Greek pro-bailout party proposes coalition after election win
Athens — The Globe and Mail
Published Saturday, Jun. 16 2012, 10:40 PM EDT
Last updated Sunday, Jun. 17 2012, 4:12 PM EDT
The pro-bailout New Democracy party came in first Sunday in Greece’s national election, and its leader has proposed forming a pro-euro coalition government.
New Democracy leader Antonis Samaras says “the Greek people today voted for Greece to remain on its European path and in the eurozone.”
He says voters chose “policies that will bring jobs, growth, justice and security.”
His party beat the anti-bailout Syriza party, which wanted to cancel Greece’s international bailouts. Syriza chief Alexis Tsipras has conceded the election.
The Greek election gave the centre-right, pro-bailout parties a narrow lead but exposed deep divisions among the voters, who appeared torn between fear of austerity and fear of exodus from the euro zone.
The strong showing by Syriza, which substantially boosted its popularity since the inconclusive May 7 vote, is bound to make the coalition talks messy, potentially leading to an unstable government just as crucial decisions have to be made about Greece’s clapped-out economy and how to save it.
Syriza’s popularity also reflected the broad discontentment among young voters, most of whom supported the party. Youth unemployment is at 50 per cent in Greece and few have any prospects of finding jobs as the Greek economy continues to sink.
“I fear that unless Syriza is in government, the young people will take to the streets in protest because they would have nothing to lose,” said a diplomat who did now want to be identified.
The party with the most votes will automatically receive a 50-seat “top-up” in the 300-seat parliament, but, like the May 7th vote, that may not be enough to secure a majority.
The final outcome will determine Greece’s relationship with the euro zone, the 17 European Union countries that share the euro. New Democracy, which took the most votes (19 per cent) in the May election, has vowed to keep the austerity-for-bailout program intact. However, the party has also vowed to renegotiate the program, for fear that leaving it intact will guarantee another five years of deep recession as the spending cuts and tax hikes destroy growth.
Syriza’s original plan to kill the austerity program would almost certainly guarantee that the EU and the International Monetary Fund would withhold bailout funds, making the country insolvent. But Alexis Tsipras, the party’s young charismatic leader, has recently moderated his demands and says he does not want the country to return to the discredited drachma.
While foreign leaders and media portray the vote as a referendum on Greece’s use of the euro, many Greeks see it simply as a chance to elect a government that will be more fiscally responsible than the last one, and to improve the economy after five years of recession.
In the May election, 70 per cent of the vote went against New Democracy and the socialist Pasok party, the two parties that held power in Greece for decades and whom many blame for Greece’s financial ruin. Greece has been bailed out twice since 2009 by the EU and the IMF, at a cost of almost €300-billion ($388-billion Canadian), and went through one debt-crunching exercise, which shaved €100-billion off the value of the sovereign bonds held by private investors. Still, Greece’s economy has remained in free fall.
In spite of the differences on paper among the leading parties – more than 20 parties are on the Sunday ballot – almost all want Greece to stay in the euro and renegotiate the bailout package. “All Greek parties will ask for similar things,” said Greek communications strategist Stratos Safioleas. “They want some sort of renegotiation with the European Union. Even Syriza is starting to moderate its rhetoric. I think they won’t do anything reckless.”
While many voters do not think that New Democracy deserves to be rewarded with an election victory, many are also wary of Mr. Tsipras, whose Syriza came out of nowhere in the May election to capture almost 17 per cent of the vote. The radical left nailed less than 5 per cent of the vote in the previous election in 2009.
Mr. Tsipras’s critics say doesn’t have the experience to stand up to Greece’s paymasters in Brussels and Berlin, where German Chancellor Angela Merkel continues to preach her austerity-for-everyone message as the best way to put Europe on a sustainable financial and economic footing. They also note that Syriza itself is coalition of left-leaning parties and keeping them in line will be difficult if Syriza wins.
Some also fear the Syriza would make good on its original vow to kill the bailout program, which would probably force Greece to leave the euro and reprint the drachma, a currency that would plummet in value against the euro the moment it was reintroduced. “Greece has to stay in the euro or otherwise we would be a shipwreck,” said Ian Vorres, the Greek-Canadian creator of the Vorres Museum, a modern art museum in suburban Athens.
The Democratic Left party, which received 7 per cent of the votes in May, is emerging as a key coalition party if either New Democracy or Syriza get a chance to form a government. New Democracy is led by Fortis Kouvelis, who would be seen as a moderating force in a Syriza-led government. He has said he would not outright cancel the bailout program.