Greek Elections, a Trap!
This Sunday’s election seems to be a trap — one that was originally set by the extreme left-wing and later taken on by newly-created anti-austerity parties. Austerity measures are known as bailout plans and understood by the average Greek to be imposed by the Troika (European Union, International Monetary Fund and the European Central Bank). This trap was set to snare socialist Pasok and conservative New Democracy — the country’s traditionally biggest parties and the main advocates of the Troika involvement.
Shocked by severe recession (-7 percent of GDP and over 20 percent of unemployment), Greeks seem to blame their woes on the harsh austerity measures imposed by the two Troika loans in less than 20 months. There is a strong sentiment that the solutions to the economic crisis are even harsher than the crisis itself.
People are tired, angry and broke because liquidity is squeezed. And because the structural problems that have generated the economic crisis in Greece are still present. People are not convinced about the medicine.
The elections seem to be about anti-austerity populism versus austerity discipline. This is a discipline very much promoted (seemingly) punitively by our European partners, especially those of the north.
The question, however, should not be who is right or wrong or who should be punished or who should not. The real question is how to create the appropriate structural policies and reforms to make the Greek economy productive and competitive.
This general environment pressured Greece to internal disarray, leading the country to early elections (a whole year and a half earlier), throwing it into a debate over the wrong issues — austerity versus non-austerity, Troika versus non-Troika; ultimately falling in the trap of populism versus promoting a deeper understanding of how to achieve higher productivity.
The whole set of newly-created, anti-Troika parties stand strong chances of getting into the parliament. Together with the Greek Communist Party (KKE), they have nothing to lose by exploiting the populist rhetoric. Meanwhile, the country’s two largest parties are struggling to avoid a possible a historical low on the night of May 6.
It’s a high stakes game.
On May 7, it looks like we will have a coalition government.
Let’s think about the risks. If Pasok and New Democracy capture less than 50 percent of the vote — the new government will not have a strong mandate.
It’s already been very difficult to govern through the crisis and put through zillions of austerity measures. Just imagine how hard it will be for the new government to govern with less than 50 percent of the popular vote. Any application and implementation of reforms will become even harder for society to accept, even though these reforms have all been signed and accepted months ago.
When Greeks go to the polls on Sunday, they will be reeling from one of the worst economic crisis in history that has cost them their jobs, pensions and is now denying them the power to plan for their future.
So what is the way out?
A coalition government should be created on the basis of a very clear communication of the trade offs and the necessary structural reforms that need to take place. That same government needs to offer to the Greek People a roadmap for getting out of the crisis.
Up to now, in Greece and across Europe, there was wishful thinking that the crisis will go away fast. However, the way we have handled it so far has only proved that the crisis will remain as long as we don’t focus on the specific structural reforms that will increase our productivity and competitiveness.
This must be the role of the new government.