Friday, December 26, 2014

Greece faces political crisis

By Ken Hanly

Athens - Greece's parliament must elect a new president by December 29th or early elections must be called according to the constitution. The Coalition of the Radical Left or Syriza as it is commonly called may be poised to win those elections

Most Greeks are fed up after five full years of recession, continual tax hikes, and record high levels of unemployment. This has increased the popularity of parties on both ends of the political spectrum but Syriza under popular leader Alexis Tsipras is predicted to win any elections.

Nikos Samanidis, a top official and founding member of Syriza said: "After decades on the defensive, the left is staging a comeback. Not just in Greece, but in Europe and Latin America as well." In Europe, there is also a surge in the popularity of more radical right parties as well.

The popularity of Syriza rattles financial markets. The Greek Prime Minister Antonis Samaras warned members of parliament that they must elect a new president soon or face a government that could even force an exit from the Eurozone. Supporters of Syriza already triumphed last May when they won in the European elections. Polls show them still leading other parties.

The possibility of an election and a win by Syriza helped caused a record drop in the Athens stock market on December 9th. Borrowing costs for Greece are also moving much higher. Even senior EU officials have entered the fray. President of the European Commission President Jean-Claude Juncker said about a general election in Greece:

"I wouldn't like extreme forces to come to power. I would prefer if known faces show up,"

As it draws closer to power, Syriza has attempted to reassure opponents and financial officials that it wants to keep Greece within the Eurozone and will not make unilateral decisions. Political economist Yanis Varoufakis claims that Syriza's position that the bailout laws with its austerity provisions should be changed is a reasonable way out of the political crisis: "The first priority is renegotiating with creditors. Syriza needs to speak the language of truth about the continuing triple bankruptcy of the country - public debt, banks, private sector - something no Greek government has done so far. Then they need to table positions that the average German will find reasonable." Many in the Greek and EU establishment remain fearful of Syriza and its leader. Syriza's solution to the crisis is the exact opposite of what is going on at present. Syriza leader Tsipras wants to increase public spending, reverse privatization, boost salaries and also pensions, and have less liberal markets.

The Greek parliament has three chances to elect a new president before it must call national elections. On Tuesday it failed in its second attempt. There is one last chance on December 29th and if they fail then it is three strikes and the parliament must declare fresh elections that Syriza may very well win.The elections would be held in January.

The IMF, European Commission, and European Central Bank may not agree to renegotiate the $293 billion bailout package, that Syriza refuses to accept. Unlike Yaroufakis many financial experts think that the Syriza program is irresponsible and unrealistic as well.

After the failed vote on Tuesday the Athens stock market main index fell two per cent. Yields on Greek government bonds rose to 8.25 per cent up from 7.8 per cent a month ago.

The Greek Prime Minister Antonis Samaras was optimistic that he would be able to garner enough votes on the third try to elect a president and avoid an election since he had a better result for his candidate than on the first vote. The candidate Stavros Dimas won 168 votes in the 300 seat parliament. He needs 180 for election. Although he won 8 more than on the last vote, he still needs 12 more to be elected. There will be a furious lobbying push to garner the twelve votes over Xmas. Polls show that a majority of Greeks do not want snap elections. While Syriza still leads in the polls its lead has narrowed to a 3.4 point lead recently.

Greece faces political crisis