Tuesday 8 May 2012

Round Three in the Greek Government Negotiations

This evening, both the Communist Party of Greece (KKE) and New Democracy announced that a coalition government with SYRIZA was not foreseeable. New Democracy was outraged by SYRIZA's insistence that the leaders of ND and PASOK write a letter to the European partners "repenting" for their support of the Memorandum, and reneging on its terms. He was also understandably spooked by SYRIZA's intention to nationalise banks and other assets. 

KKE's main political difference with SYRIZA is that KKE wants to leave not only the Eurozone, but also the European Union, whereas SYRIZA maintains that Greece will stay in the Eurozone and the European Union (although it does not establish how). 

This means that barring a sudden change in policy until Wednesday afternoon, SYRIZA will not be able to form a stable government by Wednesday night. The maximum number of seats it can receive are 145, with 151 needed for a majority. The only way to avert this is if certain individual MPs from the other parties vote in favour, although the odds of this are slim.

# Seats
New Democracy
Communist Party (KKE)
Golden Dawn

The next politician to take up the responsibility for forming a government will be Evangelos Venizelos, head of PASOK, on Thursday. His most recent suggest is for an ecumenical government which would comprise PASOK, ND, SYRIZA and Democratic Left (DL). This is likely to be impossible.

However, it is likely that two electoral coalitions could emerge:

·       PASOK, ND and Democratic Left                                        168
·       PASOK, ND and 50% DL + Independent Greeks                 175

The first coalition emerges if Fotis Kouvelis decides that Greece’s continuation in the Eurozone is of greater importance than another month of political instability and elections. The second coalition emerges if individual MPs from Democratic Left and Independent Greeks vote the same way. The first of these scenarios has been widely discussed.

In any case, it appears that the prospect of a Communist government in Greece is fading. Nothing will be certain, however, until tomorrow evening.

Should PASOK not be able to form a government, President Karolos Papoulias has the choice to try to form a unity government. Should this fail, then elections will be re-held in June. This delay in forming a government will be disastrous in terms of debt service, and raise the chance of Greece’s uncontrolled default within the Eurozone.

© Philip Ammerman, 2012

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