Sunday, June 17, 2012

One possible outcome of today's Greek election: a Syriza/New Democracy (left/conservative) coalition

However the results of today's Greek parliamentary elections turn out, there is likely to be a series of complicated if rapid negotiations to form a government. John Psaropoulos of The New Athenian talks about some of the possible common ground and difficulties for a coalition between the Radical Left electoral grouping (Syriza) and the conservative New Democracy (ND) Party in Can Greece Govern Itself? 06/16/2012.

He appeared on the PBS Newshour of 06/15/2012 talking about the elections, How Greece's Election Could Shape Global Economy:

Psaropoulos sees some possible common ground in a willingness by ND to push for more lenient terms on the EU-imposed austerity policies. Given how completely both ND and the social-democratic party Pasok knuckled under to German Chancellor Angela Merkel draconian demands, there's good reason to doubt the seriousness of the noises ND is making in that direction.

And he discusses some serious differences that would make an ND/Syriza coalition government very difficult to form:

But the two parties’ substantive differences will be hard to bridge. New Democracy wanted to lower the top tax bracket to 32 percent, and have a flat 15 percent corporate tax. Syriza wants to slap the rich with a 75 percent tax rate and visit particularly harsh taxes upon large corporations.

Syriza would not be a true left party if it were not also statist. It wants to reverse every privatisation that has taken place over the past 15 years, and turn around state utilities to make a profit. The backbone of the economy, Greece’s banking system, would be nationalised. New Democracy’s leader, Antonis Samaras, has flatly stated that “everything that can be privatised will be privatised.”

New Democracy wants illegal immigrants to be sent to detention camps and then deported. Syriza wants those detention centres to be open reception areas and to abolish deportations.

It is difficult to see these differences being bridged without breaking moulds of party thought and suffering losses on the extremes of each party. Syriza and New Democracy might, of course, make a stronger effort this time around, seeing how much closer the country is to the brink of collapse in social services. But unless one of the smaller parties relents and agrees to form a coalition with one of them, they are equally likely to try for a third round of elections. By then, the public payroll, pensions and healthcare may have begun to unravel so badly that central debate of these elections would be moot. Greece could be in an ever clearer state of bankruptcy and its fiscal adjustment would have to take place overnight.
Pasok is also making noises about supporting changes in the austerity dictates, though in practice in the current government it joined ND in sniveling to Angie's demands.

Pasok leader Evangelos Venizelos has already proposed his own list of general coalition-forming principles, aimed no doubt at mitigating his party's image as Merkel toadies (Venizelos talks of coalition government, presents proposal Athens News 06/10/2012):

The points proposed by Venizelos for the formation of a coalition government are as follows:

1) The need to agree a government of national co-responsibility with the participation of all the political forces that respect the democratic parliamentary institutions and truly want to guarantee Greece's place in the euro.

2) Agreement on a change of the terms of the bailout loan agreement "that was imposed on us due to the correlations that existed in the EU at the time".

3) Extension of the timeline for fiscal adjustment, "which already appears to be accepted", by one year and with an additional target of its extension to 2017.

4) Preservation of the sustainability of the debt, in tandem with the extension of the fiscal adjustment.

5) Advancement of the reforms that will render Greece a "regular", rational and not wasteful state, and will render the economy competitive.

6) Agreement on a 10-year National Taxation System that will be stable for a decade, simple, automated in its implementation, developmental and socially just.

7) Real support for development and employment through the promotion of public and private investments.

8) The creation of a "social protection" net for every household in a state of need, and particularly those in conditions of absolute poverty, through a system of interventions at municipal level that will ensure a dignified standard of living.
Alexis Tsipras and his Syriza group may decide they are better off not being part of the current governing coalition, and instead let ND and Pasok take the blame for pulling out of the eurozone and the internal economic disruption that will follow in the immediate aftermath.

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