Coalition Talks Collapse, Greece Going for Elections in June

Coalition Talks Collapse, Greece Going for Elections in June

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ATHENS – A last-ditch effort to set up a coalition government in the wake of stalemated May 6 elections and stave off a possible exit from the Eurozone has failed, setting up new elections next month – likely June 17 – with little promise those would result in a new administration. Greek President Karolos Papoulias had met with five of the seven parties who won enough seats to be represented in Parliament, but none had enough support to rule outright, leading to a political deadlock.

He couldn’t get them to agree because of a deep divide over whether to keep administering austerity measures demanded by the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) in return for a first series of $152 billion in rescue loans and a second planned bailout of $172 billion to keep funding for salaries and pensions. The Troika has warned if the next government wants to keep getting bailout loans that it must make another $15 billion in cuts and implement more austerity, measures rejected by 68 percent of voters – although 80 percent said they want to stay in the Eurozone of the 17 countries using the euro as a currency at the same time.

Papoulias was trying to make a last-ditch effort with New Democracy, SYRIZA, PASOK, the Independent Greeks and the Democratic Left to work together with a government of “personalities,” that could be led by a technocrat, not a politician, but the leaders continued to squabble and couldn’t find common ground. Communist leader Aleka Papariga boycotted the talks while the neo-Nazi Golden Dawn was not invited.

Papoulias will convene a meeting on May 16 to set up a caretaker government that will rule until the elections. Stock markets dropped immediately and the euro declined in the wake of the spectacular collapse to reach an agreement. “For God’s sake, let’s move towards something better and not something worse,” PASOK Socialist party leader Evangelos Venizelos told reporters after the meeting. “Our motherland can find its way, we will fight for it to find its way.”

Polls show the leftist SYRIZA party, which rejects the bailout, is now on course to win, but as a coalition might not be eligible to get a 50-seat bonus that could give it a majority and allow the Leftists to form a government next month. European leaders say that they will cut off funding for Greece if it rejects the bailout agreed in March, which would mean bankruptcy and all but certain exit from the European single currency.

“We are going to have not just one but two more elections,” Spiros Rizopoulos, owner of Spin Communications, a consultancy in Athens, told the British newspaper The Telegraph. He said that some voters would pull back from SYRIZA, but not enough to guarantee a majority for the old guard, an outcome that would necessitate a third poll. “Tsipras is running on rage but you can only go so far on rage. At some point you have to say ‘this is my ideology’, this is what I am going to do,'” he said.

The Greek crisis was being watched intensely by political leaders from the European Commission headquarters in Brussels to Washington, D.C., Wall Street and around the world over fears that the failure to form a government could lead to Greece being pushed out of the Eurozone and jeopardize the entire 17-country economic bloc of countries using the euro as a currency and set off a domino-like effect that could affect other troubled EU countries such as Portugal, Spain and Italy.

The crisis intensified after the May 6 elections failed to give any party enough support to form a government and control the 300-member Parliament. The country had been ruled by a shaky hybrid government of the New Democracy Conservatives, who won but with only 18.8 percent of the vote, and the PASOK Socialists, who finished a dismal third with 13.2 percent. Both parties, while ideological rivals, supported the deep pay cuts, tax hikes and slashed pensions insisted upon by the Troika, but backed off just before the elections, sensing public outrage.

The other five parties who gained seats in Parliament were opposed to the austerity measures and none of the leaders of the first three finishers, including the surprise second-place Coalition of the Radical Left (SYRIZA) led by 37-year-old Alexis Tsipras could rally enough support to form a coalition because of bitter differences over austerity. Tsipras said he wanted to nullify the terms but keep Greece in the Eurozone – positions the Troika said were mutually exclusive – while New Democracy leader Antonis Samaras, who has flip-flopped on austerity, said he wanted to renegotiate the conditions he supported. Venizelos, who as finance minister in the coalition doubled income and property taxes and taxed the poor while insisting austerity was the only course Greece could follow, also backtracked and said he too wanted more time to implement reforms.

The party leaders blamed each other for a failure to find a compromise. Panos Kammenos, a New Democracy outcast whose new Independent Greeks party finished fourth on an anti-austerity platform, departed the Presidential Palace in an obvious state of annoyance. He said that, “They (New Democracy and PASOK) chose the country’s lenders over a national solution.” He later accused Samaras of pushing for a second round of elections, “because he wants to become Prime Minister,” and that Venizelos “agreed on our seven points apart from rejecting bailout and unilateral default.” New Democracy officials said Kammenos’ comments were “laughable,” as the finger-pointing continued.

Democratic Left leader Fotis Kouvelis, who said he would have joined another New Democracy-PASOK coalition if SYRIZA – which rejected the idea – also agreed, said later, “There was no agreement between political forces.” He said that some parties had made a “political choice” to go to new elections in order “to serve their parties’ interests.” There was no comment from SYRIZA.

What’s worrying the Troika and political leaders in other countries now is whether the failure of the talks or an inability to form a new government after the next elections because of the deep divide will result in Greece leaving the Eurozone and returning to its ancient drachma, a scenario many analysts said would lead to 50 percent inflation and even worse chaos.

Lucas Papademos, the former ECB Vice-President who served as interim Prime Minister in the six-month coalition, had warned that Greece would run out of money by July 1 if the failure to form a government led the Troika to pull the plug on the next bailout installments and as Greece needs to make loan repayments. There were doomsday predictions that Greece would be left without enough cash to pay its bills, workers or pensioners, just as the tourist season arrives in full swing. The political instability has already led to drops in hotel bookings by as much as 50 percent in some cases. The tourism sector is Greece’s most important, bringing in about 18 percent, or $54 billion, of the country’s $300 billion Gross Domestic Product.

The austerity measures that have created the schism have worsened a deep recession now in its fifth year in Greece and created 21.7 percent unemployment, the closing of scores of thousands of businesses – with another 1,000 each week shuttering their doors – and set off two years of protests, strikes and riots to no avail.

Greece’s international lenders have warned that they won’t discuss further aid disbursements until a new government is formed. Swedish Finance Minister Anders Borg warned Greece may be nearing the end of its time in the Eurozone. “We are very close to the end of the road,” Borg told reporters in Brussels. “The situation is very serious.”

“They should go to hell. Only God knows what’s waiting for us now. I’m very scared about the future,”  Giouli Thomopoulou, 59, an unemployed office clerk, told Reuters. “I don’t think elections will solve anything because in a month we’ll be in the same situation.” And Panos Leonidas, 57, a travel agency worker, told the wire service he had given up. “The country is finished,” he said. “From now on, you can only live here if you’re an animal.”

(Sources: Kathimerini, AP, Reuters, The Telegraph, Wall Street Journal)

 

  • athens2011

    What a bloody shambles – And all because Samaras forced elections at a ridiculous moment because he thought he would win and become prime minister!  This presented the people with a choice between the old incompetent corrupt leading parties and the (formerly) small extremist groups who were irresponsibly promising an impossible end to the pain.
    The result is a sorry mess, between the grinning wonder boy Tsipras on the left, thoroughly and visibly enjoying the limelight he finds himself in, supported by the largely useless, corrupt and bloated civil servants who have long been a huge burden and impediment to the economy, and the lunatics on the extreme right.
    It is true that PASOK panicked and brought in the necessary cuts very unfairly, choosing to squeeze the poor and middle classes rather than their rich friends, while avoiding grasping the nettle of the public service. Nevertheless, the voters must now choose between on the one hand voting for sane parties which see that Greece has no acceptable future outside the Eurozone, and on the other, handing the fate of the country to the lunatics of left and right – even if it means they have to hold their noses to do so.
    Then it will be up to the public to ensure that the new government ends MPs legal immunity, hunt out their old friends who for so long filled their pockets at our expense, and generally see that the survivors do not fall back into their old ways

  • GGG65

    Greek politicians never thought about the people and the country, they are always think about how to remain in power for as long as it takes for their own benefit and their future. This crisis is caused by the two major parties taking turns over the past 38 years hiring hundreds of thousands of unneeded workers in return for votes, along with corruption, tax evasion, inefficiency, bureaucracy and an uncompetitive economy based on agriculture and tourism that pushed away foreign investors including unhealthy system, no wonder why the country is in ruins.

  • epigramx

    The reality about Greece and Europe.

    First of all, Greece is not only the corrupted or disorganized portion of those that sat on public property, or those that claim there are easy solutions, since it’s easy to claim there are easy solutions when they haven’t faced the european Ultimatums themselves. There are many decent, honorable and hardworking people. At the same time, Germany or other North European countries are not all perfect and saints. They have their share in protectionism, and in cases such as Siemens bribing scandals or East Germany abuse, there is corruption. Again, not all are the same, those are minorities.

    Now, let’s stop the hypocrisy: We knew Greece and other smaller countries were weaker than powerful Germany. The enemies of the EU coming mainly from Russia, Britain and some small portions of America and other international centers, try to rewrite history claiming “we didn’t know the discrepancies”. We very well knew and it’s hypocritical to claim otherwise. Official european statistics of several years before 2008, show counties like Sweden and Germany consistently stronger in economics. What they didn’t know is that in the future that strength of theirs might have not been enough to save their stability.

    But we were also naive: We didn’t anticipate ..Peak Oil. What was considered up to last year a conspiracy theory, now Forbes magazine openly admits it’s here. The International Energy Agency admitted in 2010 it was already there for conventional sources. Wikileaks revealed American sources believe Saudi Arabia is incapable to produce the extra capacity it claims it can. While one could claim neat states like Sweden’s anticipated it earlier than others (for example, they aim to replace all cars with electric ones soon), it’s only after 2008 that such moves became bolder; only after 2008. Yes, we were not Americans, but we didn’t anticipate a crash in energy prices (unlike other products, it’s fair to say a rise in prices is actually a crash since energy = work and all other products depend on it, it’s not just another product). The “debunkers” have been debunked since several years into a global crisis the price of oil does not drop. Saudis claim they can lower it and they repeatedly fail. Not many remain that can claim a global recession suits them hence any conspiracy theory about doctored prices (and for several years at that) would be weak. Instead it’s very real that the production is steady and demand of China, India and others is stronger. Nobody can easily fight the basic economic law of those two for a prolonged period of time.

    Hence, 

    1. Greece is not “evil” and Germany is not “perfect” (and vice versa if you see it from the other side). Many people are decent and some people are corrupted everywhere. Nationalism and protectionism is very strong lately and strengthens those rotten views. 
    2. We were not naive: Official documentation showed publically for several years before 2008 the strength of North Europe and weakness of the South. The enemies of the Union try to rewrite history claiming “we were taken by surprise”. We were not taken by surprise at all about this. We just felt the North was strong enough to not care.
    3. We were naive and taken by surprise for not anticipating the peak oil derived global recession. Energy = work in physics. Economists should learn that from the sciences. After all, work = wealth for them and one can do the math there easily without being an expert in mathematics: energy = work = wealth.
    .

  • GGG65

    Greece is a “Bourdellomalakopushtokratos” and if you don’t know the
    meaning of this word, find a Greek near you and he/she will tell you.
    That is Greece in 27 letters.