Greek politicians maneuver frantically to form a new government and at least sound like they want less austerity

Maybe it's just stating the painfully obvious. But now and for the next few months, EU politics is likely to see an awful lot of positioning, deal-making, agreements real and phony, and some generally Byzantine political maneuvers. The eurozone is in serious and immediate trouble. And the consequences of a collapse of the euro currency would range from bad to catastrophic. So the stakes are very high for all players.

Here's a Bloomberg TV report from prior to the Greek elections, which includes the Managing Director of the ReDefine NGO, Sony Kapoor, and an advisor to the French Socialist President Francois Hollande, ecnomist Philippe Aghion, Economic Edge: Spanish Targets and Greek Elections 06/15/2012.



One of the balloons in the air at this writing is for the new Greek government, which is expected to be announced Wednesday, to put together a negotiating team which would include the opposition left grouping Syriza to negotiate with the EU (i.e., German Chancellor Angela Merkel) to renegotiate the terms of the bailout memorandum (Boris Kálnoky, "Nationales Team". Griechische Taskforce will EU unter Druck setzen Welt Online 19.06.0212). Evangelos Venizelos, head of the social-democratic Pasok party, has been talking up the idea of getting Syriza's buy-in on the austerity policies. I'm sure he would like to, because his own pro-austerity, pro-Angie position has reduced his party for the moment to minor-party status, with Syriza positioned to become the left party among the dominant two parties. Pasok has hardly any left left. [Groan - sorry, I couldn't resist.]

Venizelos even agreed with the small left Democratic Left party (Dimar), a potential third partner in a New Democracy (ND)/Pasok coalition on a statement calling for the "gradual liberation from the memorandum", i.e., the current bailout terms. Neither Pasok nor ND deserve much credibility at this point on their expressed desire to get the memorandum terms eased, since they were both on board with Angie's draconian austerity program that has devastated the Greek economy. If anything, ND isn't quite as compromised as Pasok. ND voted against the initial austerity plan approved by the then-Pasok government. If Venizelos wants anyone to think he's anything but an Angiebot, he'll really have to show he can deliver substantive and immediate relief from the austerity noose. A "gradual liberation" can only lead to a near-term Greek exit from the eurozone.

Kálnoky reports that Venizelos is working on an idea to actually shut Pasok down and refound a new social democratic party, hopefully with Dimar folded into it in some way. Kálnoky claims it's motivated in no small part by Pasok's own indebtedness, which would default in the case of the party being dissolved. But it's also because of Pasok's dramatic fall in the May and June election results.

The Austrian Social Democrat Hannes Swoboda has been a leading critic of Angie's austerity measures. The Athens News liveblog quotes him at 4:48PM 06/19/2012:

The head of the European Parliament's Socialists and Democrats group Hannes Swoboda has criticised the mix of economic measures imposed on Greece, saying that they had been "all wrong" and had not contributed to overcoming the debt crisis.

Speaking in Nicosia after a meeting with Cyprus President Demetris Christofias, Swoboda called for an readjustment of the measures, which he said had helped make Greece's economic situation worse. The lesson that could be learned from the European Commission, ECB and IMF troika and the way it operated was that it was often not helpful, he added.

Concerning the message of the Greek elections to the eurozone, Swoboda said that Greek voters had voted in a way that sent a clear message, indicating that they wished to stay in the eurozone and have a stable government. At the same time, he added, the strong vote for SYRIZA meant that there had to be a change on social issues.

"The vote must be combined also in relation to the Democratic Left. It is a clearly European vote," he added, noting that he had personally visited Greece while European Commission President Jose Manuel Barroso and others had not gone to the country to see the conditions of poverty that people were faced with. [emphasis in original]

Tags: angela merkel, austerity economics, eu, euro, european union, greece, hannes swoboda