Greece Heads for Repeat Election as Left eyes Historic Opportunity

Greece took a step closer to default on Tuesday, after parties announced they were unable to break a nine-day deadlock in coalition talks. The president will appoint an emergency government to hold renewed elections. 

Socialists and conservatives, who ruled as a coalition for seven months, were unable to find a single ally from among five other parties to continue an austerity programme which is obligatory under Greece’s bailout loan. This means that economic legislation will remain frozen for several more weeks, and 15 billion dollars’ worth of austerity cuts may not be passed on time next month. That will delay Greece’s bailout instalments and could lead to salaries and pensions not being paid, as public coffers are due to run empty as early as mid-June. It also casts into doubt a planned refinancing of banks, which will remain short of cash. 

The breakdown in talks also defines the battle lines for the next election. The moderate camp of socialists and conservatives says it’s fighting to soften the austerity programme and ensure Greece’s place in the eurozone. 

It denounces the radical left Syriza party as arrogant, petty and opportunist for refusing to enter into a coalition and triggering elections. Socialist leader Evangelos Venizelos called them "traders in illusion, who've misunderstood the May 6 vote."

"Europe now understands that one-sided austerity is a dead end," said conservative leader Antonis Samaras. "The hour of our vindication is near, as long as we remain with in Europe. We have economic strengths – shipping, mineral wealth, human resources- but we can only use these if we remain in Europe" He accused Syriza and the broader left of undermining Greece's European course. 

Syriza has risen fast thanks to its anti-austerity message. It would reverse salary and pension cuts, tear up the loan agreement with Europe, and hope to redraft it from scratch. It accuses the socialists and conservatives of blackmailing Greeks into backbreaking austerity.

"They are terrorising and threatening the Greek people," said Syriza party leader Alexis Tsipras. "But a people so tested cannot be blackmailed any more" 

Syriza gutted the socialist party in the last election, and dreams of replacing it. Four separate opinion polls taken in the last week suggest that Syriza is set to make further gains in a repeat election, but not to win outright. So moderates and hardliners may have to bridge their differences sooner or later. But Syriza holds out hope that it may instead unite the communists and broader left into a historic coalition. 

Tsipras left no doubt as to the broad sweep of his ambition. "We made a significant step on May 6," he said. "Now it is time to complete that step. We must form a government of the left, so as to permanently end the policies destroying the country. We owe it to history and the coming generations"

Opinion polls confirmed

A new opinion poll in today's Vima confirms for the third time in a week that radical left Syriza would come out on top in a repeat election, claiming 20.5% of the popular vote. Conservative New Democracy comes second with 18.1%, socialists Pasok third with 12.2%, and the others more or less in the same order again. The far right Golden Dawn makes it in again, according to all three polls.

Also: 

• 72% of Greeks believe the parties should make concessions to each other and form a government, while 23% believe Greece should have repeat elections
  
• 78% want Greece to stay in the euro, while 12% want a return to the drachma
• In answer to the question "which of the parties elected to parliament would you like to see participating in the government?" the top two are (radical) Syriza and (moderate) Democratic Left, so it seems absolutely correct for conservatives and socialists not to try and build a government that skirts around them
  
• Asked whether they find Syriza's proposal realistic, 35% say quite realistic or very, while 62% say a little or not at all, which suggests that while the great majority don't believe Syriza can implement what they say, it still wants them in to hopefully change things in the right direction, even if it doesn't go all the way. 

Greece on the Brink of the Abyss

This article can also be seen on Newsweek - The Daily Beast. 

GREECE’s political party leaders have come to the end of a constitutional roadmap without being able to form a coalition government through direct talks. They now stand, along with the rest of the country, on the brink of an abyss.

A final meeting of party leaders with the country’s president is thought unlikely to yield results. After that, an emergency government will have to take the country to repeat elections.

Disoriented at this stage in its complicated and expensive bailout by the European Union, Greece can easily slip into default and penury, and abandon the euro. The loss of market trust in the currency would reverberate throughout the eurozone, possibly destabilising its other troubled economies and toppling the euro itself.

The political impasse came late on Friday, when the radical left Syriza refused to join socialists and conservatives in a government of national unity. The two traditional political powerhouses are self-proclaimed Europeanists, sworn to keeping Greece within the euro. They have ruled as a coalition since November, but were crippled with the loss of more than half their combined strength in this month’s election.

Across the aisle is a swelling contingent of communists and radical leftists who have seen their combined showing rise from 34 seats in the 300-seat parliament to 97. However, even with other anti-austerity forces they cannot command a majority either.

Chief among them is Syriza, which considers Greece’s bailout usurious, and wants the country to default on its external payments in favour of internal ones to pensioners and salaried employees. It disputes the 355 billion euro debt figure and wants this audited by a firm of international standing. It would reverse pension and salary cuts, and even extend health and unemployment benefits the economy cannot pay for. Its plan involves taxing the rich at 75 percent and nationalising banks.

This uncompromising platform catapulted Syriza from obscurity to second place last Sunday, just two points behind the conservatives. Two polls this week suggest that it would make further massive gains in a repeat election.

Syriza interprets that result as a de facto abrogation of Greece’s memorandum of austerity by popular will. “It is not Syriza that rejects this plan,” party leader Alexis Tsipras said after walking out of last-ditch talks with the socialists on Friday. “It is the Greek people who rejected it with its verdict last Sunday.”

“Increased popularity means greater responsibility,” the visibly livid socialist leader, Evangelos Venizelos, later declared. “Arrogance and party political calculations with an eye to the next election do not befit the gravity of the moment.”

It has become a mantra of Syriza officials to say that Greece’s budget is balanced but for its obligations to international lenders. This is simply not true. Greece did pay lenders a whopping 15 billion euro last year, but it also had a primary deficit of more than four billion euro.

The 200 billion euro bailout currently allows Greece to balance its budget over two years rather than two weeks. But European officials have said that Greece will not benefit from this package unless it abides by cost cuts and reforms. To make the point, the European Financial Stability Fund, which is bankrolling Greece, withheld a billion euro payment into state coffers this month, and disbursed only funds earmarked for the servicing of loans.

The trouble is partly unbridgeable ideological differences and partly the fact that the physics for a compromise are simply not there: two parties are behaving opportunistically while voters are in flux. The radical left Syriza sees its chance to make history by uniting the famously fractious left at the core of a coalition of bailout denouncers; New Democracy hopes that the threat of chaos will help it coil its rope of voters in the guise of a bailout renegotiator.

There are signs that Syriza’s leader, Alexis Tsipras, was never earnest about forming a coalition. Earlier in the week he invited the socialist and conservative leaders to write to the heads of the European Commission and European Central Bank, renouncing their commitments to austerity measures. If they didn’t do that, he said, there would be no point in his even talking to them. 

A sinking society

If political matchmaking turns into rematch, Tsipras is banking on increased support from voters who have reached the end of their tether. His party carried the day in the greater Athens area, where unemployment has skyrocketed. It now stands at 21.7 percent against an EU average of 10.2 percent, and it is nowhere worse than in the westernmost Athens neighbourhood of Perama. In this rustbelt of dying shipyards, joblessness runs as high as 50 percent.

It is here that George Koumbouros, in his mid-70s, now regularly avails himself of food and medical aid handed out by Doctors of the World. The outreach centre was originally set up for immigrants, but 90 percent of its beneficiaries are now Greeks, doctors there say.

George is the father of seven and grandfather of 14. He says neither he nor any of his children have been able to find work for two years.

“My son set out the other day in his car to pick up recyclable goods from dumpsters. He couldn’t find any. Even that has been claimed before we can get to it,” he said fighting back tears. “What are we supposed to do? Our only options are to become criminals or kill ourselves.”

Malamo Voulgaropoulou, a former singer now in her eighties, is one of many pensioners who rummage through dumpsters for food. “I find eggplants, tomatoes, zucchinis and greens,” she says. “I wash them very thoroughly and boil them for a long time.” She and her husband avoid gleaning after farmers’ street markets, she says, because the competition is intense.

Dramatic changes in peoples’ way of life are taking place even among the middle class. Haralambos Lambropoulos, a retired air force commander, lives in the central neighbourhood of Neos Kosmos. His pension has been cut in half over two years, to 1,200 euro a month. That is more than enough for him and his wife, Vasiliki, but in this family-oriented society pensions often subsidise the young. Haralambos and Vasiliki help support two sons and daughters-in-law who have also lost jobs and are struggling to raise four children.

Against this backdrop, many Greeks are convinced that the bailout is a cure worse than the disease.

A repeat election would almost certainly favour Syriza for three reasons. First, the party did best in the large urban constituencies of Athens and Thessaloniki. The interior ministry is scheduled, at the end of this month, to award those constituencies a greater number of seats, reflecting population growth over the past ten years. 

Second, voters now identify Syriza as the anti-austerity champion, and polls taken last week suggest that the party is set to concentrate more of the protest vote.

Third, any pro-bailout government has to cut at least 11 billion euro from health, social programmes and civil service costs from the 2013-14 budgets in June. Syriza has vowed not to do so. If it prevails, the EFSF won’t pay Greece a massive, 28 billion euro tranche of its bailout, a large part of which is designed to refinance the banking system and help restart the economy.

Greece is already set to lose a fifth of its 2008 economy by the end of the year. The Bank of Greece recently revised its recession figure from -4.5 percent to -5 percent. The European Commission has just revised it to -4.7 percent. With such political instability, matters can only get worse for Greece and the eurozone.

Why A Repeat Election is Likely

This post can also be read on Al Jazeera. 
 
Greek political parties began a third and final attempt today to form a government. Coalition talks have so far foundered on the fact that last Sunday’s election gave equal seats in parliament to pro-austerity and anti-austerity forces.  

The mandate to form a government now goes to the pro-austerity socialists. They can count on support from their erstwhile coalition partners, the conservatives. Both want Greece to stay in the euro, endure further, massive budget cuts next month, and repay its loans to the European Union. But they no longer have the power to govern. They need the support of the small but moderate Democratic Left. 

That party is under intense pressure from the radical left Syriza to deny support and lead the country to another election. Syriza has been the main beneficiary of the last election, quadrupling its standing to 16.78 percent of the vote by promising to denounce the bailout, reverse budget cuts, renege on loan repayment and re-audit the debt. While voters are in flux they hope for further gains.  

Fotis Kouvelis, Democratic Left leader, has said he will not participate in a government that does not include Syriza, or accept the poisoned chalice of a consensus premiership.

There are four main likely scenarios in the following 72 hours. The most optimistic is that socialist leader Evangelos Venizelos succeeds in including the Democratic Left and wins a vote of confidence. Together the socialist Pasok, conservative New Democracy and Democratic Left would wield 168 seats in the 300 seat legislature, a comfortable outright majority.

More realistically, Venizelos might not succeed in winning over the Democratic Left, but persuade them to abstain from the vote of confidence. Confidence motions are calculated as an absolute majority of the MPs present, so the absence of two or more MPs automatically allows the coalition of Pasok and New Democracy to vote themselves in, even though they do not have an absolute majority of seats.

It is even possible, though unlikely, that Venizelos and conservative leader Antonis Samaras might engage in guerrilla tactics to convince MPs to disobey their party leaders and abstain from the vote of confidence, achieving the same result.

However, the likeliest scenario is that Venizelos will persuade Kouvelis neither to actively back his coalition, nor to benignly neglect to show up for a vote of confidence, because either way Kouvelis stands to be accused of betraying the left as it was poised to make history in a repeat election. There are also major disincentives for Venizelos and Samaras to try and govern with 149 MPs, 50 of which are a now controversial bonus to the party that comes first. They would be accused of a constitutional coup for the sole purpose of putting through 12 billion euros' worth of budget cuts in June. Social unrest outside parliament as well as uproariousness inside would be likely. New Democracy and Pasok would lose MPs and voters as precipitously as before. Finally, they would probably help to achieve what the left never managed, its unification around Syriza, and the strengthening of Syriza's hand in an inevitable repeat election.

The fourth and final scenario is therefore likely, that Venizelos fails to win over the Democratic Left, and fails or chooses not to secure its absence in a vote of confidence. Greece's aloof president, Karolos Papoulias, would then convene the party leaders in a last-ditch effort at a national unity government. Failing that, Greece will hold another election in June.

Greece Votes Against Austerity, Moving Closer to Default

This article may also be viewed on Newsweek's site, the Daily Beast.

GREECE’s election has brought a sea change in the country’s political dynamics that opens up the gaping prospects of an ungovernable nation, another election and even default.

Sunday’s result has ended a grand coalition of socialists and conservatives which had, since November, managed to keep the country solvent by abiding with the terms of a eurozone bailout.

Voters have now produced a parliament so hostile to the austerity and reform programme accompanying that bailout, that socialist leader Evangelos Venizelos said there is no point in attempting to continue that collaboration.

“An old-fashioned, bipartisan coalition government will not enjoy sufficient legitimacy. Nor will it have domestic or international credibility, even if it achieves a marginal parliamentary majority,” Venizelos said.

Venizelos evidently saw that a resumption of that alliance carried two problems: It would now require a third party (Pasok and New Democracy are two seats shy of an outright majority); and the very collaboration of two parties to continue a deeply unpopular bailout policy that has cost them half their popular support would raise cries of illegitimacy.

Socialists and conservatives are rightly concerned with legitimacy in this volatile political climate. New Democracy has come in first with just a fifth of the vote - nowhere near the 37 percent it would need to govern alone. It owes almost half of its parliamentary bloc to a 50-seat bonus – once a winner’s trophy, now an embarrassing distortion to Greece’s system of proportional representation.

“I asked for a strong mandate; the people decided otherwise,” conservative leader Antonis Samaras gloomily told supporters outside party headquarters. It was the first time in four decades that the winner of a Greek election has not delivered a victory speech, or been able to form one-party government. And it is the first time in 23 years that Greece is witnessing coalition talks.

In contrast, more than 40 percent of the vote went to parties that want Greece to abandon the European bailout altogether – albeit not necessarily the euro.

The party that exemplifies that trend is Syriza, or Alliance of the Radical Left with Left Socialists and Radical Ecologists. It is a once-moribund, breakaway communist party, which quadrupled its previous performance to 16.76 percent, a mere two points behind the winner.

In Syriza lies the true message of the election. It has promised to annul Greece’s two bailout loans worth $270 billion (it calls them “leaden jackets”) along with the reforms that accompany them, and cast off the European Union’s and International Monetary Fund’s financial oversight.

"The debt is the taxes the rich did not pay," it is fond of saying, and advocates a dizzyingly expensive slate of tax-and-spend policies.  Its idea is to tax the rich to the tune of 75 percent and renationalise every privatised state company including all banks (see sidebar at the end).

This would in theory pay for a reinstatement of the recently abolished national collective minimum wage, extend unemployment benefits to illegal migrants, restore the 35-year working lifetime and bring pensions up to 100 percent of salary.

The socialists have campaigned on the basis of austerity, stability, and June’s salaries and pensions being paid on time. The conservatives have campaigned on the basis of growth as the true father of state revenue. Both have supported the bailout. Syriza, on the other hand, has won enormous appeal by arguing that the bailout does not avoid bankruptcy but leads directly to it. Socialists, conservatives and their friends at the IMF want a country of limited sovereignty, it says. Some leftists believe that Berlin plans to match China’s low unit costs by outsourcing production to an impoverished Mediterranean basin.

Syriza considers even the restructuring of 200bn euro of debt in private hands as a bad thing, as it mortgages public wealth and legitimises billions in taxpayer-sponsored refinancing of banks.

Samaras has to seek alliances. He has three days to form a government. Should he fail, Syriza assumes the task. Should the process drag on two weeks, as it may, Greece would fall behind on more than 15bn euro in cuts to social spending, government restructuring and healthcare costs, failing to qualify for its June instalment. That, in turn, could lead to non-payment of salaries and pensions, driving the country closer to a social meltdown.

George Pagoulatos, legal advisor to outgoing prime minister Loukas Papademos, pointed out a contradiction in the election result that helps illustrate the extent to which this was a protest vote: While at least two thirds of Greeks have consistently been polled as wanting Greece to remain within the euro, that proportion did not vote for parties backing the bailout loan and attached programme of austerity and reform. Greece’s creditors have, since last November, drummed in the message that implementation of that programme is a condition of remaining within the eurozone.

Venizelos was the first party leader to react to the result. “We embittered the people to save the nation,” he said. “Now it is up to others to realise their promises.”

Unless Pasok agrees to rule with New Democracy and the Democratic Left – the only other forces in parliament that support the bailout – and manages to renegotiate the austerity plan, it is unlikely that this parliament will produce a government. Greece is probably looking at another election in a matter of weeks.

Syriza’s Plan

Financial Sector

1. Make European Central Bank fund social programs in member states.
2. Ban derivatives across the European Union.
3. Establish Pan-European Tobin tax. Place higher taxes on high incomes and companies.
4. Nationalise the Greek banking system and give it over to public bodies such as cooperatives, repurposing it to deliver liquidity to small and medium-sized enterprises.

Growth

1. Tax the rich at a top rate of 75 percent for incomes of half a million or more.
2. Have higher tax on companies and "ostentatious consumption". Remove tax exemptions. For example, on the church.
3. Record all estates of one million euro or more and tax them.
4. Use every available EU euro.
5. Renationalise every privatised or partly-privatised company (Hellenic Railways Organisation, Hellenic Telecommunications Organisation, Athens Water & Sewage Treatment Company, Public Power Corporation, etc.) and stop privatisations. Restructure companies to operate profitably and transparently for the state.
6. Rebuild economy along lines of high-end agricultural produce for export, renewable energy, and non-intensive, eco-friendly tourism.

Social Policy

1. Restore national collective agreement on minimum wage. Reverse the 22 percent wage cut in private sector. Extend part-time workers to full-time. Abolish part-time labour. Prohibit freelance work when the task calls for a full-time job. Fire no one from public sector. Bring back firing limits in the private sector.
2. Put the homeless in empty properties of state, church & banks.
3. Feed all students twice a day.
4. Extend full health services to poor, homeless, unemployed. Consolidate all social services. No hospital closures or mergers. Bring staff levels back up. Abolish co-payment for unemployed, students, handicapped, poor pensioners. Bring health budget to 6 percent of GDP.
5. Adjust interest and maturity on loans so monthly payment does not exceed 30 percent of income. Write off loans to those not meeting "dignified means of living".
6. Extend unemployment benefit indefinitely, extend to immigrants, and raise to 80 percent of salary for first two years.
7. Reduce (control) prices on basic goods.
8. Abolish property tax on "small" properties.
9. Make state pay Social Security system all arrears and debts from mismanagement of its assets; ensure efficient dues collection from private sector. Restore 35-year working lifetime and pension at 100 percent of salary.

6 May 2012 Election Result

• New Democracy 18.85% and 108 seats (compared to 33.48% and 91 seats in October 2009)
• Syriza 16.78 and 52 seats (compared to 4.6% and 13 seats in October 2009)
• Pasok 13.18% and 41 seats (compared to 43.92% and 160 seats in October 2009)
• Independent Greeks 10.60% and 33 seats (first entry into parliament)
• Communist Party of Greece 8.48% and 26 seats (compared to 7.54% and 21 seats in October 2009)
• Golden Dawn 6.97% and 21 seats (first entry into parliament)
• Democratic Left 6.11% and 19 seats (first entry into parliament)

(Anti-bailout forces are in red, pro-bailout forces in black)