Turkey is not going to become a member-state of the European Union anytime soon.
No matter what joint talks take place next week, next month or next decade between Turkish and European diplomats, it is absolutely incomprehensible that the European Union, with or without the United Kingdom, would be willing to grant membership to a state with the level of economic corruption and political authoritarianism as Turkey. Full stop.
Even if European diplomats did, though, and even if each of the other 27 member-states of the European Union wanted to admit Turkey — which today borders war-torn Syria and destabilized Iraq — all it would take is for a British prime minister to say, simply, ‘No.’
That’s because EU membership is one of a handful of issues accomplished only by unanimity of the European Union’s member-states. For example, Greece has held up Macedonia’s EU accession hopes for years over a long-simmering conflict over the name ‘Macedonia,’ and the Greeks, for the better part of the last century, have been none too keen on doing many favors for their Turkish rivals, either.
Last week, EU officials cheekily informed Turkey that the country has not yet met all of the EU conditions for visa-free travel to the European Union, one of the rewards that Turkey received as part of a controversial deal to stem the flow of Syrian and Iraqi migrants from Turkey into the European Union. Though critics of German chancellor Angela Merkel argue that she sold out EU values in exchange for a Turkish solution to the EU migration crisis, Europeans are holding firm in requiring that Turkey’s president Recep Tayyip Erdoğan stop using ‘anti-terror’ laws to arrest journalists, academics and political opponents. This is hardly the stuff of happy Turkish-EU relations. Continue reading ‘Leave’ campaign’s immigration emphasis could trump Brexit economics→
Shortly after the December general election, I wrote that Spain faced three possible choices — a German-style grand coalition, a Portuguese-style ‘coalition of the left’ or a Greek-style stalemate and fresh elections.
Spain chose the Greek option.
Five months after a national election ripped apart Spain’s decades-long two-party system, the failure of the country’s four major parties to reach a coalition agreement means that Spain’s voters will once again go to the polls on June 26 for a fresh vote, after a deadline ran out on midnight Tuesday to find a viable government.
Notably, the rerun of Spain’s national elections will fall just three days after the United Kingdom votes on whether to leave the European Union, a critical vote for the entire continent.
The problem is that, with talks stalled for any conceivable governing majority, the Spanish electorate seems set to repeat results similar to last December’s election. For now, markets are not unduly spooked by the political impasse in Madrid, but continued uncertainty through the second half of 2016 could prove different if no clear government emerges from the new elections and, presumably, a new round of coalition talks brokered by Spain’s young new king, Felipe VI.
This weekend, Serbia’s prime minister Aleksandar Vučić finalized a four-year consolidation of power in early parliamentary elections that delivered a landslide victory for his center-right Serbian Progressive Party (SNS, Српска напредна странка), giving him the mandate and the support to advance political and economic reforms that he hopes could one day result in Serbia’s accession as a member-state of the European Union.
In results late Sunday night, the SNS a wide lead over its nearest competitor, the center-left Socialist Party of Serbia (SPS, Социјалистичка партија Србије), which currently serves as the government’s junior coalition partner. The Socialist leader, Ivica Dačić, a former prime minister, currently serves as Vučić’s foreign minister. Several parties of the fragmented center-left and hard-right ultra-nationalist parties trail far behind in single digits. With just under 50% of the total vote on Sunday, the SNS can expect to have an absolute majority in Serbia’s unicameral, 250-seat National Assembly (Народна скупштина).
Vučic called the snap elections earlier this year, fully knowing how well his party was doing in the polls. Like it or not, Vučic and the former SNS leader Tomislav Nikolić, currently in his first term as president, will be directing Serbian policy through the end of the decade.
But Serbia is far from the only country in the Balkans that will vote this year, and Sunday’s vote kicks off what could become a season of electoral change across the region.
Unlike Serbia, where voters were happy to deliver Vučic the broad mandate he wanted, voters in the rest of the western Balkans are far less sanguine about their elected officials. Opposition politicians in Montenegro nearly ousted their long-serving prime minister earlier this year, though fresh elections are due before October. The twists and turns of a wiretapping scandal in Macedonia have reached fever pitch this week, with protesters marching against the government in Skopje, and a June 5 parliamentary election date is currently in doubt.
A region that still dreams of EU accession
The western Balkans are the last major region of Europe that has not yet been integrated into the European Union. With the possible exception of Turkey, it’s the final frontier of EU accession. Among the six (or seven, if you count Kosovo) countries that emerged out of the former Yugoslavia, only two of them have won EU member-state status, Slovenia and Croatia. They join only Albania in representing the western Balkans in the North Atlantic Treaty Organization.
The remaining Balkan states are in varying stages of their quests for accession:
Macedonia was granted candidate status back in 2005, but democratic and economic backsliding have stalled its membership push, not to mention its long-running spat with Greece over the name, ‘Macedonia,’ which Greeks consider to be an inaccurate appropriation of Greek culture and history.
Montenegro gained candidate status in December 2010, and negotiations are ongoing, though Montenegro has fully implemented just two of 33 chapters of the acquis communautaire, the body of EU law required for all member-states.
The European Union granted Serbia candidate status in March 2012, negotiations kicked off in 2014 and Vučic is eager to conclude accession by the year 2020, though that remains incredibly optimistic.
Albania won candidate status in June 2014, and though its negotiations have yet to begin, prime minister Edi Rama, a former artist who charged to power in 2013, is an energetic center-left figure who’s worked closely with former British prime minister Tony Blair to develop a package of EU-friendly economic and political reforms.
Bosnia and Herzegovina applied for membership status in February 2016, but the European Union hasn’t yet granted it candidate status.
Given the existential threats that the European Union faces, hardly anyone outside the Balkans seems to have the stomach for what promises to be a difficult round of accession. The June 23 referendum in the United Kingdom on whether to leave the European Union remains too close to call, but its passage would be a major blow to the notion of ‘ever closer union.’ Much of southern Europe, most especially Greece, have still not recovered from the eurozone crisis that stretched the limits of EU financial, economic and monetary policy and that brought into question the future of the single currency. Meanwhile, the most acute refugee crisis in Europe since World War II has weakened the Schengen agreement by undermining the free movement of people within the European Union and the eradication of internal EU borders.
For current EU members, then, it may look like there’s precious little benefit in EU accession. But for the Balkan states, there remains enthusiasm that EU membership will force the kind of reforms that could reduce the crippling corruption that is, on general, worse in the Balkans than in the rest of Europe:
Balkans populations also hope that EU membership will also clear the path not only for reforms, but for the kind of funding that could allow them to catch up to the higher EU standard of living, which, not surprisingly lags far behind: With eventual EU membership — and the promise it brings of greater incomes and opportunities — dangling as a carrot, it’s no surprise that Vučic has amassed so much political power in Serbia and an impressive amount of respect among European leaders. But it’s that same dynamic that could lead to massive changes throughout the rest of the region, most notably in Montenegro and Macedonia.
Wiretaps and pardons
Eleven days ago, Macedonia’s president Gjorge Ivanov pardoned 56 people, all of whom were implicated in a wide-ranging wiretapping scandal that forced the country’s powerful prime minister, Nikola Gruevski, to resign in January. Beginning in the early 2010s, Gruevski and his government were found to have wiretapped illegally up to 20,000 Macedonians, opposition figures, journalists and even diplomats.
Ivanov, who announced a decree that would end all investigations into the wiretapping scandal, set off a constitutional crisis from what had already been a crisis of governance and the rule of law, and his announcements met with sharp disapproval from EU officials and Macedonia’s political opposition.
Gruevski’s ruling VMRO-DPMNE (Внатрешна македонска револуционерна организација – Демократска партија за македонско национално единство; Internal Macedonian Revolutionary Organization – Democratic Party for Macedonian National Unity) has been in power since 2006. It easily won a fourth consecutive term in April 2014, though the election was hardly a fair fight.
Gruevski has spent much of the past decade stoking nationalist sentiment, which has antagonized Greece; for example, he erected an 11-foot high statue of Alexander the Great in Macedonia’s capital of Skopje. While the spat with Greece helped Gruevski, in part, to rally domestic support, it has only hardened Greek determination to block Macedonian membership not only in the European Union, but NATO as well. Meanwhile, the VMRO-DPMNE’s government has done little to introduce reforms to stem corruption or promote liberalization.
Macedonians now seem fed up with Gruevski’s empty promises and hollow rhetoric, to say nothing of the wiretapping shenanigans and his attempts to persuade Ivanov to pull the plug on the ongoing investigations.
Elections were set for June 5, but the government, fearing a rout, may try to postpone them. A meeting scheduled earlier today in Vienna among EU leaders and Macedonia’s political leaders was cancelled, even as the intensity of Macedonia’s protesters increases.
Zoran Zaev, Macedonia’s opposition leader and the head of the center-left Social Democratic Union of Macedonia (SDSM, Социјалдемократски сојуз на Македонија), was instrumental in revealing the extent of the wiretapping scandal, though only after Gruevski tried to have Zaev jailed for allegedly attempting to illegally toppling the government.
For years, Zaev has opposed Gruevski’s nationalist showmanship and denounced the government’s flashy development projects as wasteful vanity spending. Now, with Ivanov’s announcement to suspend the wiretapping scandal that Zaev himself helped to reveal, the opposition leader has joined the front lines of the protesters. There’s a sense that he could soon be leading the country, though he pledged earlier this month to boycott elections without additional reforms to guarantee political freedom and a free and fair electoral process. An original plan to hold elections in April has already been postponed once to June and could well be delayed again.
Negotiations over the conduct and timing of the Macedonian elections are just the beginning of what could become an even more tumultuous year. If Zaev and an opposition coalition forces VMRO-DPMNE from power, no one knows exactly how willingly Gruevski and his allies will concede. Moreover, from day one, a Zaev-led government would be locked in a high-stakes battle with Ivanov to reinstate the wiretapping investigation.
Đukanović’s last stand?
Though it officially won its independence from Serbia only in June 2006, Milo Đukanović has controlled Montenegro like a personal fiefdom since 1991, when he was first elected prime minister. Đukanović has held power, on and off, ever since.
Polls show that Đukanović and his Democratic Party of Socialists (DPS, Demokratska Partija Socijalista Crne Gore) hold a wide lead in elections that have to be called within the next six months. But that belies the frustration that’s built for a quarter-century with Đukanović and his family, whose opponents argue that they run Montenegro as their own personal duchy of corruption.
As in Serbia, Montenegro’s opposition is even more split today than it was in the last election. The conservative opposition Democratic Front (Demokratski front) did poorly in the 2012 parliamentary elections, and its leader Miodrag Lekić narrowly lost the 2013 presidential election. Last year, however, Lekić left the party to form Democratic Alliance (DEMOS, Demokratski savez), a competing center-right party.
In December, however, Đukanović only narrowly survived a vote of no confidence in Montenegro’s unicameral, 81-member parliament (Skupština Crne Gore), following widespread protests that began in October over longstanding suspicions of Đukanović’s corruption. Protesters demanded his resignation and a transitional government; Đukanović himself spent half of the 2000s fending off a criminal inquiry into corruption from an Italian prosecutor. Đukanović’s long-time allies, the Social Democratic Party (Socijaldemokratska Partija Crne Gore), left government for the first time since 1998.
Đukanović has hoped that Montenegro’s relatively strong economy and a general trend toward liberalization will distract from his critics’ worst allegations. Moreover, Montenegrins will go to the polls as he pursues the country’s accession to NATO after formally opening talks in February. It’s a step that has appalled Moscow, which still holds plenty of economic and cultural power in the western Balkans, despite the region’s aspirations to integrate further with the rest of Europe.
Đukanović, who is only 54 years old, seems unlikely to take the opportunity of 2016 elections to step down. But it’s not inconceivable that, despite Montenegro’s more successful strides toward NATO and, eventually, EU accession, he too will face the kind of popular wrath that is now greeting Gruevski across Macedonia.
Everyone knows that Scotland narrowly voted against independence in September 2014.
The ‘Yes’ campaign waged that fight fully knowing that, by 2017, there would be a broader UK-wide vote on the United Kingdom’s membership in the European Union. Given that Scots are relatively (though not universally) more pro-European than English voters, growing British euroscepticism may have played an important role to nudge some Scots toward the ‘Yes’ camp.
With that Brexit referendum now set for June 23, it’s the Scottish referendum that looms over the coming vote in at least two ways that could make Brexit more likely.
The first amounts to pure game theory on the part of Scotland’s voters, who comprise around 8.4% of the total UK population.
As predicted, Spain’s messy general election resulted in no clear winner, and none of its two largest parties could claim a majority in the lower house of Spain’s parliament.
What’s more, though two upstart parties upended the political status quo that’s existed for nearly 40 years in Spain, neither did so well that they can form a government — or even serve as a kingmaker for one of the two established parties.
While the conservative Partido Popular (PP, the People’s Party) emerged with the largest share of the vote, prime minister Mariano Rajoy has plenty of reason to despair. Much of the party’s support comes from older voters in the Spanish countryside, and the PP benefited from an electoral system that delivers slightly more seats to parties with support outside Spain’s urban centers. Nevertheless, he has lost his absolute majority, dropped 64 seats and, worst of all for Rajoy, there’s no clear or easy path to a governing majority. Though Spain’s economy has stabilized under the past four years of PP rule, unemployment remains staggeringly high (21.2%). The party’s leader since 2004, Rajoy might ultimately be pushed aside during coalition talks for a younger or more charismatic leader, like deputy prime minister Soraya Sáenz de Santamaría.
Meanwhile, the center-left Partido Socialista Obrero Español (PSOE, Spanish Socialist Workers’ Party) suffered its worst defeat since the transition to democracy in the late 1970s. Its new leader, Pedro Sánchez, a moderate economist, simply could not convince voters to look beyond long-simmering corruption scandals (which, by the way, also plague Rajoy’s party) and the record of the prior PSOE government, which took the first steps toward the path of austerity measures in the aftermath of the 2009-10 eurozone debt crisis.
Indeed, the PSOE just barely outpolled Podemos, an anti-austerity alternative that burst onto the Spanish political scene in 2014, embracing the anti-establishment protests of the ‘indignados’ movement. Despite leading polls earlier this year, Podemos crashed as fears grew that it would cause the kind of economic pandemonium that plagued Greece after the election of the far-left SYRIZA this year. Its leading spokesperson, Pablo Iglesias, began to moderate his movement’s rhetoric, and rallied to a strong third-place finish.
The center-right liberal Ciudadanos (‘C’s,’ Citizens), a federalist, economically liberal party founded in Catalonia in 2007, made the leap from regional politics to national politics, but its leader Albert Rivera must be disappointed that it failed to steal more voters from Rajoy.
With another handful of seats going to various pro-independence Catalan parties, as well as Basque and Galician regional parties, the net result is that no one has enough seats in the 350-member Congreso de los Diputados (Congress of Deputies), the lower house of Spain’s legislature, the Cortes Generales (General Courts).
Notably, Rajoy maintained the PP’s majority, however reduced, in the far less powerful upper house, the Senado (Senate), which can be overruled on most matters (i.e., not ‘organic laws’ that deal with constitutional matters, civil rights and federalism) by majority vote of the Chamber of Deputies.Voters elected 208 senators on Sunday as well (an additional 58 senators are appointed by regional assemblies).
Two sets of statistics are worth considering.
First, the traditional major parties (the PP and PSOE) won just 50.7% of the vote in aggregate, compared to 83.8% in the 2008 election and 73.4% in the 2011 election. Obviously, that means Spain is entering a new era where coalition politics are more important. That’s not entirely unprecedented — when José María Aznar won 156 seats after the 1996 elections, he had to work with Catalan, Basque and Canarian nationalists to form a stable government. But the success of Podemos and Ciudadanos has transformed Spain’s politics from a two-party matter to a multiparty affair.
Secondly, among the four major parties to emerge from the 2015 election, it’s staggering just how evenly divided the Spanish left and right are. Together, the PP and Ciudadanos won 42.65% of the vote and the PSOE and Podemos won 42.67%. Spain’s electorate, in the broadest sense, delivered neither a mandate to a sharp left turn or a sharp right turn.
What Spain now faces is a difficult choice of among three different paths, all of which carry their own risks and challenges. Spain’s new young king, Felipe VI, will also take a more hands-on role in the coalition formation process than his father, Juan Carlos I, ever did. The good news for Spain is that the three options each mirror paths taken by three of its fellow European Union member-states in the last three years:
Germany 2013: a ‘grand coalition’ between the two established parties;
Portugal 2015: a fragile coalition government that brings together all of the parties and movements of the left; and
Greece 2012: deadlocked coalition talks lead to fresh elections.
To the extent that Spain is entering a new coalition-based era of its parliamentary politics, a reshaped Spanish political landscape might transcend 20th century fractures and the transition to democracy that’s dominated Spanish political life for a half-century.
Five days before the Christmas holiday, Spanish voters will go to the polls to choose a new government in an election that’s being hailed as the country’s most important since 1982.
Indeed, voter turnout may well exceed the 80% levels not seen since 1982, when Spain had only just emerged from its Francoist dictatorship and was four years away from joining the European Economic Community, the predecessor to today’s European Union. Moreover, it will also be the first general election to take place under Felipe VI, whose father Juan Carlos I abdicated in June 2014 after guiding the country’s transition to democracy in the mid-1970s.
But what makes the December 20 election so unique is that economic crisis has shattered Spain’s stable two-party electoral tradition, leaving a four-way free-for-all that could force unwieldy coalitions or a minority government at a time when the country has only just started its economic recovery. Distrust in both major parties, moreover, has opened the way for a popular far-left movement at the national level and greater discord at the regional level, most notably in Catalonia, where support for the independence movement is growing. No matter who wins power in the eurozone’s fourth-largest economy, the next Spanish government will face difficult decisions about GDP growth, lingering unemployment, and federalism and possible constitutional change.
For decades, Spanish elections were essentially, at the national level, a fight between the conservative Partido Popular (PP, the People’s Party) and the center-left Partido Socialista Obrero Español (PSOE, Spanish Socialist Workers’ Party). In the most recent 2011 election, the PP won 186 seats in the 350-member Congreso de los Diputados (Congress of Deputies), the Spanish parliament’s lower house, while the PSOE won 110 seats.
Both parties can point to massive successes over the past three decades. Under longtime PSOE prime minister Felipe González, Spain consolidated its liberal democracy and benefited greatly from closer economic and financial ties to Europe, while Barcelona’s emergence as the host of the 1992 Summer Olympics catapulted it into a world-class city. Under conservative prime minister José María Aznar, Spain joined the core of western European countries as a founding member of the eurozone in 2002 and developed widening security ties with the United States. When the PSOE returned to power in 2004 under José Luis Rodríguez Zapatero, the government enacted same-sex marriage in 2005 and later negotiated a peaceful ceasefire with the paramilitary Basque nationalist group Euskadi Ta Askatasuna (ETA).
The pain in Spain
But the global financial crisis of 2008-09 and subsequent eurozone crisis of 2010 knocked Spain off its pedestal.
Not unlike Florida, Nevada and parts of California in the United States, property values in Spain fell as rapidly as they once climbed, and an economy driven by construction and easy credit sputtered to near-depression levels of contraction. Despite running a more parsimonious fiscal policy in the 2000s than even Germany, Zapatero’s government soon found its expenses far exceeding revenues, and his government engaged in a series of tax increases and spending cuts.
The Spanish electorate ousted Zapatero in December 2011, ushering the People’s Party back to power under Mariano Rajoy, whose main goal was to prevent Spain from needing to seek an emergency bailout. Despite some scares over the Spanish banking system in 2012, Rajoy succeeded in keeping Spain bailout-free, but at the cost of ever greater spending cuts and tax hikes. The Rajoy government’s tough fiscal medicine, to some degree, has worked. Yields on Spanish 10-year debt have steadily fallen from a high of over 7.2% in July 2012 to less than 1.8% today. For a country without economic expansion since 2008, the Spanish economy returned to fragile growth in 2014, and it maintained growth throughout 2015 — notching 1% growth in the second quarter of this year and 0.8% in the third.
But voters are not enthusiastic about the prospects of reelecting Rajoy, a leader who never quite managed to win over Spanish hearts. Spain’s unemployment rate today is still 21.2%, a drop from the record-high 26.9% level recorded in early 2013. But that’s still a far higher jobless rate than anywhere else in the European Union (with the exception of Greece).
In the 2008 election, before the bottom fell out of the Spanish economy, the two major parties together won 83.8% of the vote. By 2011, that percentage fell to 73.4%. If polls are correct, that percentage could fall below 50% on Sunday, as both the PP and the PSOE struggle against the surging popularity of the anti-austerity Podemos (‘We can’) on the left and the liberal, federalist Ciudadanos (C’s, Citizens) on the right.
If the election were held today, the PP would win around 110 seats, the PSOE around 90, and Podemos and Ciudadanos would each win around 60, leaving none of them with a clear majority. The uncertainty of the four-way race has both energized the electorate (in a manner reminiscent to those first early elections in the post-dictatorship era) and enhanced the chances of post-election uncertainty that both Greece and Portugal have endured this year. Continue reading Spain readies for historic, four-way election on December 20→
Alexis Tspiras’s victory in Sunday’s snap elections in Greece is reminiscent of Richard Wagner’s four-opera marathon Ring cycle — at the end of hours of drama, the ring ends up more or less right where it began, with the Rhinemaidens.
So it was in Greece, where voters have faced a tumultuous eight months under the first Tsipras government that began when Tspiras led the fiercely anti-austerity SYRIZA (the Coalition of the Radical Left — Συνασπισμός Ριζοσπαστικής Αριστεράς) to a near-landslide win in January’s parliamentary elections.
Influenced by hardline academic Yanis Varoufakis, his initial finance minister, Tsipras tried (and failed) to extract concessions from European lenders with respect to the often harsh conditions tied to Greece’s first two bailouts. Back in January, Tsipras promised Greek voters that he would reduce the country’s austerity conditions while keeping Greece within the eurozone. However, with a looming default to the International Monetary Fund in late June, Tsipras called a July 5 referendum to give voters a chance to weigh in on the terms that eurozone finance ministers were offering Greece in exchange for extending its second bailout.
Though Tsipras won a resounding “No/Oxi” against the bailout deal, the political victory came at a cost. His government was forced to introduce capital controls within hours of calling the referendum, and Greece officially defaulted on its IMF payment. During the nine-day referendum campaign, Greece’s financial condition deteriorated so much that Greece faced its most serious risk in five years of being pushed out of the eurozone. Dismissing Varoufakis in favor of the more moderate Euclid Tsakalotos, Tsipras reversed course and ultimately entered talks for a third bailout of €86 billion, with at least a vague, face-saving promise to consider debt relief later this year. The new bailout, in turn, led to a massive rebellion within SYRIZA, so much so that Tsipras needed opposition support to enact the key parliamentary votes on the third bailout. By the end of the summer, former energy minister Panagiotis Lafazanis and 24 far-left SYRIZA MPs, including the fiery parliamentary speaker Zoe Konstantopoulou, split into a new party, Popular Unity (LE, Λαϊκή Ενότητα), dedicated to reintroducing the drachma.
As a result, Tsipras called snap elections for September 20 as a way of winning an electoral mandate for his considerable volte face and as a way of consolidating his control over the increasingly centrist SYRIZA, purged of its far-left wing.
So, after all of that, what happened?
Not much. Despite a turnout that was around 800,000 lower than in January, the end result was a Hellenic parliament that now looks almost exactly the same as it did when Tsipras resigned late last month to call elections. Defying polls that showed SYRIZA tied with the center-right New Democracy (ND, Νέα Δημοκρατία), Tsipras’s party (newly purged of its anti-bailout rebels) defeated ND by a margin of over 7% — SYRIZA lost just 0.88% support versus the January result, ND gained merely 0.29%.
That was enough for SYRIZA to win 145 seats, just a loss of four from January, and strong enough that Tsipras will continue to govern with the same junior partner, the ‘anti-austerity,’ right-wing nationalist Independent Greeks (ANEL, Ανεξάρτητοι Έλληνες). Despite fears that ANEL’s support would fall below the 3% threshold to enter parliament, the party cleared the hurdle and will lose just seven seats.
Together, it’s enough for a fragile majority, but the best news for Tsipras is that the SYRIZA rebels in Popular Unity fell just short of the 3% hurdle.
In the televised debate earlier this week, Greece’s recent prime minister Alexis Tsipras dismissed the idea of a grand coalition as ‘unnatural,’ arguing that Greek voters would have to choose between a progressive coalition or a conservative coalition.
Tsipras, however, is wrong.
Greek voters aren’t choosing much of anything at all. Greece is essentially now a fiscal ward of the eurozone’s finance ministers, and the next Greek parliament’s composition will not be much different than the current one, a mix of left-wing and right-wing legislators who committed to implementing the EU-mandated bailout program, despite their misgivings, because the alternative would be much worse.
Whether the recent prime minister Alexis Tsipras, leader of SYRIZA (Συνασπισμός Ριζοσπαστικής Αριστεράς, the Coalition of the Radical Left), or the opposition leader Vangelis Meimarakis (pictured above, left, with Tsipras), head of conservative New Democracy (ND, Νέα Δημοκρατία) leads that effort doesn’t actually matter all that much.
In substance, it’s the choice between orange-flavored sorbet or tangerine-flavored sorbet.
Neither leader will truly be in charge of Greece’s fiscal policy, because that is already being set by eurozone finance ministers in Brussels and Berlin. The best that the next prime minister can hope for is some form of debt relief — eurozone leaders will discuss the matter in October, and economists believe that some form of debt relief (even if that just means extending Greece’s repayment period) will be necessary, despite strident political opposition in countries like Germany, Finland and The Netherlands.
The election is now a dead heat — polls show that the Tsipras-led rump of SYRIZA is essentially tied with New Democracy. Though the 300-member Hellenic Parliament is generally determined by proportional representation, the winner of Sunday’s election gains a ‘bonus’ of 50 seats, so even a narrow win means a windfall for the first-placed party.
Ballot-worn and crisis-weary Greeks will go to the polls for the third time in nine months in what amounts to a fresh referendum on the country’s third European bailout.
Facing a growing insurgency in his own government as he implements the terms of a new European Union-backed bailout of up to €96 billion, prime minister Alexis Tsipras will dissolve the Hellenic Parliament and call early elections for September 20 — in an autumn where Turkey, just across the Aegean Sea, is also likely to hold snap elections after the apparent failure of coalition talks.
There’s already been a disproportionately large amount of ink spilled on poor Greece in 2015. With the first disbursement of the country’s third bailout accomplished, though, there’s probably no better time for Tsipras to go to the electorate. The early expectation is that Tsipras will survive the elections and govern with a more stable and likely centrist majority. But if you’ve learned anything about Greek politics this year, it’s that you should expect the unexpected twists and turns of a country that’s struggling culturally, economically and politically to exit crisis mode.
From anti-austerity crusade in January to a third bailout in July
Tsipras (pictured above), the leader of SYRIZA (Συνασπισμός Ριζοσπαστικής Αριστεράς, the Coalition of the Radical Left), won election in January on a pledge to reduce the terms of Greece’s memorandum and provide relief from the effects of a half-decade of austerity imposed on Greece’s fiscal policy — all without endangering Greek membership in the eurozone. After months of talks, headed by his outspoken one-time finance minister Yanis Varoufakis, it became clear that Greece did not have the political leverage that Tsipras hoped would force a more lenient deal for his country. By the end of June, it was clear that the eurozone’s finance ministers had no appetite for extending Greece’s second bailout program without additional concessions to cut Greece’s still-bloated public sector and to reform its economy.
Tsipras then hastily called a referendum for July 5, campaigning against the latest deal on offer by the Europeans, and the ‘no’ campaign (‘oxi‘) won a stronger-than-expected victory, despite closing Greece’s banks and imposing capital controls that restricted daily ATM withdrawals, at their nadir, to just €60.
Despite the referendum, Tsipras returned to the negotiating table and ultimately accepted a proposal for the third bailout — with terms even tougher than those rejected in the July 5 referendum. Tsipras, who dismissed Varoufakis as his finance minister hours after the referendum, argued that Greece had to choose between two tough choices — austerity tied to yet another bailout program or the insolvency and financial chaos that would result from a disorderly exit from the eurozone. Tsipras essentially admitted at the time that he had no ‘plan B,’ and that his country lacked the foreign reserves to establish a new currency in the event of ‘Grexit.’
Leftist rebels increasingly split from SYRIZA over bailout
SYRIZA, until recently a loose coalition of leftists ranging from mildly anti-austerity centrists to former communists, almost immediately split over whether to accept the third bailout, in spite of the chaotic alternative. In particular, Varoufakis and then-energy minister Panagiotis Lafazanis, the leader of Left Platform (Αριστερή Πλάτφορμα), have been vocal critics of the deal, and parliamentary speaker Zoe Konstantopoulou attacked it vociferously in several key votes.
For the past month, however, Tsipras has pushed through the terms of the third bailout with dwindling support from his own party, and opposition MPs have kept his government and the bailout afloat. SYRIZA controls 149 of 300 seats in the parliament, and its junior governing partner, the nationalist right-wing and anti-austerity Independent Greeks (ANEL, Ανεξάρτητοι Έλληνες), control just 13 more seats. But by last week, support from within Tsipras’s coalition dropped to below 120.
Ultimately, Tsipras wants to call snap elections because he can’t function indefinitely with a government that refuses to deliver him a majority. By calling a fresh vote, Tsipras hopes to win a mandate for his new approach and for the new bailout program, though even Tsipras himself has grumbled that its terms will continue to retard Greek GDP growth and employment, keeping Greece stuck in its six-year economic depression.
There are no reliable August polls, but surveys from the summer show that SYRIZA, under Tsipras’s leadership, still commands a massive majority of around 40% compared to just 20% for the center-right opposition, New Democracy (ND, Νέα Δημοκρατία).
But we have no polls that show what might happen if, as seems likely, Left Platform splits formally from SYRIZA. This is a crucial question because the party that wins the most votes in an election also wins a ‘bonus’ of 50 MPs. So if Left Platform steals a significant share of SYRIZA’s voters, another third party — most likely New Democracy — could win the election with a much smaller share of the vote.
Tsipras is a wily campaigner, though, and he should benefit from the fact that for the first six months of his premiership, he engaged in substantial brinksmanship in pursuit of a better deal for Greece.
So the challenge for Varoufakis and Left Platform will be to describe how they would otherwise succeed — and how a eurozone exit would make life easier for Greece’s poor and its shrinking middle class. After all, Varoufakis and Lafazanis were key players in Tspiras’s government until July. At some point, voters will realize that the SYRIZA rebels have little more to offer than Greece’s Communist Party (KKE, Κομμουνιστικό Κόμμα Ελλάδας), which won only 5.5% in the January election. Tspiras, having followed Varoufakis’s advice, brought his country to the edge of Grexit. Tsipras will argue that Left Platform and the Greek Communists offer no solution that will keep Greece in the eurozone, and he’ll have the political scars of the last six months to prove it.
The state of Greece’s center-right and center-left opposition
Ultimately, however, Tsipras’s greatest threat may come from the right, which encompasses not just the traditional Greek right, but the center and the center-left as well. They will argue that Tsipras’s hardball negotiation tactics not only failed, but needlessly disrupted a nascent economic recovery and led to the flight of billions of deposits from Greek banks. And that’s not incorrect. But Tsipras will argue that, unlike his predecessors, conservative Antonis Samaras and leftist George Papandreou, he fought for Greek sovereignty in the face of the eurozone’s unelected officials and tried to reintroduce the democratic voice of the Greek people into the debate over Greece’s economic future.
Moreover, by calling snap elections so soon, Tsipras also hopes he can win a mandate before even more economic pain befalls voters from the additional pension cuts and an increase in Greece’s VAT required under the new bailout.
With former prime minister Antonis Samaras’s resignation after the July referendum, New Democracy has removed one of the most toxic figures in Greek politics from its leadership. But its acting leader, Vangelis Meimarakis, in office for six weeks, hardly seems prepared for the sudden challenge of unseating Tsipras. Nor does Fofi Gennimata, the leader of Greece’s once-dominant center-left party, PASOK (Panhellenic Socialist Movement — Πανελλήνιο Σοσιαλιστικό Κίνημα). She’s held the PASOK leadership only since June 14.
Tsipras’s most credible opponent will be centrist Stavros Theodorakis, a former television reporter and commentator who founded To Potami (Το Ποτάμι, which means ‘The River’), a centrist, pro-European party, in February 2014. Theodorakis (pictured above) harshly condemned Tsipras’s decision to call a referendum over extending Greece’s bailout, but he has nevertheless supported Tsipras’s efforts to enact Greece’s new bailout since mid-July. As a more pragmatic and centrist ‘Tsipras 2.0’ is emerging, the distance between him and Theodorakis is shrinking.
If Tsipras wins, that means he will look towards To Potami as a coalition partner in his next government; until then, however, he will be fighting with Theodorakis over the same pool of centrist and center-left voters.
Though the Independent Greeks have backed Tsipras throughout the ups and downs of the last seven months, it’s not clear how such an anti-austerity party will hold onto its support after having embraced a new bailout memorandum. Its leader, defense minister Panos Kammenos, could face an uphill battle in selling the bailout deal. If ANEL collapses, however, it could be to the gain of Golden Dawn (Χρυσή Αυγή), a eurosceptic, anti-bailout, anti-immigrant and neo-fascist group that vies with To Potami for third place in the polls, typically with between 5% and 8% support.
August may be among the most quiet periods of the year for world politics, especially in Europe as workers spend weeks away on holiday.
But events earlier this week made it very likely that two Mediterranean countries could hold snap elections later this year, adding greater political uncertainty to a European electoral calendar that will see elections for a new Labour leader in the United Kingdom next month, a new regional government in Catalunya (with implications for the Catalan independence movement) and new national governments in Portugal, Poland and Spain.
Greece’s troubled far-left government may call a vote of confidence as it begins implementing the country’s third bailout package, finalized with European leaders last weekend despite onerous conditions that could retard economic growth for years. The bailout and its aftermath could split prime minister Alexis Tsipras’s ruling SYRIZA (Συνασπισμός Ριζοσπαστικής Αριστεράς, the Coalition of the Radical Left). With far-left SYRIZA rebels already opposed to the bailout and with other opposition parties refusing to prop up Tsipras’s government, Greece could be forced to hold its second election since January, when SYRIZA first swept to power.
Across the Aegean Sea, Turkey may find itself forced to hold a repeat election after the ruling Adalet ve Kalkınma Partisi (AKP, the Justice and Development Party) of president Recep Tayyip Erdoğan and prime minister Ahmet Davutoğlu (pictured above) apparently failed to find common ground with Turkey’s two largest opposition parties, leaving it just shy of a majority in the Turkish parliament. Without a working majority, Erdoğan may be forced to call a new election by August 23, when Davutoğlu’s mandate to form a coalition government expires. Continue reading Both Greece, Turkey could be headed for snap elections→
For all the comparisons to Greece’s debt crisis, there’s one simple solution that many Puerto Ricans and mainland policymakers are prescribing to solve the commonwealth’s own financial crisis — and it’s not available to Greece or any other eurozone members.
Puerto Rico could simply become the 51st American state.
For the past 63 years, it’s been an estado libre asociado — a self-governing commonwealth that lies uncomfortably between a state and a territory, with bespoke elements unique to Puerto Rico, both good and bad.
Republican presidential contender and former Florida governor Jeb Bush supports statehood and in 2012, both US president Barack Obama and his rival, former Massachusetts governor Mitt Romney said they would support it if a clear majority of Puerto Ricans want statehood — Puerto Rico held a status referendum in the same election year. Pedro Pierluisi, Puerto Rico’s Democratic-affiliated non-voting delegate to the US House of Representatives, made the case for it in an op-ed in The New York Times earlier this month.
It’s true that both the Greek and Puerto Rican crises share much in common. Both governments are tethered to monetary policies that aren’t necessarily optimal. Functionally, that means neither Athens nor San Juan have a currency that they can depreciate to spur exports. Neither the European Central Bank nor the Federal Reserve can realistically be expected to tailor monetary policies to local needs. That, in turn, has exacerbated the effects from the economic forces of the past decade — the 2008-09 subprime crisis in the United States and the 2009-10 sovereign debt crisis in Europe, along with the economic pain of a nearly decade-long recession, rounds of tax increases and spending cuts, and accompanying rises in unemployment and downward pressure on wages. Lower growth, of course, means lower revenues and higher budget deficits — and more borrowing means higher yields that are now sucking Puerto Rico into a downward spiral. Alejandro García Padilla, its governor, made clear in late June that he believes the island’s $72 billion in debt is unsustainable.
In both scenarios, Greeks (through the Schengen zone) and Puerto Ricans (through the universal grant of US citizenship made in 1917 to allow Puerto Ricans to fight in World War I) can relocate to more economically prosperous European and American regions with ease. Migration means that fewer Puerto Ricans are left to service the growing debt — or build businesses and communities that can provide the revenues to fund schools and infrastructure. The island’s population is creeping downward; from a peak of 3.83 million in 2004, it was down to just 3.55 million last year. The pace of emigration is rising — to about 50,000 annually.
There are key differences as well between Greece and Puerto Rico.
Puerto Rico’s status is a relic of the late colonial era, and the United States acquired the island in 1898 as a result of its war against Spain (in Cuba, the Philippines and elsewhere). From the beginning, full-fledged independence has never been a popular option among Puerto Ricans. But nationalist sentiment rose so strongly by 1950 that two pro-sovereignty activists, Oscar Collazo and Griselio Torresola, attempted to assassinate US president Harry Truman.
The US policy response, Operation Bootstrap, adopted throughout the following decade to industrialize the island, transformed Puerto Rico into a more modern, urban place, even as American businesses consolidated the island’s farmland. But it never whisked Puerto Rico into a miraculous Caribbean Singapore, and it decimated small-scale agriculture.
Puerto Rico also suffers from the classic ‘island effect’ that economists sometimes describe of countries where dependence on imports and higher transport costs artificially increase the cost of living — a condition that’s often found throughout the Caribbean and islands, but that also affects Israel, a country surrounded by hostile Arab states with virtually no cross-border trade.
Most important of all, there’s no real talk of ‘PRexit,’ because no one believes that Puerto Rico could just abandon the ‘dollarzone.’ There’s no plan sitting in US treasury secretary Jack Lew’s desk that outlines the potential steps because it’s so much more implausible than a ‘Grexit.’
García Padilla is right that the crisis, decades in the making, is due to political factors as well as economic. Default may come soon — the Puerto Rican government says it doesn’t have enough cash to make a scheduled August 1 payment of nearly $170 million. That could launch a messy years-long default process, with the island trying to force haircuts on its bondholders. If San Juan can’t demand debt relief, protracted litigation might result in court rulings forcing Puerto Rico’s government to prioritize creditors over the salaries of public servants — galvanizing so much economic suffering that it would draw international condemnation over America’s neocolonial version of Greece.
There’s no effective Chapter 9 process for Puerto Rico, unlike for US municipalities, so the alternative of an orderly Detroit-style restructuring, isn’t available. The Obama administration, moreover, has made it clear that it doesn’t support a bailout — and it’s not clear that Republicans in Congress would be willing to provide the funds for any bailout.
So calls for statehood, in both Puerto Rico and on the mainland, and on the left and right, are on the rise, and predictably so. But as genuine as those calls might be, it’s a very, very unlikely result– and that will likely be true for a long time.
Imagine a North America with three, not two, countries north of the Rio Grande — the United States, Canada and… Newfoundland.
Newfoundland!? That’s right. The Canadian outpost in the north Atlantic. Imagine today a proud population of nearly 530,000, now basking in the proceeds of a thriving offshore oil market, growing interest in summer tourism and a historical reliance on fisheries.
It’s not as crazy as it sounds — and if not for the votes of 7,000 Newfoundlanders on this day in 1948, the proudly sovereign country of Newfoundland and Labrador might exist today as a strategic Atlantic hub.
With an area slightly larger than Bangladesh or Greece, and with a population similar to that of Luxembourg and larger than the populations of Iceland, Belize, Brunei or Malta, the Canadian province today has a GDP per capita of nearly $68,000, in Canadian dollars (as of 2013) — much higher than the Canadian average of nearly $54,000.
On July 22, 1948, nearly 150,000 Newfoundlanders voted in the second of two fiercely contested referenda. They decided, however narrowly, in favor of confederation with Canada. On April 1 of the following year, Newfoundland and Labrador became the 10th Canadian province. The referendum brought to an end 15 years of uncertain status — that’s because in 1934, the essentially independent ‘Dominion of Newfoundland’ reverted back to colonial status after a financial crisis left the country unable to service its debt.
Sound familiar? Relations today between Greece and the rest of the eurozone (most especially Germany) are as strained as ever. With a third bailout effectively ceding control of Greek fiscal policy from prime minister Alexis Tsipras to European authorities, Newfoundland’s example holds instructive lessons on sovereignty and debt. The referendum — and the failure of the pro-independence campaign — also provides a data point for aspiring nations like Scotland and Catalunya.
In the span of six days, German chancellor Angela Merkel has made a teenage Palestinian refugee cry with her government’s stand on refugee and immigration policy (then tried to pet her, in what must be one of her most cringe-worthy moments as chancellor), reiterated her increasingly isolated position in Europe in opposition to LGBT marriage equality and almost allowed her finance minister Wolfgang Schäuble to force Greece out of the eurozone, in the process undermining Merkel’s authority both at home and within the wider eurozone.
Merkel, who won a narrower-than-expected victory in the 2005 election, reached the apex of her political power in September 2013, when her governing Christlich Demokratische Union Deutschlands (CDU, Christian Democratic Union) nearly won an absolute majority in the country’s parliamentary elections. Despite being forced back into a ‘grand coalition’ with the rival center-left Sozialdemokratische Partei Deutschlands (SPD, Social Democratic Party), Merkel’s popularity crested. At long last, she had won a clear personal mandate for her cautious, seemingly ideology-free leadership.
But when faced with policy issues — like Greece, LGBT rights and immigration — featuring such sharp contrasts, Merkel’s popularity was always going to fall from those stratospheric levels.
The crisis over Greece’s future highlighted the limits of Merkel’s conciliatory governing style — to sit back, wait for a consensus to emerge and follow public opinion, even (or especially) if it means co-opting a rival party’s positions. That’s how Merkel has handled everything from nuclear power to raising the minimum wage. But there’s a limit to that kind of governance. Continue reading Has Germany (and Europe) reached peak Merkel?→
Though it’s Yanis Varoufakis, the Marxist economist and recently deposed Greek finance minister, who is typically painted in the media as the drag on the long-running negotiations to avoid a Greek default and keep the country within the eurozone, his intransigence has been met at every step of the way by Germany’s finance minister Wolfgang Schäuble, whose sneering impatience for Greek demands has been no less personal than Varoufakis’s over-the-top denunciations of European ministerial colleagues as ‘terrorists.’
Schäuble’s sharp-tongued wit has been a constant through five years of negotiations that stretch back long before prime minister Alexis Tsipras and the far-left SYRIZA (Συνασπισμός Ριζοσπαστικής Αριστεράς, the Coalition of the Radical Left) took power in January. On Thursday, Schäuble joked to an increasingly concerned US treasury secretary Jack Lew that he would be willing to swap Europe’s Greece troubles for Puerto Rico’s debt crisis.
When it comes to Greece, Schäuble is in many ways Germany’s opposition leader, even though he’s a stalwart of chancellor Angela Merkel’s governing Christlich Demokratische Union Deutschlands (CDU, Christian Democratic Party). He’s made it clear throughout the course of negotiations that he favors pushing Greece out of the eurozone, a result that other European leaders worry could destroy the single currency’s credibility — not to mention plunge Greece into an even more painful depression. Back in 2011 and 2012, few German politicians — just a handful of grey-haired Bavarian conservatives — were willing to call for Greece’s eurozone exit. Today, however, it’s a mainstream position, even on the center-left.
Germany is currently governed through a ‘grand coalition’ between the center-right CDU and the Sozialdemokratische Partei Deutschlands (SPD, Social Democratic Party) that includes around 80% of the entire Bundestag, the lower house of the German parliament. Nevertheless, Merkel is limited in her maneuverability — if she gives too much to Greece, there’s a chance Schäuble could lead a revolt of CDU backbenchers who already worry Merkel has transformed the party into a political amoeba that sways to the path of political expediency.
As Tsipras and his new finance minister Euclid Tsakalotos wait for Greece’s creditors to evaluation the government’s probable last proposal for debt relief, there’s a lot that lies in Schäuble’s hands. Even as French president François Hollande has directed his entire economic leadership — prime minister Manuel Valls, finance minister Michel Sapin and economic minister Emmanuel Macron — to help save Greece’s place in the eurozone, German doubts about the deal, a three-year bailout of over €50 billion, could still derail Saturday’s deadline. A full summit of the European Union’s leaders has been scheduled for Sunday. With banks running out of money and Greece banks nearing insolvency, European leaders have made it clear that if they don’t reach a deal with Tsipras on Saturday, they will spend Sunday addressing how Greece will exit the single currency.
Germany, as the largest member-state, is the largest contribution to any stability funding that comes from the European Commission and/or the European Central Bank. It’s currently on the hook for around €90 billion of Greece’s €5320 billion public debt. Merkel, despite doubts in her own party, has supported Greece’s two bailouts in the past, though she’s done so by demanding harsh strings that satisfy her own conservative flank and, of course, German taxpayers, who are ultimately on the hook for nearly one-third of Greece’s bailout debt.
Back in 2010, with a nod to moral hazard, Merkel cruelly told then-prime minister George Papandreou that she had to make the bailout as difficult as possible:
Mr. Papandreou says that when he asked German Chancellor Angela Merkel for gentler conditions in 2010, she replied that the aid program had to hurt. “We want to make sure nobody else will want this,” Ms. Merkel told him.
In principle, it was Merkel’s nod toward moral hazard — she couldn’t give the Greeks terms that Spain, Italy, Ireland, Portugal or the Baltic states might soon want. But in practice, it was a sop to the German right, which was growing ever more disgusted at consecutive Greek governments, which haven’t had the strongest reform record.
The world woke up to the news Monday morning that outspoken Greek finance minister Yanis Varoufakis had, at long lost, been dismissed by his prime minister, Alexis Tsipras.
Varoufakis (pictured above, right, behind Greece’s new finance minister, Euclid Tsakalotos) had become, to say the least, a brake on negotiations with the Eurogroup, even though his widespread popularity and strident anti-austerity boosted Tsipras’s government to a stunning victory in Sunday’s debt negotiations referendum, whereby 61.31% of voters rejected a prior plan offered by Greece’s European creditors.
European officials struggled to reach consensus with Varoufakis, who just last week, in the middle of the rushed referendum campaign, referred to his European ministerial colleagues as ‘terrorists.’ Tsakalotos, an Oxford-trained economist, is expected to take a more mild-mannered approach, and he already supplanted Varoufakis as Greece’s chief negotiator back in April. That was, however, only to the extent anyone could supplant the motorbike-riding, free-wheeling Varoufakis, who gave his final press conference as finance minister Sunday night in a t-shirt.
Varoufakis’s resignation, along with a pledge of national unity across Greece’s mainstream domestic political spectrum, breathed new life into hopes for last-minute talks for a third bailout, allowing the country to reopen its illiquid and perhaps insolvent banks, lift (at least partially) capital controls that have limited daily cash withdrawals to €60, restore liquidity to ATMs that have run out of cash altogether, address Greece’s €1.6 billion default on June 30 to the International Monetary Fund and meet a July 20 deadline to make a €3.5 billion payment to the European Central Bank.
For all the celebration that followed the resounding ‘no’ vote in Sunday’s referendum, the coming Sunday could bring financial austerity far more severe than Greece has known in the past five years, marked by a nearly 30% drop in GDP growth and a 26% unemployment rate. Failure to reach a deal could result in a shortage of cash, food, medicine and so many other necessities to the extent that European leaders are whispering that Greece could require humanitarian aid.