Greece Votes Itself in the Foot: The Rise of the Coalition of the Radical Left and the Demise of Europe
June 14, 2012
The outcome of the June 17 Greek legislative elections will not only determine whether Greece exits the eurozone, but it could also seal the fate of the entire postwar European project. According to the latest polls, the center-right New Democracy (ND) party and the Coalition of the Radical Left, known as Syriza, are in a dead heat. Taking first place is crucial, because it comes with a 50-seat bonus in parliament, which means that no government can be formed without the winner.
For its part, ND’s chances hang on whether it can rally the voters who deserted the party in the last national elections on May 6. Those elections were an attempt, at least, at a power grab by ND’s leader, Antonis Samaras. He had built his political profile by standing in opposition to the May 2010 bailout agreement and adjustment program championed by the European Union, the European Central Bank, and the International Monetary Fund — popularly known as the troika. Then, Samaras’ moment came in November, after former Prime Minister George Papandreou called for a referendum on Greece’s euro membership. Brussels quickly threatened to withdraw support from Greece, and Papandreou, realizing that he had slipped up, threw support behind a coalition government led by the former ECB Vice President Lucas Papademos. That government successfully negotiated a debt write-down and finalized the latest adjustment with the troika. Samaras backed that government, too, on the condition that both its duration and mandate be limited. But that turnaround undermined his credibility among voters.
Samaras is widely seen as representing the corrupt and ineffective Athens political establishment that led the country to ruin. After all, Greece’s public debt and deficit significantly worsened during ND’s last tenure in government, from 2004-9. It should come as no surprise, then, that when he forced the May 6 elections, hoping to win big, he brought home the worst ND result ever: Not even one in five voters backed the party.
But the premature elections did something else: They paralyzed the real progress that was afoot. In the months before the elections, austerity measures dictated by the troika had boosted exports. Athens’ deficit was on a sharp downward trend, on schedule to be eliminated by 2013. Despite its limited mandate, the Papademos government introduced concrete measures to fight corruption, the misappropriation of public funds, tax evasion, and inefficiency — policies that had begun to bear fruit. A census of public pensions uncovered a stunning 200,000 bogus disability and old-age claimants, whose annual cost to the budget is conservatively estimated as upwards of $870 million. A drive to improve the efficiency of health-care spending resulted in effective cost-control measures. The Greek bank recapitalization was on course to stabilize the banking sector and inject liquidity into the market. The flight of bank deposits reversed, and the tail end of the debt “haircut” would have increased stability. The nearly $8.7 billion payment by the state of its trade and tax-refund arrears would have gone ahead, providing a huge and badly needed stimulus to the economy.
Because of Samaras’ miscalculation, those positive signals have vanished. The adjustment plan is widely perceived as a failure; its critics feel vindicated. With political paralysis at the top, the Greek state’s notoriously ineffective bureaucratic machinery has come to a standstill. The ND has played up Greeks’ fears of exiting from the euro to try to win back votes. And given that more than 60 percent of the country has consistently supported Greece’s euro membership, the ND could pick up support there.
But the ND is trending in the wrong direction. Despite the party’s genuine desire to keep Greece in the eurozone, its campaign talk may be too little, too late. And without the ND, the outlook for Greece, and for Europe, grows dark, quickly…
So how could a group of inexperienced, wide-eyed radicals and neo-communist academics, led by the 37-year-old former student activist Alexis Tsipras, propel itself to the top of the Greek political power structure? Much of the shift comes as a response to the deep recession that has pushed unemployment above 20 percent, a loss of faith in successive austerity plans that kept missing their targets, a rejection of the corrupt ways and unpersuasive rhetoric of the two big parties, and a feeling of national humiliation brought on by the recurring spectacle of Germany constantly strong-arming Greece. Greece’s voters also feel dejected following the collapse of the once-prevailing clientelist social contract, whereby votes were exchanged for jobs, favors, and an enviable standard of life, albeit one based on massive debt…