The victory of the centre-right New Democracy led by Aontonis Samaras in Greece’s election has given the country some breathing space, offered a ray of hope to the beleaguered Greek economy and was met with a sigh of relief in European and other capitals worldwide.
Greece’s new Prime Minister certainly does not have an easy task ahead of him- Anthony Manduca
The fact that New Democracy was able to form a coalition government with two centre-left parties, Pasok and the Democratic Left – the three parties together have a comfortable parliamentary majority, (179 seats in the 300-member Parliament) – offers some stability to the country in very turbulent times.
All seven parties which won seats in last May’s election are represented once again in Parliament after this latest election. New Democracy got 129 seats (including a 50-seat bonus after it emerged as the largest party) compared to 108 seats in the May election.
Pasok got 33 seats, down from 41, and the Democratic Left got 17 seats, a decrease of two. The radical left bloc Syriza, the main anti-bailout party, increased its share of seats from 51 to 71, confirming it as the country’s official opposition. In fact, Syriza’s share of the popular vote, 26.9 per cent, was not much less than what New Democracy got, namely 29.7 per cent.
The other three smaller parties all lost seats, but are nonetheless still represented in Parliament. The Communist Party lost over half its seats, from 26 to 12, the far-right Golden Dawn saw its number of seats reduced from 21 to 18 and the Independent Greeks, a conservative party opposed to the bailout, got 20 seats compared to 33 last month.
New Democracy and Pasok generally support the bailout terms imposed on Greece by the EU, the IMF and the European Central Bank, while the Democratic Left campaigned on a platform which was more anti- than pro-bailout, but it nevertheless agreed to join the coalition.
This means that at least for now, Greece’s place in the eurozone is secure. The new government, though, has said it intends to seek some amendments to the bailout conditions, which are indeed very harsh, and one hopes that a compromise agreement can be reached.
Indeed, this is possibly the last chance to save the Greek economy and it is important that the EU shows some flexibility over some of the bailout terms, just as it is important that Samaras sticks to the basic terms of the agreement.
The bailout conditions include the cutting of 15,000 state sector jobs this year and 150,000 by 2015, a reduction of the minimum wage by 22 per cent, pension cuts of €300 million this year, spending cuts of more than €3 billion this year, the liberalisation of labour laws, better tax collection, privatisations worth €15bn by 2015 and cutting the debt burden to 116 per cent of GDP by 2020.
These are indeed difficult terms to abide by and the EU might have to grant some concessions, possibly over the timing of the reforms, to the new government in Athens.
The EU might also review the interest rates on the loans given to Greece as well as earmark funds to boost growth.
Greece’s new Prime Minister certainly does not have an easy task ahead of him. The three coalition parties together received 48 per cent of the popular vote, which means 52 per cent of the electorate voted for parties which pledged to tear up the bailout agreement.
Furthermore, while MPs from Pasok and the Democratic Left party are supporting the government in Parliament, these two parties have chosen not to have any ministers in the Cabinet, for fear of being associated with unpopular austerity measures. This, of course, does nothing to advance the perception of Greece having a strong, united government, but this is all part of a political game.
Waiting in the wings will be the powerful leader of Syriza, Alexis Tsiparas, the country’s new opposition leader, who has been boosted by his party’s success at the polls, and who is bound to make huge political capital out of every unpopular austerity measure introduced by the new government. Tsiparas will also make much of the fact that the two main coalition partners, New Democracy and Pasok – who governed Greece for the past 40 years – are blamed by many Greeks for the country’s problems.
Also, he is bound to remind Samaras that when he was in opposition he had opposed many of the austerity measures introduced by a Pasok government between 2010 and 2011, arguing instead that Greece needed growth.
What is for certain is that time is running out for Greece and there is no time to waste. Greece has been in recession for five years, a third of Greeks have been pushed below the poverty line, the unemployment rate has reached 22 per cent, real wages are down by 25 per cent and the country is on the verge of a social breakdown.
What is needed now if for the new government to remain strong and united, to be focused on economic reform and for the EU to be flexible with some of the bailout conditions. If the Greek government fails to win any concessions from Brussels, it will face a backlash at home, which will play into Syriza’s hands. This is in nobody’s interest.
It is crucially important that this week’s EU summit agrees on a common strategy towards Greece which will help this country remain in the eurozone and pull through this crisis. As always, a Franco-German compromise is essential to bring this about.