Greece is going to be holding an early presidential election. The president (a largely ceremonial job) is elected by parliament and this isn’t normally too big a deal, but on this occasion, well, I’ll let Open Europe’s Raoul Ruparel explain:
In the first or second round the candidate must gain 200 out of 300 votes from MPs. If this is not done then he needs 180 in the third round. If no candidate is found after three rounds, snap general elections are called (these would be around the end of January if they did happen). Currently the [governing] New Democracy and Pasok coalition holds 155 seats, while the opposition Syriza party has refused to back a joint candidate (a compromise often used in the past) since it is leading in the polls and wants snap elections.
There is a chance that the government can gain the 180 seats – many of the smaller parties and independent candidates would lose seats to Syriza in a new election and therefore want to avoid having one. Currently, Greek officials put the chance of success at around 50:50 (not exactly inspiring but better than some had expected previously).
In Ruparel’s view, calling for an early presidential vote was risky, but calling it before the current bailout expires (February) means that the current government can argue to voters that its own track record leaves it best placed to negotiate the terms of what comes next with the EU/European Central Bank and IMF.
Ruparel continues:
One key question which remains unanswered is, what would happen if elections take place and Syriza win? While Syriza claim to support euro membership they want a fundamental change in the way Greece approaches European issues. Notably they want a debt restructuring and a complete overhaul of the programme for reforms and consolidation in Greece which accompanies the bailout (or presumably which would tie into a restructuring). This seems very unlikely to materialise, but it is not clear if they would push for a Greek exit from the euro if their demands are not met or if they would temper their position.
Syriza is a party of the far left, its leader, something of an admirer of the unlamented Hugo Chavez, its rise emblematic of the way that the single currency has stirred up political instability across Europe (those with memories that stretch back as far as the distant 1990s will recall that it was meant to do the opposite).
Greece was the epicentre of Europe’s debt crisis and now — after four years of punishing austerity — it may soon become the first eurozone country to hand its government to a populist outsider promising radical solutions. The prospect of Greece’s self-styled “radical left” Syriza party coming to power…has sown panic among investors. The mood was neatly captured in a note from an analyst after meeting Syriza officials in London: “Everybody coming out of the meeting wants to sell everything in Greece.”
But, in its role as the house journal of the Brussels establishment, the Financial Times can always be relied upon to do its best to help create a climate in which the project of European integration can proceed uninterrupted, so its writer adds:
Yet the recent market panic belies the fact that [Syriza leader Alexis] Tsipras has softened his rhetoric since Syriza came first in May’s European elections, cementing its lead over the governing New Democracy party in opinion polls. He professes devotion to the euro while his economic team now holds regular international conference calls in an effort to reassure fund managers that a leftwing government would be able to tackle Greece’s debt problem and would not oppose foreign investment.
And one local business type finds comfort where he can:
“You have to assume a realistic approach to the debt issue . . . then it’s a mixed picture,” said Simos Andreou, a Greek management consultant. “There seem no objections in principle to private sector involvement in the economy…”
“no objections in principle to private sector involvement in the economy”
Syriza will not repeat the mistakes of 1917, comrade!
Meanwhile the current government’s strategy will be to warn that a victory by Syriza will risk Grexit (Greek exit from the euro), something guaranteed to alarm those Greeks who still have any savings left. Those fears may be overdone: My guess is that, however beneficial Grexit might be for Greece over the longer term (on balance it would be positive), the country’s euro zone partners will do almost anything they can do to keep Greece within the currency union. In the end, Greece is too small to be allowed to sink the European project. If he wins, and if he can avoid pushing the Germans too far, Tsipras will be able to cut a much better deal for Greece than Brussels or Berlin will currently be prepared to admit.
And for Germany’s taxpayers that’s very bad news indeed.
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