Sunday

27th Nov 2022

Greece forms government, doubts remain

A three-party coalition was formed in Greece on Wednesday (20 June) with Antonis Samaras sworn in as new prime minister, a precondition for any negotiations on the second bail-out to take place.

"Our efforts have yielded a parliamentary majority to form a durable government which will bring hope and stability," Samaras said when being sworn in by the country's president, three days after narrowly winning the elections over the anti-bail-out radical left Syriza party.

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  • Greek guards: questions remain as to how long the new government will last (Photo: Nikita Avvakumov)

But Samaras' own party, New Democracy, and its main coalition partner Pasok are the two rival forces that dominated Greek politics since 1974 and largely responsible for the financial mess the country is in.

It is unclear how long their alliance will last amid attacks from a strong left-wing opposition and the likelihood of more mass protests in the coming months.

Their main objective in the coming days is to form a negotiation team ready for a showdown with the troika of international lenders and eurozone finance ministers. Athens wants longer deadlines and fewer austerity measures in return for the €130bn bail-out.

"The most critical issue is the formation of the national negotiation team and ensuring that it is successful," Socialist leader Evangelos Venizelos told reporters.

The small Democratic Left party is also part of the coalition. Its leader Fotis Kouvelis is also calling for a "gradual" phase-out from the austerity programme that "has bled society."

EU officials in Brussels have suggested that minor changes and deadline extensions can be negotiated over the summer, but not the overall goals of the bail-out - to bring down Greece's debt to 120 percent of GDP by 2020, restore economic growth and keep a balanced budget.

A first discussion with the new Greek finance minister is to take place on Thursday in Luxembourg, at a meeting of eurozone finance ministers joined by International Monetary Fund chief Christine Lagarde.

With Greece in its fifth year of recession, missed deficit targets, thousands of closed businesses and people removing money from the banks, the austerity recipe accompanying the bail-out is a hard sell.

On Wednesday, the office of Austrian central banker Ewald Novotny reminded eurozone decision-makers what is at stake: "The single-minded concentration on austerity policy [in the 1930s] led to mass unemployment, a breakdown of democratic systems and, at the end, to the catastrophe of Nazism."

Agenda

Troika back in Greece this WEEK

The troika of international lenders returns to Athens this week to take stock of delays in implementing the bailout-linked austerity measures. Meanwhile, the European Central Bank may take some crisis-alleviating measures on Thursday.

ECB says more rate hikes to come

European Central Bank president Christine Lagarde said more rate hikes will come, but also admitted a recession will not lower inflation — leaving some economist question the logic of the policy.

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