a problem of low public revenues.  Myriad tax concessions and exemptions granted to special interests by previous administrations, along with a low effective tax rate on personal income as well as capital, explain much of the problem. So too does the highly ineffective method of tax collection. Continue reading Post-‘Spailout’ climate pulls Samaras even closer to SYRIZA’s position →

Spain

Spain set to seek European bailout this weekend

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If true, at least this would put Greece on the backburner for a while. From Reuters, which has the scoop:

Spain is expected to ask the euro zone for help with recapitalising its stricken banks at the weekend, EU and German sources said on Friday, becoming the fourth country to seek assistance since Europe’s debt crisis began.

Five officials in Brussels and Berlin said the finance ministers of the single currency area would hold a conference call on Saturday morning to discuss a Spanish request for aid, although no figure on the assistance has been set.

The Eurogroup, which comprises the 17 euro zone states, will issue a statement after the call, which is scheduled to take place before midday (1000 GMT), the sources said.

“The announcement is expected for Saturday afternoon,” one of the EU officials said.

The dramatic move comes after Fitch Ratings cut Madrid’s sovereign credit rating by three notches to BBB on Thursday, highlighting the Spanish banking sector’s exposure to bad property loans and to contagion from Greece’s debt crisis.

Spain, with a nominal GDP (as of 2010) of $1.4 trillion, dwarfs that of either Ireland (nominal 2010 GDP = $229 billion), Portugal (nominal GDP = $204 billion) or Greece (GDP = $305 billion).  It is the eurozone’s fourth largest economy, after Germany, France and Italy, and it is the world’s 12-largest economy.

So this bailout would go much further to the heart of the eurozone than the previous bailouts to Greece, Ireland and Portugal.

Spain’s growth has stalled (or has been in recession) since 2009 and unemployment was 24.3% as of April 2012.  Although Spain’s banks have been fairly conservative, and Spain ran a surplus (or a very modest deficit) for much of the prior decade, the bust of a construction and property-value boom has left it in the midst of a staggering economic decline that brought Mariano Rajoy and the Partido Popular (PP — People’s Party) to power in December 2011 after nearly a decade of rule by prime minister José Luis Rodríguez Zapatero, whose Partido Socialista Obrero Español (PSOE — Spanish Socialist Workers’ Party) took much of the brunt of Spanish anger about the sudden economic turn, after implementing harsh budget cuts in response to the reality of reduced revenues and rising anxiety among Spanish bondholders.

So just a little over half a year after taking power, it will be on Rajoy’s watch — Rajoy promised never to accept an aid package — that Spain seeks a bailout. Continue reading Spain set to seek European bailout this weekend →

Greece

Golden Dawn incident highlights possibility of neo-fascist decline in Greek election re-run

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There aren’t many silver linings in being forced to hold two legislative elections in as many months, while your country is running out of money, mired in near-depression economic conditions and suffering from budget cuts that have torn apart the country’s social contract.

But perhaps one of the best things that can come of the June 17 elections — regardless of whether the pro-bailout center-right New Democracy or the anti-bailout radical left SYRIZA wins — is the chance that the neo-fascist Golden Dawn party will fare significantly poorer this time around.

Among other things, reduced support for Golden Dawn would significantly facilitate the arithmetic of forming a government.

The high-profile implosion of the party’s spokesperson Ilias Kasidiaris — an arrest warrant was issued for Kasidiaris after he threw water at one female parliamentary candidate yesterday and repeated slapped another on a live television talk show — does not bode well for the party’s chances:

The exchanges came when the discussion turned to the sensitive topic of the Greek Civil War (1946-1949).
When Kasidiaris called [Communist MP Liana] Kanelli an “old Commie”, she retorted that he was a “fascist”.  Kasidiaris also was incensed that SYRIZA’s Rena Dourou mentioned a pending court case against him.
When Dourou said that there was a “crisis of democracy when people who will take the country back 500 years have got into the parliament”, Kasidiaris, who has served in the army’s special forces, picked up a glass of water and hurled its contents at her.
“You joke,” he shouted.
He then turned on Kanelli, who had got up out of her chair and appeared to throw a newspaper at him.
He slapped Kanelli three times on the side of the face.

The Kasidiaris distraction follows a ridiculous post-election press conference in May when Nikolaos Mihaloliakos, the party’s leader, launched into a neo-nazi screed after the party’s thugs tried to force journalists to stand at attention.

Golden Dawn thrives on these confrontational moments to attract attention.  But even if you think that these kinds of outbursts are deliberate, it’s a sign of Golden Dawn’s weakness that it is staging these moments to suck away media attention from the main parties just 10 days before the election.

In the May elections, Golden Dawn won 6.97% of the vote and 21 seats.  Parties will win seats in the parliament, on the basis of proportional representation, if they can draw more than 3% of the vote. Continue reading Golden Dawn incident highlights possibility of neo-fascist decline in Greek election re-run →

Greece

Tsipras outlines SYRIZA program, as Samaras shifts tone toward bailout renegotiation

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Alexis Tsipras laid out his party’s program for the upcoming June 17 Greek election on Friday.

Tsipras said a SYRIZA government would immediately reject the memorandum on coming to power and ask for Greece’s debt to be restructured or for a moratorium on repayments. It would then repeal a reduction to the minimum wage and extend unemployment benefit to two years. It would also repeal recent labor market reforms limiting collective contracts.

Tsipras set out how his government would stabilize the economy. He said public spending would be set at between 43 and 46 percent of GDP, rather than under 36 percent as agreed in the memorandum. The SYRIZA leader said he would raise revenues by cutting down on tax evasion, waste and corruption and forming an assets register for all Greeks at home and abroad. The wealthy would pay more under a new tax system, he said.

The key takeaway point is that it is not substantively different from the program under which he led SYRIZA, the Coalition of the Radical Left (Συνασπισμός Ριζοσπαστικής Αριστεράς) in the previous May elections.

It does, however, highlight a subtle but unmistakable shift in the tone of Tsipras’s main rival, Antonis Samaras, the leader of New Democracy (Νέα Δημοκρατία), the center-right pro-bailout party that finished first in the May election.  Samaras in recent days has increasingly been taking a softer line on renegotiating Greece’s austerity program with the European Commission, the European Central Bank and the International Monetary Fund, all of which granted two bailouts to Greece in exchange for its adoption of austerity measures and labor market reforms.

Although Samaras has raged throughout both campaigns that a SYRIZA win would be catastrophic and lead to Greece’s exit from the eurozone, it’s clear that in the second campaign, ND and the pro-bailout PASOK (Panhellenic Socialist Movement — Πανελλήνιο Σοσιαλιστικό Κίνημα) are moving toward SYRIZA’s position.   Continue reading Tsipras outlines SYRIZA program, as Samaras shifts tone toward bailout renegotiation →

Greece

ND regains polling momentum against SYRIZA in upcoming Greek election

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As predicted, the upcoming (second) Greek election is increasingly looking like a showdown between the two key figures of the pro-bailout and anti-austerity camps — between Antonis Samaras, the leader of the center-right New Democracy (Νέα Δημοκρατία) and Alexis Tsipras, the leader of the leftist SYRIZA (the Coalition of the Radical Left — Συνασπισμός Ριζοσπαστικής Αριστεράς).

Polls show that New Democracy may be regaining momentum against SYRIZA, which had jumped into the lead in polls following the election and during the coalition talks that failed to produce a viable government.  Each of the two parties can point to polls showing a lead, with nearly a month to go until Greeks return to the polls.  Both parties are polling over 20% after an election in which no single party won over one-fifth of a historically fragmented electorate.

Both leaders are already sniping at one another in advance of June 17 elections, the second in two months in Greece, amid global concern that the possibility of an anti-bailout government’s election could lead to Greece’s exit from the eurozone (with a fear that the process of ‘de-euroization’ has already begun and could well accelerate — capital flowing out of not just Greek banks, but banks in Spain, Portugal and Italy as well).

Tsipras on Tuesday was in Berlin, after a visit to Paris on Monday with popular leftist leader Jean-Luc Mélenchon (pictured above), with the dual goals of calming fears about a potential SYRIZA-led government (Tsipras does not want Greece to leave the eurozone, but would like to renegotiate the terms of Greece’s bailout and austerity measures, four years into a devastating recession) and also building common cause with European leftists.  Tsipras has couched his electoral success in terms of a wider turn across Europe from austerity towards a more growth-oriented policy, as evidenced by the election of leftist anti-austerity François Hollande in France:

“Greece is a link in a chain. If it breaks it is not just the link that is broken but the whole chain. What people have to understand is that the Greek crisis concerns not just Greece but all European people so a common European solution has to be found,” Tsipras told reporters. Continue reading ND regains polling momentum against SYRIZA in upcoming Greek election →