Sunday

22nd May 2022

Greek elections to usher in anti-bail-out parties

  • A Pasok rally: The former ruling party is set to stomach big losses (Photo: Pasok)

Greece's two main parties are set for heavy losses in Sunday's (6 May) elections, with anti-bail-out groups on the extreme left and right to enter parliament for the first time, raising again the prospect of an exit from the eurozone.

Public anger at the austerity measures linked to the second, €130 billion strong bail-out package could translate into a new Parliament unable to form a ruling coalition and a new round of elections being called in the next months.

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Observers expect the ruling centre-right New Democracy and the centre-left Pasok parties to come in first and second, but it is unclear whether they will hold enough seats to govern alone. Some eight smaller, anti-bail-out parties including neo-Nazi Golden Dawn and nationalist Laos, are to make it into the Parliament. It will be the first time so many parties will form the legislature since democracy was restored in the 1970s.

No new surveys have been allowed to be published for two weeks ahead of the elections, with pollsters warning that the result may be unexpected. The last surveys put New Democracy at 22 percent and Pasok at 18 percent.

Pasok leader and former finance minister Evangelos Venizelos, who has been the main negotiator of the austerity package accompanying the second bail-out, has appealed to voters not to let "neo-Nazis goose-step into parliament."

But frequent strikes, violent protests and a shocking suicide in front of the parliament earlier this year have all signalled how little support the pro-bail-out camp has among voters, even though any deviation from the prescribed austerity may lead to a Greek exit from the eurozone.

New Democracy leader Antonis Samaras, who only reluctantly signed up to the bail-out programme, is slated to become Prime Minister if he manages to form a coalition. He has promised to cut taxes and re-negotiate parts of the bail-out. Venizelos, for his part, has pledged to get more time for implementing the €11.5 billion worth of further cuts that should be in place by June.

But with unemployment at almost 22 percent, four years of continuous recession and no positive outlook for the next few years, nerves are wearing thin on accepting further lay-offs, lower wages and higher taxes.

Meanwhile, warnings of a Greek euro-exit have multiplied. Central bank governor George Provopoulos last week said that as "painstaking" as the bail-out requirements may be, not following them would "take the country several decades back and eventually drive it out of the euro area and the European Union."

And Fitch ratings agency on Thursday (3 May) said it was a very likely scenario that Greece will quit the euro. "Greece would very likely have to re-denominate its debt and default again," it said in a press release, describing the consequences of the event.

The ratings of Cyprus, Ireland, Italy, Portugal and Spain would then be further downgraded, reflecting investors' fear that Greece had set a precedent which could be repeated. The agency also explained that a switch to the drachma would be treated as a default.

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