Wednesday, 8 February 2012

Decision Day

Greece's governing coalition is to meet today to sign off on an austerity and reform package they must approve to get a 130 billion euro ($170bn) loan from the eurozone and IMF. Without it the country will go bust next month.

Even though the coalition, comprised of socialists, conservatives and right-wingers has not yet signed off on the entire package, some of the measures have been officially confirmed.

Private sector salaries will be slashed by 20 percent, including the minimum wage, which drops to 600 euro (just under $800) a month before tax. In the public sector, 15,000 jobs will go this year, and ten times that many over four years. Pensions, too, will be affected across the board. Auxiliary pensions will be cut by 14 percent. Officials were still debating yesterday on how to close an 800 million euro hole in the three billion euros' worth of cuts they have to make to this year's budget. One option was to also cut primary pensions, according to a government official.

Unions predict a catastrophic fall in social security contributions and tax revenue and less disposable income on the street. They say the government will have to cut pensions again in months.

The other decision day 

Once the deal is signed this government's job will have been done. Its conservative New Democracy element will champ at the bit to hold new elections, which it originally wanted this month and now wants to see on April 8. Poll numbers explain why. ND, which lost the last election to socialist Pasok, is now polling 31 percent of the popular vote according to today's poll by Public Issue for Kathimerini newspaper. Even though ND has actually fallen from its last election showing of 33 percent in October 2009, it now trounces Pasok, which has plummeted from 44 percent to eight. That doesn't give ND enough seats to form a government on its own, but in a future coalition it would be the senior partner, and Antonis Samaras would likely be prime minister.

There are several things to consider. First, the fractiousness of the next parliament reflects what we expected to happen in 2009. Pasok's sweeping victory then may have been the last hurrah for the two-party system, which has produced stand-alone governments since 1974. Now the disaffection with both "power parties", as the Greeks refer to them, has truly sunk in. This bodes ill for the implementation of the catalogue of concessions party leaders are making today. The coming election will pit current coalition members against each other, and they are unlikely to campaign on affection for the bailout track George Papandreou put Greece on in May 2010.

The second most important development is the precipitous rise of the Democratic Left, a party founded last year by Fotis Kouvelis, now polling a staggering 18 percent. Kouvelis broke away from the reformed communists of the Left Coalition when the thinking section of that party fell foul of its young and immoderately populist leader, Alexis Tsipras. One would like to think of this as a triumph for moderation and discourse, which it surely partly is; but this 18 percent must also be seen in light of two broader developments: the mass exodus of voters from Pasok and New Democracy, which have traditionally held more than 80 percent of the vote between them come election time; and the sweeping bias towards the left through this crisis, that has seen parties left of Pasok rise from a total of 12.1 percent of the popular vote in the 2009 election to a forecast 42.5 percent.

It is not likely to happen, but were the communists and former communists to collaborate, they could just about squeeze a government out of the hypothetical parliament these poll figures form. If the red-blooded communist leaders of the 1940s were alive today, they would consider this vindication for their catastrophic loss during the Civil War, and comeuppance for capitalism. Andreas Papandreou, who founded Pasok, always referred to his 1981 election win as "the third round" of the 20th century struggle between communism and the right, the first being the 1946-49 Civil War and the second the 1967-74 colonels' dictatorship, triggered partly through fear of a communist putsch. This claim annoyed the communists no end, and they jealously fought Pasok's success.

The end of that success and the rumoured extinction of Pasok is the third observation to make about the present political mood. It took Andreas Papandreou just seven years to found the socialist party and bring it to a victory that took Greece by storm. He re-cultivated in a new guise the centre-left political ground his father had bravely carved out of post-Second World War Greece. George Papandreou senior had in turn wrested that political ground from the Venizelist Liberals of the early 20th century, placing it in the hands of his own political dynasty. Andreas tinged it with the vengeful complex of the downtrodden, a complex which seemed to legitimise unmeritocratic clubbishness and embezzlement whose practitioners perhaps saw it as an extension of their party's wealth redistribution policy.

Andreas' social revolution ended in a corruption trial in 1989, but his charisma returned him to power in 1993, his vengeful instincts against the right and New Democracy reinforced. His enlightened son, George junior, attempted to cleanse Pasok of its past sins and recast it as a Europeanist, reformist party, only to see himself running his father's shop from the attic. He retreated behind a circle of advisors and survived two general election losses by bypassing party mechanisms and appealing directly to the public in a November 2007 party leadership vote. But Pasok now seems to have confounded itself beyond repair. Its reformist wing has not prevailed over the populists who light candles to Andreas.

That means an opportunity as well as a loss. A large and important section of urban middle class Greeks is in search of a European-oriented, reformist and humane political force. The migration from the post-1974 parties has begun. The leftists are claiming it for now, but make no mistake - these voters are up for grabs, and they will alter the political landscape of Greece when they find their leader.

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