Greece’s Fate in the Euro Zone Still Murky
The leader of the center-right New Democracy party, Antonis Samaras, was sworn in as Prime Minister yesterday after forming a coalition government with its main rival, the Socialist Pasok, and the Democratic Left. After inconclusive May 6 elections, Greece had been leaderless and ruled by a caretaker government for the past seven weeks, a state of affairs that had only added to the doubts about Greece’s future in the euro zone.
Samaras spoke of the Greek people as “injured” and needing “healing.” He had campaigned on promises of keeping Greece in the euro zone and negotiating the terms of the 130 billion euro ($165 billion) bailout — a bailout which he had actually voted against back in 2010, when he expelled New Democracy party members for supporting it. Samaras opposed the first bailout to discredit Pasok, then the party holding the most seats in the Greek Parliament or Vouli, under former Prime Minister George Papandreou. This year, Samaras, backed the bailout, after it was agreed that a national unity government would be formed and new elections held.
As Matt Robinson writes in Ekathimerini, Samaras’ career has been marked by such “u-turns.” Educated at Amherst (where he and Papandreou were roommates) and holding a Harvard MBA, Samaras actually defected from New Democracy in 1993, leading to the party’s fall from power; he set up his own party, Political Spring. He returned to the party in 2004 and has led it since 2009. Robinson describes him as a “polarizing figure” in Greece, as apparent in a dispute of huge cultural significance to Greeks:
His inflexible stance at the height of a dispute over the name of neighboring Former Yugoslav Republic of Macedonia in the 1990s when that country declared independence from the former Yugoslavia cost him his job as foreign minister in 1992, analysts say. Greece objects to the name “Macedonia,” which is the same as its northern province.
Greece’s province of Macedonia was the birthplace of no one less than Alexander the Great and the fight over the name “Macedonia” is a highly sensitive issue.
The New York Times quotes New Democracy member and MP Chrysanthos Lazaridis, an advisor to Samaras, as saying that he has an “open mind on both sides of the spectrum.” Critics point out that Samaras himself ”destabilized Greece with his insistence on calling elections” to replace the government under Pasok Prime Minister Lucas Papademos, the technocrat who signed the Greece’s second bailout. Pasok leader Evangelos Venizelos has said that his party will not contribute anyone to the new cabinet and the Democratic Left’s leaders have said the same, with a view to fending off blame being cast onto their parties over any more austerity measures.
Alexis Tsipras, the leader of radical left party Syriza which won over 27 percent of the votes in the election, had simply refused to join in the coalition government. While supporting Greece remaining in the euro zone, Syriza has said that it would not honor the terms of the bailout deal and stoked fear not only through European finance leaders but global markets. As The Atlantic’s Matthrew O’Brien writes, a New Democracy victory is even more “crippling” than a Pyrrhic victory. Syriza now gets to “watch the two big mainstream parties discredit themselves following Germany’s austerity orders”; New Democracy faces a “Sisyphean task” and Syriza is, in many ways, just where it wanted to be, in the position to say, notes O’Brien, “I told you so”:
There are two nightmares for Europe. The first is that Syriza takes power in a few months and forces a Greek exit. Once it became clear that monetary union isn’t irrevocable, depositors in weak countries would want to move their euros to strong countries. Bank runs would hit Spain and Italy overnight. It would take a huge dose of liquidity to put that financial fire out. As in, trillions of euros. But there’s a second danger. It’s that Syriza foreshadows future “anti-euro” parties in Spain or Italy. That too would be checkmate for the great European experiment. Those countries are too big and have too much leverage for Germany to bully. They are not, as the Spanish prime minister put it, Uganda.
The question now remains if New Democracy and Pasok can work together and renegotiate the bailout with Europe and the International Monetary Fund.
Samaras has said that he will reverse some tax increases and restore cuts to pensions, though he has not indicated where the funds will come from. Greece, unless it receives the next installment of bailout fund, will be bankrupt and out of money by mid-July — that is, by next month.
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Photo taken in Syntagma Square in Athens by Jack Zalium