Monday 13 February 2012

A New Era of Political Fragmentation in Greece

Monday morning dawns, and with it the absolute fragmentation of the present Greek political system has begun. 

A total of 45 MPs of LAOS (2), PASOK (22) and New Democracy (21) voted against the new memorandum, and have therefore been expelled from their respective parties. 

This leaves both New Democracy and PASOK fatally weakened before the elections, which based on previous agreement must be held by the end of April 2012. 

Although there is no guarantee that the expulsions will not be reversed in time for the elections, it is certain that lasting damage to both major parties have been done. Together with popular discontent against the austerity measures, it is highly likely that any imminent election will result in a coalition of at least two, and probably four, parties.

What is uncertain is which side of the political spectrum these will be on. One scenario is for a government led by New Democracy, supported by LAOS, the Democratic Alliance led by Dora Bakoyianni, and any other centrist or right-wing independents. This scenario is highly uncertain due to bad blood between Samaras and Bakoyianni over the succession battle at New Democracy will have to be put aside in order for a cooperation to take place.

A governing coalition of the left is equally uncertain due to the same factors. Although the four centre- and extreme-left parties collectively dominate the polls, differences between some, namely the Communist Party, makes cooperation difficult or impossible.  

Two outcomes of this Troika-forced memorandum are clear: 

a. If Antonis Samaras leads a next government, it is highly likely that the civil service and the parties of the extreme left will engage in a campaign of active civil disobedience. This will be characterised by violent strikes and occupations, and will fatally slow any implementation of public sector reform and privatisation. State-owned companies or parastatals such as the Public Power Company (DEH) will be nearly impossible to privatise. 

b. It will be almost impossible for any Greek government to pass any equivalent austerity legislation in the future. We should not forget that Greece had, before last night, already passed three broad austerity packages (in May 2010, July 2011 and October 2011) as conditions of the first and second bail-out packages. Last night was the fourth. The first three were only possible due to party discipline at PASOK: all other parties voted against the packages. Last night, the only way this law was passed was through the same process: party discipline, and an unprecedented 45 expulsions. 

The fact that any future governing coalition will have less of a margin for error, and will therefore have further difficulties in maintaining the discipline needed for a vote, effectively means that passing further such laws will be impossible. 

As a result, one could conclude that there is only one solution for an interim government to manage the crisis: extend the life of the Papademos government for another 2 years. 

It remains to be seen in the coming days whether Antonis Samaras will take the plunge and push for elections as planned in April, or whether he will suppress his personal ambition and continue the coalition government. 

It also remains to be seen whether such an option would be voted by the remaining PASOK and New Democracy members even if it were raised. 

In any case, Greece has clearly arrived at a new and dangerous stage of absolute political fragmentation. This outcome is a clear result of Troika policy, which has rammed through austerity bills without regard for either the narrow or broad political capacity of the country. In terms of "reform" strategy, this is a deal killer. 

Led by Germany, the Eurozone creditors and the IMF have managed to kill any political stability in this country, and with it any hope that real structural reforms will ever be implemented. 

Through a combination of theoretical economic policies which show little regard for basic financial practise or the Greek reality, and through their own double-dealing rhetoric in which they temper domestic political considerations by trashing Greece to their domestic electorates, they've managed to turn both the Greek people and the political system against them, and against "reform". 

What happens next is unknown.

© Philip Ammerman, 2012 
Navigator Consulting Group 

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