Two big hurdles ahead

Greece’s conservative-led coalition government has to clear two major hurdles that will decide its political future.

The first concerns the troika’s demands in the upcoming negotiations. There is no way that the existing parliament will be able to pass the further reform to the Greek pension system that the creditors had been pushing for. However, the international inspectors are likely to accept a delay, especially in the wake of Tuesday’s meeting between Greek Prime Minister Antonis Samaras and German Chancellor Angela Merkel in Berlin.

Troika representatives will most certainly ask for two or three measures to be adopted by the government, mainly in the area of labor market reform. Will these measures be voted through Parliament? Will they get the approval of socialist PASOK? We will have to wait for a few more months before we can find out what the troika will demand and a few more again to see if they finally get the Parliament’s approval.

Most observers agree that a deadlock of this sort within the coalition looks unlikely as things stand at the moment. Others remain skeptical, particularly with regard to how PASOK might behave.

The second hurdle is next year’s presidential election. A new president to take over from Karolos Papoulias will need to be backed by a minimum of 180 deputies. If the government fails to elect a successor, as leftist opposition SYRIZA hopes, an early general election will be triggered.

The Greek economy should be in better shape by then as the second half of 2014 is expected to see a positive growth rate. On the other hand, Greeks will by that time have paid the notorious unified property tax (better known as ENFIA) and more or less fulfilled their other financial obligations to the state.

It’s hard to say what the overall public mood will be by then but the it will to a significant extent determine deputies’ behavior in the presidential vote. Deputies will obviously weigh what they stand to lose if their parliamentary tenure comes to a premature end against the ambitions they may have of being re-elected (even with a different party tag).

In the eyes of some MPs, the formal end to the troika’s presence in Greece and the country’s memorandum-related obligations will enable them to throw their weight behind the government by voting for the new president.

One very big problem is that between now and that point in the future, the political risk and the specter of political instability will haunt anyone who is thinking of putting their money in this country.

Subscribe to our Newsletters

Enter your information below to receive our weekly newsletters with the latest insights, opinion pieces and current events straight to your inbox.

By signing up you are agreeing to our Terms of Service and Privacy Policy.