Grand coalition to govern Greece?

DISCLAIMER: All opinions in this column reflect the views of the author(s), not of EURACTIV Media network.

Although it is too early to make valid predictions about the outcome of the parliamentary elections in Greece, the fragmentation of the political scene might render a coalition government of Nea Democratia and PASOK the least worst option following the elections, argues Anna Visvizi.

Anna Visvizi is a political and economic analyst and associate professor at DEREE – The American College of Greece. The following provided exclusively to EURACTIV Germany.

"With all probability, this week the date of the elections to the Greek Parliament will be set for the elections to take place on May 6, 2012. The outcome of the elections will have fundamental impact on the reform process in Greece and in a path-dependent manner will define the fate of the €130 billion EU/IMF financial assistance programme as well as the purposefulness of the debt-exchange programme set in motion in March this year. In this view, the outcome of the elections in Greece will weigh heavily on the developments concerning Spain and Portugal as well as on the EU-level discourse surrounding these developments.

From this perspective, it is quite interesting to take a closer look at current developments on the Greek political scene and to ponder on the meaning of the debate that unfolds in view of the forthcoming elections. Three issues deserve a particular attention in this regard, i.e. fragmentation of the Greek political scene and the prospect of a necessity of forming a coalition government, the topics/issues most likely to define the electoral campaign, and the possible implications for the reform process.

Currently there are thirteen political groups that will seek a pass into the Greek Parliament. The undeniable frontrunner – according to the most recent opinions poll by Public Issue  – is the centre-right/conservative Nea Democratia (22,5%), followed by the socialist PASOK (15,5%). A significant number of respondents would have voted the leftist/communist parties such as the Coalition of the Radical Left (ΣΥΡΙΖΑ, 12,5%), the Communist Party (KKE, 12%), the Democratic Left (12%), and the Ecogreens (Οικολ?γοι Πρ?σινοι, 3%).

Out of political parties formed recently by former members of PASOK, i.e. the Social Agreement (Κοινωνικ? Συμφων?α) and the Civilians’ Charriot (?ρμα Πολιτ?ν), only the former one receives 1% of potential votes. By contrast, groups formed by former members of Nea Democratia, i.e. the Democratic Coalition and the Independent Greeks take respectively 2% and 8,5% of potential votes. The former member of the interim government, i.e. the clinging to national/Christian sentiments Popular Orthodox Rally (LAOS), sees a significant drop in popular support in that only 2% of voters would have cast their vote in favour of LAOS. 

According to the same opinion poll, the nationalist Golden Dawn (Χρυσ? Αυγ?) would have gained 5% of support and thus – by breaking the 3% threshold – it would have entered the parliament. Finally, the liberal and reformist party Drassi is way too small to make a visible impact on current opinion polls, although it does play a very important positive role in shaping the debate on the reform process in Greece. Against this background, the questions that emerge include: Will ND succeed in winning the parliamentary majority? In case it does not, which political party will be the most likely coalition member? How will it impact the reform process in Greece?

Clearly, ND’s position and thus the possibility of it winning the parliamentary majority, which would serve as a guarantee for an efficient reform process in Greece, have been substantially weakened by the popularity of the Independent Greeks party. Given the fact that increasingly the Greek society resents the political system and overall it is on the verge of losing its hope for a better future, the Independent Greeks party hits the sweet spot of popular attitudes and expectations. The socialist PASOK, on the other hand, has regained part of its electorate support following the change of the leader of the movement, and the ensuing revival of sentiments that the public sector employees have been attaching to PASOK for the last 30 years.

From a different vantage point, the rise in popularity of the leftist/communist parties should be watched with caution in that these parties build their strength by opposing the bond exchange programme, the financial assistance scheme, and the reform process aimed at the liberalisation of the Greek economy altogether. It is unlikely, however, that these parties will be willing to form a coalition. It is plausible, however, to suggest that the greater the support these parties will receive, the weaker the position of ND and PASOK will be.

Although a winning majority of ND and a strong reformist government would be the best option for Greece and for the fiscal adjustment programme, if no clear majority is secured by ND, a coalition government might become a necessity following the elections of May 6. Practice suggests, however, that should it be the case, instrumentalisation of the reform programme and its use for domestic politicking, will hamper any efforts to get the Greek economy back on track. In other words, such a coalition will produce more side-effects than benefits in that it will seriously affect the implementation of the EU/IMF-sponsored reform programme and hence it will cast shadow on the outcomes of the bond exchange programme.

Given the perceived unpredictability of the situation in Greece, at this stage several voices can be heard in the West calling on the Greek politicians to cooperate, reminding them at the same time of the imperative of consensus over the reform process. Although consensus is always desirable, as ever, the devil is in the details. Here one should bear in mind that even if the electoral campaign has not officially started yet, a cleavage among the two major parties, i.e. ND and PASOK, is obvious. It is particularly visible with regard to fiscal policy in general and the specific take on taxation in particular. (Of course, questions of the downsizing of the public sector, privatisation and liberalisation of the economy are equally important.) 

Notably, the approach to taxation implemented by the socialist government of PASOK since 2010 has led to the impoverishment of the Greek society, with the tax burden becoming totally disconnected from income and from the capacity to pay taxes, thus forcing people to consume their savings (for daily expenses and to pay taxes) and/or forcing them out to the streets (the number of homeless in Athens reached 20.000 in 2012). The implications of this take on taxation have been equally tragic for the business sector and for the industry. As a result the average level of unemployment across Greece reached 21% at the end of 2011, whereby unemployment among young people reached 50% over the same time.

In contrast, ND emphasises the need of relaxing the tax burden as a necessary precondition of growth and success of the reform process. In these circumstances the question is whether the prospect of a coalition government can be avoided. And because the restoration of growth in Greece and its progress on the path toward fiscal sustainability will work as a litmus test for the fiscal consolidation efforts and the appropriateness of measures employed elsewhere in Europe, it is necessary that the details and nuances of the Greek political scene are taken seriously in the EU-level discourses."

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