Greek kingmaker-in-waiting says he won’t gamble euro exit

A Greek political party founded less than a year ago that might end up deciding the makeup of the next government won’t lend support to any coalition willing to gamble with the country’s place in the euro, its leader said.

To Potami, or “the River” in Greek, is polling in third place ahead of January 25 elections. It trails the governing New Democracy party and rival SYRIZA, which opposes austerity measures imposed as a condition of Greece’s two bailouts and aims to negotiate a writedown on some debt.

“We won’t play with the euro, and we won’t allow any gamble with Greece’s membership in the euro area,” Stavros Theodorakis, 51, who previously worked as a journalist, said in an interview in Athens on Thursday. “We will defend the country’s European course.”

Speculation over Greece’s future has roiled markets, pushing benchmark 10-year bond yields above 10 percent for the first time in 15 months this week. Prime Minister Antonis Samaras has said the SYRIZA victory predicted in opinion polls would lead to default and an exit from the euro.

Yet most surveys suggest SYRIZA, an acronym for Coalition of the Radical Left, wouldn’t garner enough support to secure a parliamentary majority and form a government without a junior partner. That would leave To Potami as the potential kingmaker.

The alternative scenario is if neither SYRIZA leader Alexis Tsipras, 40, nor Samaras, 63, win by a sufficient margin to form a coalition of their choosing. In that case, according to Theodorakis, the most obvious option would be for the two rival forces to unite.

“If the gap between the winner and the second party is very small, then there will be huge pressure to form a grand coalition,” he said.

Potential alliances

Opinion polls project that six parties will pass the 3 percent threshold needed to send lawmakers to Greece’s next parliament. SYRIZA has 31.6 percent support compared with 28.6 percent for New Democracy, according to a survey by Alco, an Athens-based polling company, published this week.

SYRIZA would need about 36.5 percent to secure 151 seats in the 300-seat chamber and form a one-party government. It has said it won’t align with parties that have supported the austerity conditions attached to the Greek bailout.

Those include New Democracy and PASOK, the socialist party that won elections in 2009 before revealing Greece’s unsustainable national debt. PASOK, now junior coalition partner in Samaras’s government, currently polls 3.6 percent.

Communist party

Three more parties will likely elect lawmakers: the Communist Party of Greece, which has said it won’t ally with any other political force; the far-right Golden Dawn, with which no other party is willing to form a coalition; and To Potami, which surveys show would get 4.2 percent of the vote.

Theodorakis, who said he chose the party’s name to symbolize the clarity of its policies, said he won’t lend any support to a government that would include supporters of Greece’s return to the drachma or an exit from the European Union.

“There should be a common understanding between coalition partners and they both should have a veto over cabinet members,” Theodorakis said.

SYRIZA’s plan to seek a writedown on debt isn’t feasible at the moment and Greece should aim instead at securing longer maturities and lower interest rates to ease the burden, he said. SYRIZA argues that euro-member governments would blink and accept Greek demands for debt relief, because they wouldn’t want to revive the European debt crisis.

“And what if they don’t?” Theodorakis said.

Western economy

Other proposals the party would oppose is a levy on bank deposits. It wants to see the adoption of a set of policies to facilitate investment and job creation, as well as a safety net for those hurt most in the Greek recession, which cost the country about a quarter of its gross domestic product.

“We are only willing to discuss on the basis of a Western-type economy,” he said. “We can’t discuss nationalizations, or kicking out investors.”

According to Theodorakis, the danger of a Greek exit from the euro area hasn’t disappeared.

“If the winning party shows that it’s indifferent or tries to blackmail Europe, then yes, I think this could lead to collision,” he said.

While Greece’s euro-area partners may not push the country to leave the currency, the actions of the winner of Greek elections may raise this risk, Theodorakis said. “I have no faith in SYRIZA’s negotiating team,” he said.

[Bloomberg]