Greek elections: Take two

Nothing is yet settled, but the likely prospect of a pro-euro coalition has brought some comfort to other European leaders

Greece’s second attempt this year to form a government in the midst of a rapid and escalating financial crisis seems a little more likely to succeed than its first, only a month ago.

In May, legislative elections shook up the Greek parliament, pummeling PASOK, the left-leaning party that many Greeks blamed for accepting severe austerity measures as part of the 2010 bailout package with the European Union and the International Monetary Fund.

PASOK, together with the conservative New Democracy party, which also supported the bailout deal, earned less than one third of the vote in May. They lost ground to SYRIZA, a party originally founded as a coalition of radical leftist parties. SYRIZA, crucially, opposed the bailout package, and its success brought worries that Greece would reject austerity and leave the euro — possibly triggering the eventual collapse of the entire eurozone.

But none of the leading three parties was able to form a government, and so here we are again. Last weekend’s elections again failed to give any party a majority. But they did reshuffle power. New Democracy surged to 30 per cent of the popular vote. Leader Antonis Samaras says he will seek changes to the bailout deal. He’s not proposing scrapping it. PASOK continued its decline, but combined the two traditionally powerful parties will likely be able to form a government. Alexis Tsipras, leader of SYRIZA, has ruled out joining a coalition – opting instead, as he put it, for strong and responsible opposition. This is the right choice. His party has firmly opposed bailout conditions. Comprising for power would stain its integrity, and would besides leave more radical and less responsible parties to fight that corner.

Nothing is yet settled for certain, but the likely prospect of a pro-euro coalition that will at least grudgingly accept austerity measures has brought some comfort to other European leaders — not least of all Chancellor Angela Merkel of Germany, whose citizens bear much of the financial burden of bailing out Europe’s failing economies.

Relief is unlikely to extend to many Greeks, though. Only forty per cent of the population voted for parties that backed austerity, and the country will face economic hardship for years to come.

Most worryingly, Greece’s second round of voting did not much reduce the electoral success of the neo-fascist Golden Dawn, which again earned about seven per cent of the vote. A New Dawn spokesman recently slapped a female political opponent on television. Greece’s trials are far from over.




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Greek elections: Take two

    • The elections remove an imminent likelihood of Greece leaving the Eurozone, but they’re hardly out of the water. Unemployment in Greece is at 22% and will probably get worse before it gets better. Angela Merkel’s own political problems (her party got trounced in regional elections) mean that Germany is less able to open the purse-strings if Greece or others seek more lenient bailout conditions.

      And Greece is probably the easier to deal with of the various PIIGS countries because it is so small. Spanish banks are seeing their bonds reduced to junk status and unemployment there hit 24%. If Spain gets worse (a 100 billion euro rescue fund was just put together) it may be too big for the rest of the world to bail out. And then Italy’s even bigger.

      That is probably why futures contracts on any country dropping the Euro by December 2012 are still trading at about 33% (58% by 2014).

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