Monday, June 18, 2012

Greek election hangover: the morning after

John Paropoulos at The New Athenian (A Twin Victory in Greece Sets the Stage for Confrontation 06/18/2012) mentions one factor that could turn out to be a substantive practical difference between the outcome of yesterday's Greek election and last month's, which is that the two old establishment parties, conservative New Democracy (ND) and social-democratic Pasok, won enough seats in this round to form a government between the two of them, which wasn't the case in May:

The 50-seat bonus in parliament that goes to the top party also helps New Democracy in practical terms. It could, in theory, form a strong Europeanist coalition with the other parties that continue to uphold Greece’s loan agreements, the socialist Pasok and the moderate Democratic Left. Together they could wield a formidable 179 seats in the 300-seat legislature, effectively a two thirds majority. This is a far cry from the May election, when Samaras and socialist leader Evangelos Venizelos were unable to make the 151 seat minimum and would have had to ask for a vote of tolerance for a minority government.
He also gives this helpful breakdown of the results by party, showing vote percentage and number of Parliamentary seats:

New Democracy 29.66% (129 seats)
Syriza 26.89 (71 seats)
Pasok 12.28 (33 seats)
Indep. Greeks 7.51 (20 seats)
Golden Dawn 6.92 (18 seats)
Democratic Left 6.26 (17 seats)
Communist Party 4.50 (12 seats)
The Parliament has 300 seats, so 151 are enough to form a majority.

BBC News (Antonis Samaras begins urgent Greece coalition talks 06/18/2012) provides this helpful graphic comparing the May and June election results:

It's arranged in the conventional European scheme showing parties left to right, with the Communist Party (KKE) farthest left and Golden Dawn farthest right. This shows there was some additional polarization between what are now the main representatives of the right and the left, ND and Syriza, respectively.

Among other things, it's striking that even at a time of severe economic problems, the KKE isn't building any significant support, although it could potentially be a coalition partner in a future Syriza-led government. The KKE even lost seats compared to May, with presumably some voters going to Syriza.

Paropoulos sketches out what is likely to be the strategy of Alexis Tsipras and his Syriza grouping (Syriza is itself a coalition of smaller parties) as leader of the opposition in a possible ND/Pasok government led by ND's Antonis Samaras and Pasok's Evangelos Venizelos:

Syriza has done extremely well out of the last two elections. It sextupled its share of the popular vote and turned its 13 seats into 71. These are historic achievements for the left, whose combined share of the vote in the last four decades has never risen above 13 percent. Tsipras will likely now occupy the anti-austerity pulpit Samaras once did when the socialists were in power. He vows that, unlike Samaras, he will stick to the guns of opposition to what he calls an “unholy alliance of the forces of the past,” a reference to the socialist and conservative parties.

His promise should be taken seriously. Syriza’s 17 percent in the May election was enough to freeze a privatisation programme Greece’s European creditors view as a major component of its bailout obligations. Privatisation promises to be a major battleground for another reason. Much of the support that has rallied behind Syriza consists of public sector unions that used to champion Pasok. Privatisation amounts to layoffs and lower pensions and benefits, which they are determined to fight. Their arguments are material. Syriza provides an economic theory to complement them – that Greece’s state enterprises are not monopolies, but require investment to compete in what are open markets. To sell them downriver is to display a singular lack of national pride.
Paropoulos sounds sympathetic to an ND/Pasok austerity government. But he also notes, "Syriza controls the street even if New Democracy manages to control parliament." By "street" he presumably means the most active opposition to the austerity policy death grip.

Samaras has three days under Greek law to form an ND-led government. Presumably, Pasok would want to drag out negotiations to the last moment to get maximum advantage. Although both ND and Pasok have been so subservient to German Chancellor Angela Merkel's austerity demands that he Pasok's Venizelos may just may a very quick coalition agreement to keep Angie happy.

Cartoonist Klaus Stuttmann doesn't see much reason to be optimistic about the results of the Greek election. He shows two beds, one labeled "Greece", the other "Euroland", and the doctor is asking, "Na, did my two coma patients get through this last weekend still in good shape?"

Paul Krugman discusses the Greek results in Greece the Victim New York Times 06/17/2012 and Can't Get No Satisfaction 06/18/2012. In the latter, he wonders why conventional wisdom among the EU and media elites found the Greek results relieving:

... we have a maybe coalition that received a minority of the votes, pursuing a strategy almost guaranteed to fail, with parties ranging from radical to full-on fascist waiting in the wings. But what was the market expecting?

In a way, the worst thing about the Greek election is the possibility that it will encourage the Germans and the ECB to persist a bit longer with their fantasies about how things might work.
In the former, he points accurately to the failure of European leadership in the euro crisis:

No, the origins of this disaster lie farther north, in Brussels, Frankfurt and Berlin, where officials created a deeply — perhaps fatally — flawed monetary system, then compounded the problems of that system by substituting moralizing for analysis. And the solution to the crisis, if there is one, will have to come from the same places. ...

Which brings us to Sunday’s Greek election, which ended up settling nothing. The governing coalition may have managed to stay in power, although even that’s not clear (the junior partner in the coalition is threatening to defect). But the Greeks can’t solve this crisis anyway.

The only way the euro might — might — be saved is if the Germans and the European Central Bank realize that they’re the ones who need to change their behavior, spending more and, yes, accepting higher inflation. If not — well, Greece will basically go down in history as the victim of other people’s hubris.
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