Friday, June 15, 2012

The World Awaits as Greece Holds Elections for the Second Time in Six Weeks

Europe and the rest of the world await the outcome of the Greek election on Sunday, June 17, 2012, with some apprehension. It is just six weeks after the Greek people categorically refused the political parties supporting the European Union backed austerity plans to counter economic recession. In the backdrop of that election on May 6, no political alliance could form a stable government and therefore fresh elections were called for.

At a time, just when new elections were announced, the left wing party SYRIZA seemed to be in a position of defeating the centre right New Democracy (ND). Coming second in the May 2012 election was a huge achievement for the party which was hitherto a very small group. It was its opposition to the austerity measures which transformed the SYRIZA in to a major national force. A victory by the party would have sent the Euro into a new crisis.

However, recently the popularity of the ND has once again improved and many hope that it will once more edge past the SYRIZA in Sunday’s election. Greek banking stocks improved substantially after it was suggested that the ND will once more win the election and a pro-austerity government would come to power again in Greece. As things stand, the ND will not obtain a majority on its own and will have to rely on an ally to form a coalition government. The most likely ally would be the Panhellenic Socialist Movement (PASOK). As things stand, the PASOK is not expected to improve significantly on its performance six weeks ago. Therefore, only a better performance by the ND can open the way to a possible coalition government. If the two parties are unable to obtain a majority, there is a likelihood of the Greeks ending up once more with a hung parliament.

This fear may be one reason why the ND is slowly improving its standing in the political arena after being in a position of getting defeated at the hands of the SYRIZA. Despite its successes, the left-wing party is also not strong enough to form a government on its own. Even if it wins the election, it is doubtful if the potential anti-austerity leftist allies of SYRIZA will be able to win enough seats to form a government.

It would be a real irony if the ND and PASOK are indeed able to form a government. After several months of debating, campaigning and protesting, the Greek people would be back in square one. Nevertheless any government, except an extremist one, will be better than no government.

Image: CIA Publications

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