The more things change, the more they stay the same. Greece has held its second election in six weeks and again faces political gridlock that will do little to dispel the dark economic clouds hovering over Athens
In his final address ahead of Sunday’s vote, Antonis Samaras, leader of the centre right New Democracy, said the electorate faced the stark choice of staying in the euro or going back to the drachma.
In the end, Samaras breathed a sigh of relief as his party finished in first place in the popular vote, edging out the radical left Syriza, which had campaigned against the EU/IMF imposed austerity measures as a condition of Greece’s recent bailout package.
The election result wasn’t a victory for Samaras but a defeat for austerity measures imposed from outside
But an increase in Syriza’s vote from 17 percent to 27 percent points to troubled times ahead.
Party leader Alexis Tsipras wasted little time firing a shot across New Democracy’s bows, claiming the election result wasn’t a victory for Samaras but a defeat for austerity measures imposed from outside.
As the political horse trading gets underway inside Greece, the political manoeuvrings outside the country also bear watching. With Angela Merkel, the ‘Wicked Witch of Berlin’ – as she is sometimes referred to in certain Greek circles – getting on her broomstick to fly over on Monday to Los Cabos, Mexico, for the annual G-20 shindig, the pressure on the German Chancellor to throw another bone to the crippled old Greek dog will become even more intense – not least because Barack Obama increasingly fears eurozone contagion impacting his re-election prospects and recently installed French President, Francois Hollande already calling for a €120bn economic ‘growth pact’ for Europe – measures including a financial transaction tax, as well as investment to create jobs.
After two bailout packages worth a total of €240bn the Greek economy, now in its fifth year of recession, continues its downward spiral to the point where, to use the famous German phrase: “You can’t pick a naked man’s pocket’.
Eurozone finance officials have already discussed a number of options under a ‘worst case’ scenario, including limiting the size of cash withdrawals from ATM machines, border checks and the imposition of eurozone capital controls.
A more likely outcome, given little expectation of Greece emerging from its economic coma anytime soon, would be a political fudge on the part of Germany and its quislings in the doomed (in its present form) euro project to offer additional leeway to Athens in terms of meeting its debt targets without necessarily altering the targets themselves.
It remains to be seen though whether even this will be enough. And even if it is, a troika (ECB/EU/IMF) opting to be more accommodating towards Greece is likely to meet resistance further down the road from the likes of Spain and Italy looking to shore up their own weakening economies.
Markets will deliver their own verdict. It could be harsh, once the initial optimism (prompted by a renewed liquidity blitz from the world’s major central banks?) evaporates.