Thursday, 2 February 2012

Election Season Opens as Coalition Begins to Fray

The political rhetoric in Athens heated up sharply this week following Monday's European Union summit in Brussels. The three ruling coalition members are posturing and drawing lines in the sand, marking an end to the period of docile coexistence that prevailed for a few short months after the 'armistice' government was formed on November 11.

Even before the summit, New Democracy pitted itself against lowering the minimum wage, or the axeing of 13th and 14th salaries in the private sector, siding with unions. Eurozone creditors stuck to their guns and said Greece must reduce payroll costs as part of its competitiveness-boosting reforms. Since the summit New Democracy has reaffirmed its intention of investigating socialist Pasok's deficit figure for 2009 - the year that Greece entered Excessive Deficit Procedure for the third time and effectively began to rule itself out of money markets. Today its spokesman, Yannis Mihelakis, said the current parliamentary constitution "no longer reflects the will of the people."

Right-wing Laos has made even more noise in recent days. It threatened to pull out of the coalition over a mooted legalisation of drugs - its second secessionary threat this year. Yesterday its leader, Yiorgos Karatzaferis, sent European Parliament a letter asking for an intervention in the austerity measures the eurozone is requesting of Greece. He said they amounted to an "economic dictatorship" and risked "a popular eruption". He also accused the eurozone of violating Inernational Labour Organisation rules, and European treaties and principles.

Inter-party animosity peaked today with former prime Minister George Papandreou's speech to his bloc of deputies in parliament. He lashed out against "New Democracy's lies" and enumerated past conservative sins that bloated the deficit. Among other things, he accused ND of doubling public pharmaceutical expenses, from 2.4 billion euro in 2004 to 5 billion in 2009. In what sounded like an increasingly electoral speech as it progressed, he listed Pasok's pro-transparency resume, including the creation of Greece's Economic Crimes Office (SDOE).

New Democracy's response called Papandreou "brazen" and said, "His policies were the reason why people lost in two years what they built in 20."  

In truth the armistice government was never entirely at peace. New Democracy has been sniping at Pasok ministers from the sidelines, notably Environment and Energy Minister Yiorgos Papakonstantinou for attempting to award large advertising contracts; Health Minister Andreas Loverdos for the government's arrears in paying for procurements; and Development Minister Mihalis Chrysohoidis for failing, by his own admission, to read the original memorandum of austerity measures in 2010. But the fact that  Papandreou today stood above the trenches and fired back means election season has unofficially opened. The coalition parties will likely remain in a coalition designed to coax a new, 130 billion euro bailout out of the eurozone. But they will be increasingly at odds.

There are two reasons for this. An election is inevitable this year because the coalition is unstable. No party wants to completely align itself with the European-inspired austerity and reform programme, eyeing electoral gains from railing against it as a necessary evil; and party discipline is breaking down as many parliamentary deputies are beginning to revolt against individual articles of bills (dozens of deputies refused to vote for a liberalisation of pharmacy opening hours on January 26). Many Pasok MPs, particularly, have suffered a breakdown in relations with their constituencies.

A worse case scenario is still possible. Behind the electoral posturing, there really could be a political failure to commit to the reforms necessary for a second bailout, in which case Greece will prepare for disorderly default on March 20, when a 14.5 billion euro bill in bonds come due.

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