ECONOMY

Greeks used to years of chaos dismiss Samaras’s warnings of more

As Prime Minister Antonis Samaras’s political maneuvers to avoid early elections edge toward a dead end, his warning of turmoil risks falling on deaf ears among Greeks numbed by years of upheaval.

After losing a second vote in parliament yesterday on his candidate for a new president, Samaras needs to win over a dozen lawmakers before a final ballot on Dec. 29. Should he fail, the constitution dictates that elections must be called, with opposition party Syriza leading opinion polls.

“We’ve already been living through chaos for years now,” said Kostas Grekas, a 23-year-old computer-technology student in Athens who graduates next year. “I’d prefer there to be elections now so that Syriza gets in, just to break up the old party system and to see something different.”

Greece marked 2014 by exiting a six-year recession that cost the country about a quarter of its economic output and tripled the unemployment rate. While Samaras’s pitch is that a change of government would endanger the incipient recovery, Syriza promises to abandon austerity measures tied to the country’s international bailout.

Samaras, 63, garnered 168 votes out of 300 members of parliament to get approval for Stavros Dimas as the country’s largely ceremonial head of state. He needed 200 votes for victory and the threshold next week falls to 180 lawmakers.

In the third vote, “each MP will come face to face with the anguish of the Greek people and the interests of the nation,” the prime minister said after the result.

Crying Wolf

The prospect of early parliamentary elections has roiled financial markets in Greece, evoking memories of the height of the financial crisis in 2012 when the country’s euro membership was in jeopardy and Samaras took power after two knife-edge ballots in the space of six weeks.

Samaras says Syriza has revived the prospect of a euro exit, yet polls show the party would prevail in a vote. A survey by polling company Rass published on Dec. 21 showed Syriza ahead of Samaras’s New Democracy by 3.4 percentage points, albeit down from 5.3 points in November.

“Samaras has cried wolf too many times,” said Dimitrios Triantaphyllou, assistant professor in the international relations department at Kadir Has University in Istanbul. “Evoking the fear of euro exit may not work this time with lawmakers and voters.”

Jittery Markets

Greek bonds fell yesterday, with the yield on three-year notes rising 53 basis points to 10.19 percent while the 10-year benchmark (GGGB10YR) yield rose 15 basis points to 8.47 percent. The Athens Stock Exchange Index (ASE) dropped 1.7 percent.

The prime minister’s decision on Dec. 8 to bring forward the process of selecting a president triggered the worst stock-market selloff in 27 years earlier this month. The index is down 18 percent since then, led by banks.

The likelihood of more political upheaval has served as a warning to companies banking on the recovery taking hold after Greece brought its finances under control.

While the government plans to run a balanced budget next year, the increase in borrowing costs since the yield on 10-year bonds fell to as little as 5.52 percent in September means the country still needs a precautionary credit line.

“What could put Greece in danger is the wrong handling of the situation by the political system,” said Andreas Andreadis, president of the Association of Greek Tourism Enterprises, whose industry represents about a sixth of the economy. “Greek politicians should start dealing with the situation with some sort of consensus, common understanding and cooperation.”

Seeking Compromise

Samaras needs the support of independent lawmakers and smaller parties to defy the odds in the vote next week.

In a move to appease opponents ahead of yesterday’s ballot, he proposed a compromise in an unexpected national television address on Dec. 21. He offered to broaden his coalition government and hold elections toward the end of next year instead of mid-2016 when the current government’s term expires. His overture was immediately rejected.

Christina Papagianni, a 55-year-old home-maker in Athens, welcomes the chance to change the government, though said she still expects politicians to reach an agreement.

“I don’t see how things can get any better from here,” she said. “It would be good for there to be elections and for them all to go, but they’ll find a way to avoid that. They buried Greece deep into the ground. I’d vote Syriza just to see what they can do, but they’re all the same.”

[Bloomberg]