Greece’s co-ruling conservative New Democracy party wants snap elections as soon as the troubled euro zone member clinches a new bailout deal to avoid a messy default, and no later than April 8, its leader Antonis Samaras told Reuters on Tuesday.
He said Greece was in a long-term depression, rather than just a recession. But he also expects a deal with Greece’s creditors to be agreed by March 5 at the latest.
Samaras, whose party shares power in the coalition government of technocrat Prime Minister Lucas Papademos and is leading in opinion polls, said Greece needed a strong government to pull it out of a debt crisis threatening the euro and shaking the world economy.
He said he expected the bond swap deal that will see private Greek bond holders take losses of 65-70 percent to be completed by March 5 at the latest, in time for a second, 130-billion euro international rescue package for Athens.
“As soon as the new loan agreement is settled and the overall Greek debt is considered sustainable again we must go on with new elections,» he said in an interview.
“The bond swap is expected to be over by March 5, we can have elections on April 8. There is not a moment to spare.”
Criticized by EU peers for not backing some of the austerity measures prescribed by international lenders, Samaras, 60, slammed the current policy mix and said it urgently needed adjustment before plunging Greece into an even deeper crisis.
“Greece is currently going through the fifth consecutive year of severe recession. This is not a cyclical recession anymore. This is a long-term depression which is unprecedented in Greece, as well as in Europe. Unless we do something about it, we will get deeper in the crisis, not out of it,» he said.
New Democracy is now the second largest party in parliament and one of three making up the Papademos coalition, which needs its support to stay in power and push key legislation.
Samaras, who would be prime minister in a New Democracy government, said drastic salary cuts and tax hikes, without privatizations and reforms, are making it difficult for the deficit to dip below 10 percent of GDP and recession is now projected to last another two years, instead of one.
Greek officials project the 2011 deficit at about 9.6 percent of GDP and 5.5 percent of GDP this year. The economy is seen contracting by 6 percent last year and 3 percent in 2012.
“Greece needs a strong medicine but the one administered was the wrong one since it did not allow for any recovery,» Samaras said. «What we need to do now is reduce tax rates and implement structural changes so as to speed up deficit cutting and recovery.”
Samaras, an economist who took the helm of New Democracy after its crushing election defeat in 2009 in the wake of the debt crisis, said the problem with the current policies, agreed with the EU and the IMF in exchange for funds to keep Greece afloat, was that they neglected recovery.
“We entered a vicious cycle where more tax hikes and more income cuts produced more recession which in turn generated more deficits, which in turn made necessary more austerity measures,» he said. «We want to break this deadlock.”
He said he would continue to back the Papademos government’s efforts to clinch a new bailout deal and measures such as structural reforms and efforts to fight chronic tax evasion and bureaucracy.
“We fully support targeted measures to eliminate distortions and rigidities from goods markets, the labor markets, capital markets and so on,» he said. «But at the same time, we insist that measures to fight recession are desperately needed in Greece. Otherwise, whatever else we do is becoming an exercise in futility.”
He brushed aside talk of a major cabinet reshuffle, sparked by the succession battle at the Socialist PASOK party after the November resignation of former prime minister George Papandreou, who was Samaras’ roommate at Amherst College, Boston.
He said this was up to Papademos but should only affect PASOK ministers running for the top party job, Samaras said.
“They cannot be acting as ministers when at the same time they are running to get elected as new leaders in PASOK,» he said. «No major reshuffling is feasible right now. It wouldn’t make sense.”
Opinion polls show New Democracy getting about 30 percent of the vote, about twice as much as the second-placed Socialist party but not enough to win outright. That would leave Samaras two options – form a coalition with other parties or ask for a repeat poll in the hope of consolidating his victory.
He would not reveal which of the two options he would opt for and said he was confident he would win enough votes but made clear a coalition was not a good solution for Greece.
“I believe that, in Greece, coalition governments are by definition and by construction weak and fragile,» he said. «I tell you they cannot last long. Greece needs a strong government backed by a strong popular mandate to streamline fiscal problems, change the structure of the Greek economy and establish again social cohesion.”