COMMENT

Weighing all the factors

By Alexis Papachelas

Certain people in the know continue to believe that snap elections will take place in the fall. Prime Minister Antonis Samaras is obviously aware of this trend, which is why he told Parliament a few days ago that early elections are out of the question and that the 180 votes needed in the 300-seat House to elect a new president will be found. Samaras has a lot of decisions to make by the end of September and he needs to weigh a lot of different factors when making them.

First of all the tourism season needs to go well this summer in order to generate some optimism regarding its effects on the economy, unemployment and overall morale. The first public opinion polls will begin emerging after the end of the summer, giving some indication of which way voters are leaning. It is also around then that the troika will complete its fifth and final evaluation of the economy and give its final recommendations, before the start of debt relief talks.

The prime minister will also have to see whether the troika will push for more changes to the social security system, to labor issues and to civil servant salaries or choose to ease the pressure on the government. Much will also depend on whether the power vacuum until the new European Commission is appointed in October affects the debt talks and where will the International Monetary Fund will stand.

The only crucial factor that cannot be predicted yet is the outcome of the stress tests scheduled for the country’s banks, which will be published in November at the earliest. Their importance should not be overlooked, as the number that emerges for lenders’ capital requirements will determine how much room the government has to negotiate in the debt talks and will also directly influence investor and political sentiment.

If all goes well – that is if the troika backs off, morale is boosted and Parliament approves all pending prior actions – the whole matter of the government’s continued survival will come down to independent deputies and whether they will back the government’s presidential candidate or not. Their decision will certainly be influenced by polls, the overall climate in the market and the tone of negotiations with the troika. It will obviously be much easier for them to back to government’s horse if the country’s creditors confirm that Greece will not longer be subject to the terms of a new memorandum.

There are no easy decisions ahead for Samaras. There are those who will advise him that if it starts to look like things are going awry, if the troika demands measures that cannot possibly pass through Parliament or if the 180 votes for president are not collected, then the only option is early elections in October and November, possibly accompanied by a serious clash with the country’s creditors.

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