Greece heads to an early general election next month after parliament rejected Prime Minister Antonis Samaras's nominee for president on Monday, throwing the country into a new period of political turmoil just as it emerges from economic crisis.Indeed, Greeks don't want or need another election but that's where they're heading yet again. Some see this exercise in democracy as positive. Economist Yanis Varoufakis posted a comment on his blog, Greece is about to give European democracy a chance:
Greek 10-year bond yields surged to a 15-month high and stocks tumbled after former European Commissioner Stavros Dimas fell short of the 180 votes needed to become president in the decisive third round of voting, triggering the dissolution of parliament.
Samaras set Jan. 25 as the date for a parliamentary election.
Opinion polls point to a victory by the radical leftist Syriza party, which wants to wipe out a big part of the national debt, and cancel the austerity terms of a 240-billion euro ($290 billion) bailout from the European Union and International Monetary Fund that Greece still needs to pay its bills.
While most Greeks do not appear to want elections, the terms of the bailout agreed by the Samaras government have imposed harsh sacrifices on many people and the signs of improvement in their battered economy have yet to show through clearly.
If Syriza is elected, it would be the first time an anti-bailout party determined to overturn the austerity approach prescribed since the start of the euro zone crisis comes to power in Europe.
"With the will of our people, in a few days bailouts tied to austerity will be a thing of the past," Syriza leader Alexis Tsipras said after the vote. "The future has already begun."
A defeated Samaras, who gambled and lost by bringing forward the presidential vote by two months, urged Greeks to vote for stability and vowed not to let anyone put Greece's place in Europe in question.
The result opens a new chapter of political uncertainty in the euro zone's problem child just as it appeared to be putting the worst of a six-year economic crisis behind it. After nearly crashing out of the euro in 2012, Greece this year returned to economic growth and ended a four-year exile from bond markets.
Syriza has held a steady lead in opinion polls for months, although its advantage over Samaras' conservative New Democracy party has narrowed in recent weeks. Weakness among potential coalition partners on both sides could mean that whichever party wins in January will struggle to form a government.
Failure to put together a government could leave Greece once again precariously close to a financial crisis since Athens will be without an administration to wrap up a final bailout inspection due to unlock over 7 billion euros in aid.
EU/IMF inspectors due to return to Athens in January will now resume discussions on concluding that review after a new government is in place, the IMF said, adding that Greece had no immediate funding needs.
Finance Minister Gikas Hardouvelis, who had been negotiating an early exit to the bailout program, said a new government would have to seek an extension to the bailout beyond its end in February. Although Athens had enough cash, it may have to issue more Treasury bills to cover funding needs in March, he said.
"There will be difficulty in negotiations because we need to have a government," Hardouvelis said.
Underlining the potential volatility facing markets, the main Athens stock market index fell as much as 11 percent before paring losses while Greek bond yields jumped above 9 percent. The main banking stocks index fell over 11 percent before recovering.
"The outcome of the final vote extends the political uncertainty for at least one month," said Theodore Krintas, head of wealth management at Attica Bank in Athens. "One cannot know if the result of early elections will be a viable government."
But unlike in 2012, markets elsewhere in Europe were rattled only a little by the latest upheaval in Greece, in a sign of increasing confidence within the euro zone that any contagion will be limited and can be contained.
In a bid to reassure markets, Tsipras has sounded more moderate lately, promising to keep Greece in the euro and negotiate an end to the bailout agreement rather than scrap it unilaterally. But he has refused to budge on reversing austerity.
Hours after the vote, German Finance Minister Wolfgang Schaeuble warned it would be "difficult" to help Greece if it veered off the path of reform and that any new government must stick to obligations signed up by the previous government.
On the streets of Athens, voters were worried that elections would put the sacrifices of the past two and half years at risk and threaten the country's future.
Stella Alipranti, 39, who runs a small tourism business, said she was disappointed and saw no advantage in an election.
"Things won't change just by changing the government because we have foreigners deciding for us," she said. "Having elections every two years certainly doesn't help the country."
Something is amiss in our Europe.I couldn't resist to post my thoughts on Varoufakis's latest:
When the constitutional process of a proud European democracy seemed to be leading, quite properly, to elections (as was the case in Greece since the Fall), the European Commission, various governments and the commentariat-at-large intervened, presenting the prospect of elections (the crowning moment of the democratic process) as a disaster-in-the-making; as a calamity to be avoided at all cost.
When the elections became inescapable, the same power brokers began to lecture the citizens of this small, proud nation on how to vote. And when these voters seemed eager to vote differently, European Union authorities began to warn any new government that might emerge that it should consider itself a caretaker of the agreements that the previous government had struck with the European Union – that any thought of re-negotiating them should perish instantly.
Is this what our dreams of Europe have come to? Has Europe come to a point where elections are seen as a problem, rather than the source of solutions? Have Brussels-based government appointees grown so stupendously arrogant as to imagine that they can tell electorates how to vote? Have we reached a point when a people is told that if they vote in a government that seeks to renegotiate an asphyxiating international loan agreement, they face non-functioning ATMs within days?
There is, indeed, something amiss in our Europe and Greece, the proverbial canary in the mine, has brought it to the surface. Europeans from Helsinki to Lisbon and from Dublin to Cyprus must now make it their collective business to resuscitate that which once inspired us: a penchant for democracy.
"There is no democracy in Greece. It’s basically an oligarchy run by a handful of wealthy families controlling an ever shrinking economic pie. I have friends on the right that are actually fed up of Samaras and the coalition government because they squandered a real opportunity to finally cut the cancer that has plagued Greece for decades — a bloated, corrupt and inefficient public sector that continues to weigh the country down. Hardly any jobs were cut in the public sector in Greece over the last five years. The brunt of the massive job cuts was borne by the private sector. And the reason? Because Greek politicians on the Left and Right keep feeding the public sector beast to control votes, making promises the country simply cannot afford. So my friends on the right are fed up and want SYRIZA to win so it can “expedite the downfall of Greece and kill the public sector beast once and for all.” While I understand their exasperation, their logic is twisted and foolish. They should be careful for what they wish for because a SYRIZA victory will only extend Greece’s depression and quite possibly send the country back to the Dark Ages."There is a myth in Greece that democracy is flourishing and the country will succeed in doing away with austerity imposed by troika and remain in the eurozone. This is absolute rubbish spread by SYRIZA's leader Alexis Tsipras.
If you want to really understand the Greek economy and the political theatrics being played out now, go back to read my thoughts from my September trip to the epicenter of the euro crisis where I painstakingly laid it all out.
To really understand Greece, you have to understand that Greek politicians are blatant liars and corrupt to the bone. It's not just Tsipras. Successive governments from the Left and Right kept increasing the public sector to cement their political base and now that the country is bankrupt, they still can't cut the public sector beast because they fear political repercussions.
Economists will argue that Greece should exit the eurozone, reintroduce the drachma to devalue their way back to economic health. The problem with that logic is that all this will do is introduce rampant hyper inflation and nobody in their right mind will ever lend to Greece again knowing their debt profile will keep getting worse.
And as I've written back in 2012, it's time to look beyond Grexit because the cost of a Greek exit would be crippling not only for Europe but for the rest of the world. All this talk of "containing contagion" is pure fantasy. If Greece exits the eurozone, others will follow and it's game over for this fragile union.
Finally, Nick Maltouzis published a comment in MacroPolis, How snap elections in Greece fit into Samaras's strategy:
Snap elections in Greece have been on the cards for a while. Every move made by the government in recent months (negotiations with the troika in Paris, the early bailout exit plan, calling a sudden vote of confidence and moving the date of the presidential vote forward by two months) have been vain attempts to put off the inevitable. There was never a convincing case that the coalition’s candidate would be able to gather the minimum 180 votes needed and Prime Minister Antonis Samaras’s half-hearted attempts to offer a potentially game-changing compromise over the past week were far too little, too late.Like I said, never trust Greek politicians, they always have something up their sleeve and keep buying votes by increasing the public sector even when troika demands they cut it. It's unbelievable but I'm so used to their lies that nothing fazes me anymore.
Samaras’s decision not to meet other party leaders, regardless of the obstinacy of SYRIZA, Independent Greeks and Democratic Left, to discuss an agreed solution was less than his role as prime minister demanded. His decision to name his candidate at the last minute and for him to be the vice president of his own party, New Democracy, indicated that he had no real intention of building consensus. The premier’s admission in a TV interview on Saturday that snap elections would suit him perhaps inadvertently revealed that there was never any genuine attempt to elect a president.
There has been a distinct sense over recent weeks that the government has lost the appetite to see through the adjustment programme it has repeatedly argued is the only option for Greece to exit the crisis. The final troika review was meant to be wrapped up within a few weeks of the meetings in Paris in early September. However, as the review dragged on so it became apparent that the government did not have the political will (and perhaps the necessary votes in Parliament) to push things over the line. Each troika demand squeezed a little more life out of the coalition until it became clear that a new plan had to be devised.
At this point, Samaras made what was a deeply political calculation: He realised that passing the latest clutch of troika demands through Parliament would guarantee that his government had no chance of electing a president in February and would force it to go to national polls having only just approved a new round of unpopular measures. In these circumstances, bringing forward the presidential vote gave the coalition a slightly better chance of success or, if snap elections were not avoided, meant that a SYRIZA or SYRIZA-led government would be left with the task of closing out the troika negotiations.
Samaras will know very well that his chances of winning a snap election are slim. He will also be aware, though, that he can make life very difficult for SYRIZA. The polarisation of the political debate in Greece (in which the opposition has also played a significant part) has already led to the gap between New Democracy and SYRIZA narrowing. The less convincing a probable election victory is for SYRIZA, the more difficult the leftists will find it to form a government. They are highly unlikely to reach the 36 to 38 percent bracket they need for a clear majority. Meanwhile, fellow anti-austerity party Independent Greeks might not make it into Parliament or, if they do, will probably not have enough seats to help SYRIZA. An alliance with PASOK or centrist To Potami will demand a lot of bridge building.
So, if SYRIZA wins a January 25 election it will have around a month in which to ensure the election of a president, find political allies that do not yet exist, form a government for the first time in its history and reach some kind of settlement with the troika before the extension to the current bailout ends on February 28, leaving Greece in serious danger of being unable to meet its debt obligations over the next few months. Even if SYRIZA overcomes these hurdles, it will still have to put its demands for debt relief and economic stimulus to the country’s lenders, while running the risk of alienating them by fulfilling its pre-election promises of wage and pension rises.
This increases the possibility that a SYRIZA government would reach an impasse very swiftly. Any attempt to seek confrontation with the eurozone that could put Greece’s economy at risk would probably see its coalition partner(s) walk out, while a move to water down its austerity-reversing policies could cause a fracture with SYRIZA’s sizeable left wing. In the meantime, investors and depositors may have voted with their feet.
This would likely lead Greece to a new round of elections, with SYRIZA suffering the consequences of its swift stint in power and Samaras’s New Democracy cashing in. It is what has been come to be known in right-wing circles in Greece as the “Left Parenthesis” theory. Of course, it could play out a different way, with SYRIZA being unable to form a government and Greeks going to the polls for the second time around a month later, as they did in the summer of 2012.
It should not be forgotten that in those elections two years ago, New Democracy garnered an unthinkably poor 18.8 percent in the May vote (the lowest total in its history) but increased its share of the vote to 29.6 percent in June, having preyed on fears that Greece’s position in the eurozone would be at risk should SYRIZA win. It is this increase of almost 11 percentage points that is in the minds of those strategists who believe that Samaras might be better off playing the long game by allowing SYRIZA to make a mess of things and him coming back, almost saviour-like, with an increased majority.
It may sound like a far-fetched plan, which runs counter to Samaras’s insistence in Saturday’s interview that he was doing “everything possible” to ensure that presidential candidate Stavros Dimas would be elected, but there have been clear signs that snap elections have been on the prime minister’s mind. There is an old saying that you can tell a politician is lying just by checking to see if their lips are moving. There is a local variation to this: You can tell if a Greek politician is preparing for elections by checking if they are hiring public sector employees. A few days before Christmas, Parliament passed a government amendment to rehire more than 200 workers on the Athens metro.
If you were looking for a sign of whether Samaras and his government were preparing for elections, this was it. It is worth bearing in mind that these 210 workers were hired when New Democracy was in power in 2009, a few days before elections ushered in a PASOK government. A subsequent investigation led to charges being filed against 10 public officials and the workers losing their jobs as it was deemed that hiring criteria had been bypassed.
Apart from indicating that the government wrote off the possibility of electing a president, the decision to rehire these workers (following four previous attempts by New Democracy to do so) raises new questions about Samaras’s commitment to the principles of the adjustment programme he has spent the last 2.5 years implementing. The fact that SYRIZA also voted in favour of the amendment prompts doubts about whether the leftist party is doing anything more than paying lip service to the idea of breaking with the compromised political practices of the past. These issues would be something worth discussing in the upcoming election campaign.
Below, Greece faces snap elections next month after Prime Minister Antonis Samaras failed in his third attempt to persuade parliament to back his candidate for head of state. Bloomberg’s Elliott Gotkine and Joe Weisenthal report on “In The Loop.”