The new general election will secure Greece’s position in Eurozone; at least for some time

Alexis Tsipras, the Greek Prime Minister, leaving the European Parliament plenary in Strasbourg after delivering a speech. He was strongly criticized by some MEPs for his decision to hold a referendum on 5 July on the bailout terms for the country’s sovereign debt crisis but others praised him for that. (European Commission Audiovisual Services, Date: 07/07/2015).

Alexis Tsipras, the Greek Prime Minister, leaving the European Parliament plenary in Strasbourg after delivering a speech. He was strongly criticized by some MEPs for his decision to hold a referendum on 5 July on the bailout terms for the country’s sovereign debt crisis but others praised him for that. (European Commission Audiovisual Services,
Date: 07/07/2015).

The very next day that the Greek government signed a three year Memorandum of Understanding (MoU) for a new stability support program of €86 billion with the European Commission, Prime Minister Alexis Tsipras triggered an early legislative election. To do this he had to resign and according to the constitution, the President of the Republic has to separately and successively mandate the second and the third largest parliamentary party to form a new government. Quite predictably this will prove impossible and the country will have to hold a general election on 20 or 27 September.

25 deputies left SYRIZA

Today the President of the Republic is expected to ask the third largest Parliamentary party the ‘Popular Unity’ to form a government. This political formation is a last minute arrival and is made of by 25 deputies who abandoned the governing SYRIZA exactly because this party under Tsipras signed the MoU with the European Union. In doing this the 25 deputies left the government in the air without a Parliamentary majority. They propose that the country should abandon the euro area and possibly the EU altogether, denounce its foreign debts, introduce a national currency, the new drachma, and search for a wider strategic alliance with non Western countries like the BRICS (Brazil, Russia, India, China, South Africa), Venezuela, Argentina and other dubious allies. To be noted, that the BRICS have never invited Greece to join their New Development Bank (NDB).

During the past few weeks all the 25 and some more have voted down in Parliament Tsipras’ choices to accept the harsh terms of the third MoU which the country signed with its creditors in order to stay in the Eurozone and continue using the euro. The President of ‘Popular Unity’, Panagiotis Lafazanis, is a back room gray personality who has been steadily opposing Tsipras’ leadership in SYRIZA. All along the past months, even before the 25 January election that brought SYRIZA to power, this left wing collection of groupings, lacked a common vision about their political goals nor did they share a collective ideological identity.

Can Tsipras do it again?

Now, after this group of extreme left wingers abandoned SYRIZA the party is becoming much more manageable and the power of its President Tsipras is not contested seriously any more. By the same token, SYRIZA becomes an option for a much wider spectrum of voters ranging from the left to center and even the center right. After the partitioning of the 25 extreme left-wingers, SYRIZA is now shifting in full towards the center closing in fast towards the social democratic part of the political spectrum. Predictably, this hasty transition will greatly increase its audience. Together with the general resentment against the two old parties, New Democracy (center right) and the socialist PASOK, which alternately governed the country for the last forty years, Tsipras can logically expect a new victory in the coming election.

His problem will be though that he may not gain an absolute majority in a house of 300. In such a case he may need one or more parties to form a coalition government. But then again there will be no shortage of volunteers. Practically all the political parties that support the Eurozone option for the country will be available to cooperate. Not to forget that it was with their votes in the Parliament that Tsipras could pass all the latest harsh conditions in order to keep Greece inside the Eurozone.

A three year support

To this effect, the European Stability Mechanism (ESM), Europe’s firewall established in 2012 in response to the global financial crisis, will disburse up to €86bn in loans over the next three years, provided that the Greek authorities implement reforms to address fundamental economic and social challenges, as specified in the MoU. To be noted that all the financial needs of Greece will be covered exclusively by EU sources.

The International Monetary Fund has refrained from participating in the Greek agreement. It may join again the creditors’ lines if Athens conforms to the obligations it undertook and again only if an “explicit and concrete agreement” on a debt relief from the country’s Eurozone creditors is signed. For the time being the IMF acts as a technical advisor in the negotiations with Greece. This stance signifies a strong differentiation between Washington and Berlin vis-à-vis the Greek case and also in Eurozone’s economic policies in general.

Most need the euro

Coming back to Greece’s internal political spectrum, one finds that it is not any more compartmented only under the traditional left-center-right division. The option of staying or leaving Eurozone and possibly the European Union in general runs within the entire political horizon from end to end. The fascist Golden Down and the long-established communist party (KKE) are both adamant in supporting a Grexit, the exit from Eurozone and possibly from the EU. The new extreme left ‘Popular Unity’ formation of 25 deputies has joined this club. On the other side of the fence the rest of SYRIZA under Tsipras, New Democracy, PASOK and Potami (River) support Greece’s position in Eurozone at any cost. Those are the parties of the present Parliament though. The next election may produce more legislative parties which would attain the 3% threshold.

As things stand now in the next election the average voter will have to answer two questions. Firstly, he or she will have to decide if they want Greece to stay in Eurozone. Then they will have to choose the party which will be best placed to restart the economy and minimize the adverse effects from the new MoU Greece just agreed with the European Union. Obviously, this choice is not related only with the left or right orientation of the parties.

Predicting the results of the election

Two more factors are to decide the results of the next election. The first is Tsipras’ personal appeal to the general public. The next thing may be Lafazanis’ decision to advertise or not his convictions about the drachma. If ‘Popular Unity’ is not able to avoid the earmarking of the ‘drachma party’, the new party will not be able to heavily undercut on SYRIZA. Around 70% of the population resents the return to the drachma and more people are afraid of a singular Greek path outside the Eurozone and the EU.

It’s still a bit early perhaps to safely predict the outcome of the September vote, but SYRIZA’s first place is not disputed by many political analysts. It’s also certain that the pro-Eurozone parties will gain a large overall majority against the drachma lovers.

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