Greek Prime Minister Antonis Samaras failed to convince lawmakers to stay the economic course he’s set. He now has less than four weeks to persuade Greece’s voters to do the same.
Samaras is due to meet with President Karolos Papoulias in Athens today to request early elections on Jan. 25 having steered the country at the epicenter of Europe’s debt crisis out of recession. That gives him a chance to reel in the opposition Syriza party’s lead in the polls as it pushes to abandon the austerity measures tied to Greece’s bailout that are credited in Berlin and Brussels for the nascent recovery.
“These elections are not necessarily being held in favorable conditions for Syriza,” Dimitrios Triantaphyllou, associate professor in the international relations department at Kadir Has University in Istanbul, said in an e-mail. “Some macroeconomic indicators are actually positive for the first time in a long time.”
Greece this year exited a six-year recession worsened by budget cuts tied to its 240 billion-euro ($293 billion) bailout that has cost about a quarter of the country’s economic output and tripled the unemployment rate. Samaras’s success reining in the fiscal deficit enabled his government to sell bonds for the first time since 2010, before rising yields amid political instability again shut off market access.
While opinion polls show Syriza led by Alexis Tsipras ahead of Samaras’s New Democracy party, that lead has narrowed since Dec. 8, when the prime minister gambled by bringing forward the process of electing a new president. Greece’s early return to the ballot box was sealed yesterday when Samaras failed to get his candidate, Stavros Dimas, confirmed by the requisite supermajority of 180 lawmakers.
Greek 10-year (GGGB10YR) bond yields soared 103 basis points to 9.53 percent as investors took fright at the prospect of a Syriza government. Yet that prospect looks less certain than it did a month ago, according to political analysts including Dimitris Sotiropoulos, an associate professor of political science at the University of Athens. He sees a race between the two parties centered on their respective economic visions.
“Expect a very acute and polarized electoral campaign in which New Democracy and Syriza will try to attract as many votes as possible from the political parties closest to them,” Sotiropoulos said in a phone interview. “That could mean the votes for the smaller parties will evaporate, including parties from the center, and there will be plenty of them.”
Greece’s electoral landscape was fragmented in 2012 after two consecutive ballots in six weeks destroyed the dominance of New Democracy and the socialist Pasok party, which between them have governed the country continuously since 1974, propelling Syriza from a fringe party to the No. 2 political force.
A Kapa Research poll on Dec. 27 gave Syriza 27.2 percent support compared to 24.7 percent for New Democracy, with Pasok placing third on 6.1 percent and To Potami, a centrist party founded this year in joint fourth place with the Communist Party of Greece on 5.8 percent. Independent Greeks, an anti-bailout breakaway from New Democracy, which refused to back Dimas for president, had 2.5 percent, less than the minimum 3 percent threshold for getting into parliament.
Further complicating the picture — potentially to Samaras’s benefit — former Pasok Prime Minister George Papandreou, who requested Greece’s bailout, has hinted at forming a breakaway party. Proto Thema reported yesterday that he will formally announce the move on Jan. 3.
Such a development could improve Samaras’s chances of overhauling Syriza’s lead if Papandreou lures away traditional Pasok voters disaffected by the party’s role under the leadership of Evangelos Venizelos as junior coalition partner in Samaras’s government. Polls suggest that Syriza draws some of its backing from Pasok supporters.
“A Syriza victory used to be very likely,” said Sotiropoulos. “It’s not so likely any more.”
Samaras, Greece’s fourth prime minister since its 2010 bailout from the euro area and International Monetary Fund, will visit the president at midday to formally ask for parliament’s dissolution and trigger the four-week campaign before early elections.
Even in the event of a Syriza victory as polls suggest, Tsipras may not have the freedom to fulfill pledges to annul the bailout agreement and renegotiate repayment terms on loans.
“We could be looking at a very dangerous period of brinkmanship,” said James Ker-Lindsay, a senior research fellow at the London School of Economics, who sees Tspiras trying to “test the limits.”
“Most leaders who get into that situation are then confronted with reality,” he said in a telephone interview. “He will be forced to have to make compromises.”