Tag Archives: new democracy

Greece

Cracking down on Golden Dawn’s leadership is a risky strategy for the Greek government

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Over the course of the past week, the Greek government stepped up its efforts to treat Greece’s hard-right, neo-fascist party, Golden Dawn (Χρυσή Αυγή) with the kind of speed and clarity that one rarely sees in Athens.Greece Flag Icon

Those efforts follow the stabbing of anti-fascist hip-hop artist Pavlos Fyssas over a week ago, which marked a turning point for the coalition government that center-right prime minister Antonis Samaras leads.  Greek authorities over the weekend arrested Golden Dawn’s leader Nikos Michaloliakos (pictured above) and other party members, including party spokesman Ilias Kassidiairis, on charges of belonging to a criminal organization.  It was an unprecedented action in Greece’s post-dictatorship democracy — the first time since 1974 that MPs, let alone a party head, were arrested.

But things took an awkward turn on Wednesday when three of the Golden Dawn MPs (but not Michaloliakos) arrested were released pending trial, adding to doubts that Samaras’s government is making the right choice in suddenly treating Golden Dawn as more of a criminal organization than a political organization, however vile its organizing beliefs.  Kassidiaris (more on him here) did himself no favors by kicking and pushing members of the media upon his release Wednesday.

Support was already crashing for Golden Dawn in the wake of the murder — the party dropped from winning around 13% support in polls to just around 6% or 7% last week in the aftermath of the Fyssas murder.  In real terms, that means that Golden Dawn would no longer be the third-largest party if elections were held in Greece tomorrow.  After winning 6.92% in the previous June 2012 elections, Golden Dawn currently holds 18 seats in the 300-seat Hellenic Parliament (Βουλή των Ελλήνων), and the party had been threatening to resign en masse, leading to distracting by-elections.  Golden Dawn, which began as a ‘nationalist socialist’ magazine in 1980, comprised mostly of misfit supporters of the right-wing military junta that ruled Greece between 1967 and 1974, was a very minor presence in Greek political life before — until Greece’s economy plunged into contraction, unemployment, misery and social discord over the past four years.  (Read more background on the group’s history here.)

If you want to understand why Golden Dawn’s popularity has ballooned, check out the trajectory of the Greek economy from growth to severe depression over the past seven years:

greecegdpGolden Dawn was already growing into something more than a political party — a mutual aid society to provide food and other necessities (but only, of course, to ‘pure’ Greeks) and a near-paramilitary outfit that drew, according to some Greek analysts, the support of 50% of the Greek police forces.

But Golden Dawn’s polling collapse was, even before the crackdown, good news for Samaras — right-wing voters who had flirted with Golden Dawn seemed to be returning to Samaras’s more conventional conservative New Democracy (Νέα Δημοκρατία), which has boosted it once again over the anti-austerity, leftist SYRIZA (the Coalition of the Radical Left — Συνασπισμός Ριζοσπαστικής Αριστεράς).  Before the latest drama in Greece, SYRIZA had eclipsed New Democracy in many polls, even as Greece faces the humiliating prospect of requesting a third bailout from the ‘troika’ of the European Central Bank, the European Commission and the International Monetary Fund.

So why would Samaras make this push now?  His sudden aggressive tack against Golden Dawn comes with the risk that Samaras will transform Michaloliakos and his party into martyrs, thereby boosting their support when they might have otherwise faded away as Greeks backed away from a group with such openly neo-Nazi leanings. Continue reading Cracking down on Golden Dawn’s leadership is a risky strategy for the Greek government →

Germany, Greece

What kind of a deal can Greece expect after the German elections?

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Europe may be a non-issue in the German election campaign, but it’s becoming increasingly clear that Europe will occupy a chief role in the agenda of Germany’s next chancellor, perhaps more so than exclusively German domestic issues.Greece Flag IconGermany Flag Icon

Though center-right chancellor Angela Merkel and center-left challenger Peer Steinbrück are both stridently pro-Europe, it’s an open question how to next German government should deal with the poster-child of the European financial crisis — Greece.  To understand Germany’s options requires an understanding of the underlying Greek politics — and how a Greek political crisis could plunge the entire eurozone back into panic mode.

Even as Germany and the eurozone as a whole pulls out of the worst of the most recent recession, Greece continues to struggle with economic contraction.  The economy is set to shrink by between 4.5% to 5% this year, the unemployment rate is a staggering 27.6%, and this follows five consecutive years of recession capped off by a 7.1% contraction in 2011 and 6.4% contraction last year.  Greece remains trapped in a grueling internal devaluation where the private sector is being forced to accept leaner wages to make exports more competitive and the public sector is being forcibly downsized by the terms of the bailout programs agreed to by the ‘troika’ of the European Central Bank, the European Commission and the International Monetary Fund.  Greece today is not a fun place to live, and Greek voters are angry at Germany in particular for forcing so many Greeks into poverty and joblessness while doing little in terms of fiscal or monetary policy to boost the country’s medium-term growth prospects.

But German voters have their own narrative — while they’re still generally supportive of ever close union within Europe, they’re nonetheless wary of the European Union becoming a transfer union where wealth from German productivity flows to Greek profligacy.  That underlies the collective angst within the entire Germany political community late last month when Wolfgang Schäuble, Germany’s finance minister, indicated that Greece would require a third bailout — perhaps up to €11 billion, which is still a fraction of what the troika has already lent to Greece.  (For the record, Portugal’s government is also likely to require a second bailout of its own early next summer.)

Back in Greece, that means a politically radioactive set of negotiations at a time when Greece’s government is reeling.  A coalition between the two once-dominant parties since the return of Greek democracy in 1974, the center-right New Democracy (Νέα Δημοκρατία) and the center-left PASOK (Panhellenic Socialist Movement – Πανελλήνιο Σοσιαλιστικό Κίνημα) holds just a cumulative 155 seats, giving it the barest of majorities in Greece’s 300-member Hellenic Parliament.  After the disastrous shutdown of Greece’s public television station ERT in June, the anti-austerity Democratic Left (Δημοκρατική Αριστερά) left the governing coalition — its leader Fotis Kouvelis previously agreed to join the coalition after Greek’s June 2012 elections in order to provide more stability for the country.

Snap elections seem likely in any event sometime next year.  If elections were held today, SYRIZA (the Coalition of the Radical Left — Συνασπισμός Ριζοσπαστικής Αριστεράς) seems likeliest to win them, according to a recent poll, making the young, massively anti-austerity opposition leader Alexis Tsipras Greece’s radical new prime minister.  The Sept. 11 Public Issue poll showed SYRIZA moving into first place with 29%, New Democracy with 28%, and the far-right, neo-fascist Golden Dawn (Χρυσή Αυγή) would win 13%.  PASOK, meanwhile, would fall to just 7%, the Greek Communist Party (KKE) would win 6.5%, the right-wing, anti-bailout Independent Greeks would win 5.5%, and the Democratic Left would win just 2.5%, less than the 3% threshold for entering parliament.

SYRIZA has essentially consolidated much of the support of the anti-austerity left, so it’s puzzling how PASOK still attracts even 7% support, given that it’s subjugated itself almost completely  to prime minister Antonis Samaras’s agenda.  But Golden Dawn’s support is rising, and it’s likely to pull support from increasingly frustrated right-wing voters that once supported New Democracy, suggesting that if economic conditions keep deteriorating, Golden Dawn could draw even more support to a largely xenophobic, nationalist agenda.

If those numbers held up in a new Greek election, Merkel and her colleagues in Paris, Brussels and other European capitals, would probably regard it as a disaster for Europe. Continue reading What kind of a deal can Greece expect after the German elections? →

Greece

Kouvelis, Democratic Left withdrawal from Greek government leaves precarious majority

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Just a little over a year after the second of two divisive elections in Greece, the smallest partner in the three-party governing coalition withdrew its support today — leaving Greece ever closer to new elections, though the government will continue on with a slim majority for now.Greece Flag Icon

Fotis Kouvelis, in announcing that his party, the Democratic Left (Δημοκρατική Αριστερά), would leave the coalition over the growing row related to the sudden closure of ERT, the national broadcaster, emphasized that Greece did not need new elections, and he indicated that the party would perhaps provide external support to what’s left of prime minister Antonis Samaras’s coalition to keep Greece on track with respect to the terms of its bailout program with the ‘troika’ of the European Commission, the European Central Bank and the International Monetary Fund.

What does that mean for Greece?

Though it’s true that the departure of the Democratic Left doesn’t necessarily mean new elections, it leaves the government in a precarious position.

Samaras’s New Democracy (Νέα Δημοκρατία), Greece’s longstanding center-right party, holds 125 seats in the 300-member Hellenic Parliament (Βουλή των Ελλήνων).  Its other coalition partner, PASOK (Panhellenic Socialist Movement – Πανελλήνιο Σοσιαλιστικό Κίνημα), Greece’s traditional center-left party, holds 28 seats.  Together, that gives the government an ostensible three-seat majority, though the 14 seats that Kouvelis delivered provided a wider margin for comfort over a year that’s seen Samaras’s government push forward with the fiscal adjustments mandated by the bailout program.

But more importantly, Kouvelis (pictured above, left, with Samaras in center background) delivered the votes of one of the two parties of the anti-bailout left, giving Samaras’s government a broader base and a credible claim to being somewhat of a unity government.

The Democratic Left formed only in 2010 when moderates split from the leftist SYRIZA (the Coalition of the Radical Left — Συνασπισμός Ριζοσπαστικής Αριστεράς).  So while SYRIZA leader Alexis Tsipras is content to lead the opposition, Kouvelis and his party brought an outsized amount of legitimacy to Samaras’s government.  After all, both New Democracy and PASOK had backed Greece’s bailouts, and many voters have held the two parties, which switched back and forth in power in recent decades, especially responsible for Greece’s economic woes.

Their continued unpopularity is one reason why no one wants to risk elections anytime soon.  PASOK, in particular, has lost nearly all of its support among voters to the benefit of Tsipras and SYRIZA, which have given more muscular voice to the anti-bailout left.  If elections were held tomorrow, it’s not even certain that PASOK would pass the 3% threshold to win seats in the Hellenic Parliament.

One recent poll shows New Democracy holding onto a very narrow lead, with 21% to just 20.5% for SYRIZA.  In third place is the neo-fascist Golden Dawn (Χρυσή Αυγή) with a staggering 10.2%.  Greece’s far-left Communist Party (KKE) registered 5.7%, the center-right (but anti-bailout) Independent Greeks registered 5.2%.  PASOK won just 5.1%, and the Democratic Left won just 4.8%.

With such weak support, neither Samaras nor PASOK leader and former finance minister Evangelos Venizelos have an incentive to trigger new elections.  So while the chances that Greece will go to the polls for the third time in 12 months are slim, there’s no escaping the fact that the Democratic Left’s decision to leave the government is a setback for Samaras.  Continue reading Kouvelis, Democratic Left withdrawal from Greek government leaves precarious majority →

Bulgaria, Cyprus, European Union, France, Germany, Greece, Italy, Spain, United Kingdom

What Iceland’s election tells us about post-crisis European politics

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Iceland was supposed to be different.Iceland Flag IconEuropean_Union

In allowing its banks to fail, neo-Keynesian economists have argued, Iceland avoided the fate of Ireland, which nationalized its banks and now faces a future with a very large public debt.  By devaluing its currency, the krónur, Iceland avoided the fate of countries like Estonia and others in southern Europe trapped in the eurozone and a one-size-fits all monetary policy, allowing for a rapid return to economic growth and rapidly falling unemployment.  Neoclassical economists counter that Iceland’s currency controls mean that it’s still essentially shut out from foreign investment, and the accompanying inflation has eroded many of the gains of Iceland’s return to GDP growth and, besides, Iceland’s households are still struggling under mortgage and other debt instruments that are linked to inflation or denominated in foreign currencies.

But Iceland’s weekend parliamentary election shows that both schools of economic thought are right.

Elections are rarely won on the slogan, ‘it could have been worse.’ Just ask U.S. president Barack Obama, whose efforts to implement $800 billion in stimulus programs in his first term in office went barely mentioned in his 2012 reelection campaign.

Iceland, as it turns out, is hardly so different at all — and it’s now virtually a case study in an electoral pattern that’s become increasingly pronounced in Europe that began when the 2008 global financial crisis took hold, through the 2010 sovereign debt crisis in the eurozone and through the current European-wide recession that’s seen unemployment rise to the sharpest levels in decades.

Call it the European three-step.

In the first step, a center-right government, like the one led by Sjálfstæðisflokkurinn (Independence Party) in Iceland in 2008, took the blame for the initial crisis.

In the second step, a center-left government, like the one led by Jóhanna Sigurðardóttir and the Samfylkingin (Social Democratic Alliance) in Iceland, replaced it, only to find that it would be forced to implement harsh austerity measures, including budget cuts, tax increases and, in Iceland’s case, even more extreme measures, such as currency controls and inflation-inducing devaluations.  That leads to further voter disenchantment, now with the center-left.

The third step is the return of the initial center-right party (or parties) to power, as the Independence Party and their traditional allies, the Framsóknarflokkurinn (Progressive Party) will do following Iceland’s latest election, at the expense of the more newly discredited center-left.  In addition, with both the mainstream center-left and center-right now associated with economic pain, there’s increasing support for new parties, some of them merely protest vehicles and others sometimes more radical, on both the left and the right.  In Iceland, that means that two new parties, Björt framtíð (Bright Future) and the Píratar (Pirate Party of Iceland) will now hold one-seventh of the seats in Iceland’s Alþingi.

This is essentially what happened last year in Greece, too.  Greece Flag IconIn the first step, Kostas Karamanlis and the center-right New Democracy (Νέα Δημοκρατία) initially took the blame for the initial financial crisis.  In the second step, George Papandreou and the center-left PASOK (Panhellenic Socialist Movement – Πανελλήνιο Σοσιαλιστικό Κίνημα) overwhelming won the October 2009 elections, only to find itself forced to accept a bailout deal with the European Commission, the European Central Bank and the International Monetary Fund.  In the third step, after two grueling rounds of election, Antonis Samaras and New Democracy returned to power in June 2012.

By that time, however, PASOK was so compromised that it was essentially forced into a minor subsidiary role supporting Samaras’s center-right, pro-bailout government.  A more radical leftist force, SYRIZA (the Coalition of the Radical Left — Συνασπισμός Ριζοσπαστικής Αριστεράς), led by the young, charismatic Alexis Tsipras, now vies for the lead routinely in polls, and on the far right, the noxious neo-nazi Golden Dawn (Χρυσή Αυγή) now attracts a small, but significant enough portion of the Greek electorate to put it in third place.

The process seems well under way in other countries, too.  In France, for examFrance Flag Iconple, center-right president Nicolas Sarkozy lost reelection in May 2012 amid great hopes for the incoming Parti socialiste (PS, Socialist Party) administration of François Hollande, but his popularity is sinking to ever lower levels as France trudges through its own austerity, and polls show Sarkozy would now lead Hollande if another presidential election were held today.

It’s not just right-left-right, though. The European three-step comes in a different flavor, too: left-right-left, and you can spot the trend in country after country across Europe — richer and poorer, western and eastern, northern and southern. Continue reading What Iceland’s election tells us about post-crisis European politics →

Greece

Tsipras predicts Greek debt haircut after German elections

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The great thing about Washington, D.C. is the flow of visitors we see from throughout the world and the relative access to top officials through top-notch organizations such as the Brookings Institution, which hosted Greek opposition leader Alexis Tsipras for a 90-minute session Tuesday.Greece Flag Icon

The beleaguered Greek economy has receded from headlines somewhat since the razor-close election in June 2012 (itself a rerun of an earlier inconclusive vote in May 2012) and since the conclusion of the latest agreement, reached in October 2012, between Greece’s government and the ‘troika’ of the International Monetary Fund, the European Commission and the European Central Bank for the disbursement of cash to the nearly bankrupt Greek government in exchange for €13.5 billion in budget cuts.

Tsipras leads SYRIZA (the Coalition of the Radical Left — Συνασπισμός Ριζοσπαστικής Αριστεράς), which finished a very narrow second place to the center-right New Democracy (Νέα Δημοκρατία), whose leader Antonis Samaras, now prime minister, leads a broad pro-bailout coalition.  Although SYRIZA lost the election, it’s the largest anti-austerity force in Greece, and it either leads or ties New Democracy in most polls.

Given that Greece’s unemployment rate keeps increasing (it’s currently around 27%) and it’s entering its sixth consecutive year of economic contraction, even as the government’s been forced into adopting increasingly harsh austerity measures, it’s hard not to see Tsipras as a future prime minister.

Tsipras, who’s made several international trips since last June, has been on somewhat of a campaign to convince the world that he’s not a crazy socialist to be feared, but rather well-placed within the Keynesian macroeconomic tradition of the social democratic left, whose European leaders believe that austerity alone cannot deliver the kind of boost to the economy that will result in greater GDP growth and more employment.   Continue reading Tsipras predicts Greek debt haircut after German elections →

Greece

Greek government, troika reach agreement on Greek bailout

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It seems all but done — Greece’s government and the ‘troika’ of the International Monetary Fund, the European Central Bank and the European Commission have reached an agreement on the latest disbursement of funds that Greece needs to finance government operations, in exchange for a series of budget cuts and labor market reforms. 

In an additional twist, there are quasi-official reports from both Germany and Greece that the bailout program will be extended from the end of 2014 to the end of 2016, which will give Greece until at least 2016 to whittle down its budget deficit to the 3% required under EU rules, though it seems unlikely that Greece’s budget will be anywhere near to closing in on that target by even 2016.

The details are essentially as described over the past four months — €13.5 billion in budget cuts over the next two years, €9 billion of which will take effect in 2013.  The bottom line for Greek finances is that a Greek exit from the eurozone, which seemed virtually inevitable through much of 2012, has now been delayed, and delayed for a significant amount of time (Citi, for example, lowered its odds of a ‘Grexit’ to 60%, and predict it could still happen, but only in the first half of 2014).

That’s a significant victory for Greece’s prime minister, in office for barely four months, Antonis Samaris (pictured above, right, with Euro Group president and Luxembourg prime minister Jean–Claude Juncker), and it will now give him some breathing space to turn to Greece’s economic depression.

For me, there are three notable political aspects to the deal worth noting:  Continue reading Greek government, troika reach agreement on Greek bailout →

Germany, Greece

Samaras ‘negotiations’ with Berlin not going so swell

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It didn’t go so well for Greek prime minister Antonis Samaras on his visits with European Union leaders in Berlin.  His plea for more time to come up with cuts to the Greek budget is being met with stony nonchalance from both German chancellor Angela Merkel (pictured above right, with Samaras) and French president François Hollande, to say nothing of German civil society.

Samaras has requested an additional two years to come up with an additional €11.5 billion in cuts to the Greek budget.  While Merkel — and especially Hollande — were sympathetic to Samaras’s plea and reiterated their support for Greece to remain in the eurozone, Samaras will return to Athens having won no concessions from Berlin or Paris.

Business daily Handelsblatt writes:

“Greek Prime Minister Antonis Samaras does not tire of making new demands. Now he wants more time, for the health of his economy. Not more money, only more time — at least according to his requests to Berlin and Brussels. And, in Berlin and Brussels, there will be much discussion about whether Greece should be granted more time.”

“Our instinctive reaction regarding Samaras’ request is, well, that could be something. Given the near 40 degree Celsius (104 degrees Fahrenheit) temperatures that Germany experienced last weekend, we can empathize with Greek lethargy.”

“But is the Greek prime minister right? Is time instead of money really better? I say no.”

“We have known for a long time that time is money. Perhaps Angela Merkel will also say that to the Greeks. Despite the hot and sweaty 40-degree temperatures, there will be no more days off.”

Athens News reports that Merkel’s comments at a joint press conference with Samaras Friday were particularly tense:

“We expect Greece to deliver all that has been promised,” Merkel declared. In remarks that were unusually sharp for a joint news conference, she stressed that Berlin has heard words in the past but now expects deeds.

The tough talk contrasted sharply with the head of state honours and diplomatic smiles with which Samaras was received on his first official visit, complete with red carpet and band.

Merkel said that Samaras’ visit is a sign of the “very close ties” between the two countries, only to add later that each side had lost credibility in the eyes of the other and that trust must be regained.

And these are demands from someone who ‘Europe’ was desperate to win June’s Greek parliamentary elections.

Can you imagine how horrific the reaction would have been if the request had come from Alexis Tsipras, the leader of SYRIZA (the Coalition of the Radical Left — Συνασπισμός Ριζοσπαστικής Αριστεράς)?

Merkel spent Sunday trying to calm the waters against anti-Greek feeling in Germany, after German Bundesbank president Jens Weidmann attacked the European Central Bank’s buying of state debt, and Alexander Dobrindt, general secretary of the governing Christlich-Soziale Union (Christian Social Union), the Bavarian conservative party and sister party of Merkel’s own Christlich Demokratische Union (Christian Democratic Union), speculated that Greece would leave the single currency by next year.

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? →

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).

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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 →

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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 →

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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 →

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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 →

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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 →