Wednesday, 28 September 2011

Greek polls punish both Pasok and ND

Finance Minister Evangelos Venizelos assured the Greek and international media yesterday that Greece's bailout and agreed programme of reforms would proceed according to schedule. “If we fail,” Venizelos said, “the country will suffer a setback equivalent to a great military defeat. It will take us back decades.”

Later the same day parliament voted through a new property tax that will add hundreds of euros to household power bills this year, and attempt to raise 1.7bn euro. In imposing wave upon wave of severe austerity measures for the past 18 months, the government is partly playing on Greek fears. In a Public Issue poll published last Sunday by Kathimerini, two thirds of Greeks were against returning to the drachma and 60 percent feared that default is possible.

But that is where the good news ends for the ruling socialists. The polls are generally not favourable to the government or the political elite in general. The same survey found that Prime Minister George Papandreou enjoys a 17 percent approval rating, and his opponent, conservative New Democracy chief Antonis Samaras, a mere 26 percent. Papandreou is shouldering unpopular reforms; but why have Samaras' figures been stubbornly stuck in the low 20s since he came to his party's leadership in December 2009? His unaffordable economic programme, his divisive stance over the midterm reform programme last June and his insistence earlier this month on protracted elections until he wins an outright parliamentary majority ought to be prime suspects.

It gets worse for the PM in a Rass poll for Proto Thema, also published last Sunday, where 29 percent of Pasok voters would back his finance minister for party leader, versus 12 percent still in favour of him. It is a shameful showing for Papandreou, who four years ago trounced Venizelos for the party leadership, claiming 56 percent of the party base versus Venizelos' 38 percent.

As they now stand, voter intentions would neither return Pasok nor install New Democracy in autonomous parliamentary power. An ALCO poll published in Proto Thema and a Pulse poll for Eleftheros Typos both gave Pasok 15 percent and New Democracy 21 percent. A GPO poll aired on Mega channel the next day gave similar results. It is a far cry from their election performances of 43.92 percent and 33.48 percent respectively in October 2009. Of course between 20 percent and 30 percent of the vote remains undecided in those polls, but it should come as a concern that the as yet unelected Greens, and the newly formed Democratic Left and Democratic Alliance, all appear close to entering parliament. That would suggest a chamber possibly fragmented between eight factions. Since polls show the smaller parties currently in parliament (Communist Party, Left Coalition and Laos) clinging to their present majorities, new entrants would eat into the roughly 80 percent piece of the electoral pie usually contested by socialists and conservatives.

But a coalition government is not the worst case scenario for Greece. The mere declaration of elections could be ruinous. The prospect of a caretaker government for the mandatory month-long campaign period, followed by a minimum of one month for the new government to begin legislating, would probably be enough for the markets to declare Greece bankrupt.

That is why Deputy Prime Minister Theodore Pangalos appeared on television this morning to massage public opinion in the wake of the passage of the property tax. He declared that "We have surpassed, for some time now, the ability of the taxpayer to bear new burdens. And I think the emphasis now should be on cost cuts." Pangalos declared that he himself now owes over 17,000 euros in property tax, and will have to sell a property in order to meet the obligation. "What if you can't sell one in this market?" the presenters asked. "Then Mr. Venizelos will have to throw me in jail," came the reply. The presenters laughed, but Pangalos wasn't smiling.

Tuesday, 27 September 2011

Interview with PBS

The New Athenian was on PBS yesterday, discussing the reality as hitherto announced austerity measures begin to take effect and people continue to fear default. Parliament is due to vote today on the property tax announced on September 11. The government also faces a series of privatisations in coming weeks including lucrative state monopolies and prime real estate.

Thursday, 22 September 2011

The Stubborn Greek Leviathan

Greek Prime Minister George Papandreou has faced a dilemma these past two years - whether to squeeze more money out of the pockets of the struggling middle class, or alienate political allies by cutting state sector jobs. Over the last ten days he has done both under pressure from creditors, in a bid to raise or save a total of 8bn euros this year (See sidebar at the end of this post). The fact that the projected revenue shortfall for 2011 is a quarter of that sum shows how little credibility we enjoy.

Greece's creditors may demand cost cuts in government rather than squeezing more from taxpayers, but those trigger sedition in the ruling Pasok party's union power base. That is the reason successive governments have not pruned but fertilised the state payroll, which stood at over a million of Greece's 4.5 million-strong workforce when Pasok came to power in 2009. (Cabinet member Ilias Mosialos recently told a Sunday newspaper that 200,000 have since gone off payroll but cited no source for the figure).

The bankruptcy scenario thus still hangs over Greece. Fitch's said today that it expects a Greek default within the euro. It was the latest in a crescendo of voices from economists and financiers calling what they see as the inevitable. Some also see it as the beginning of the end of the euro.

Monday, 19 September 2011

Crisis Chronology


June 15: The government nearly falls after protests in Syntagma square and a tumultuous debate in Greek parliament, a mid-term package of austerity measures and reforms worth 28bn over five years. George Papandreou speaks to Antonis Samaras over the phone (!) but they fail to agree on a grand coalition. Papandreou reputedly offers to quite the premiership but recalls the offer after outrage from his senior party officials.

June 16: Two Pasok deputies resign, temporarily reducing the socialist majority in parliament to 154.

June 17: After a reshuffle Finance Minister George Papakonstantinou is replaced by Evangelos Venizelos.