Up until a few days ago, the Prime Minister Mr. Antonis Samaras was literally trapped in an endless negotiation with the troika that was leading nowhere.
Events were developing in his absence, in an absolutely negative way.
The troika and the International Monetary Fund’s representatives in particular, were very concerned about the political risk and demanded greater assurances and guarantees.
The Minister of Finances Mr. Gikas Hardouvelis attempted a bold compromise, having accepted a series of restrictive measures, such as streamlining wages in the public sector, abolishing the union law of 1982, making the Ministry of Finances independent and many other, less important things; Poul Thomsen however insisted on everything, he even demanded pension cuts.
The cold-blooded Dane greatly focused on the political risk and as such demanded an increase of the surplus, without recognizing the economy’s improvement, nor taking the ENFIA revenue into consideration, despite taxpayers turning out to pay more than he had predicted.
One could say that Poul Thomsen wanted to secure the extension of the IMF’s supervision of the Greek economy by all costs, that he appeared to want Greece to become an example of change for the rest of the European countries that may soon face a debt crisis.
Mr. Samaras obviously could not accept the IMF demands. He knew that Thomsen’s measures would not go through Parliament, but even if they did get voted, he could not hope in electing a President. He had no luck if he stuck to the negotiation. He would be lead like a sheep to the slaughter. So rather than being forced down a path that other created, he decided to make a path of his own.
He stopped the negotiation by pointing out the troika’s absurd demands and brought the Presidential election forward.
He essentially undertook the risk of solving the country’s political problem, which was turning out to be a major issue and major pressure point for the Greek economy and the country at large.
This is perfectly illustrated by the overreaction of the markets. The Athens Stock Exchange collapsed and Greek treasury bill interest rates soared excessively, harkening back to 2012 and bringing back headlines of a possible exit from the Euro in the international headlines, particularly the Anglo-Saxon press.
The problem at present is undoubtedly political and this at stake: Either a President is elected on the 29th of December and the present danger eclipses, or there will not be a new President and the problem will be solved directly by the people via the general elections that must take place the latest by early February.
And just like Mr. Samaras says these days “everyone will have to face their responsibilities”. And everyone now is actually alert.
The troika knows that if a new President is elected it will have to accept the political danger going away, take back its absurd demands and complete the negotiations having accepted a far smaller budget gap than the one it is claiming.
If a new President is elected then the troika’s demands for new measures will drop from 1.8 billion euros to 900 million euros, the review will be easier to complete, the credit line will instantly be approved and the atmosphere of doubt will disappear as if by magic.
In practice this means that the election of a new President will rid the country of about a billion euros’ worth of measures, not to mention the cost of the extended uncertainty which is reflected in the markets and which nobody can accurately estimate.
It is true though that the pressure on the Greek economy is affecting everyone, parties and peoples. No MP and no party can remain indifferent to the devaluation of Greek stocks and bonds and the development of a negative climate for the economy and its ability to address this new crisis of trust.
There should be no doubt that if a new President is not elected that the doubt will surge at the start of January and there is a serious danger of undesirable attitudes developments during the election campaign period.
More so if Mr. Tsipras’ electoral win is considered a given and his officers do whatever they can on daily basis in order to confirm the concerns of the markets and everyone abroad.
In any case though, the political game is fired up for good, there is a lot of pressure on the country and life in recent years has proven that developments have been anything but linear.
Neither will they be linear this time. There are many surprises in our political life and the country’s stability now depends on complicated and imaginative developments that until recently most could not predict or did not want to consider.
The pressure on SYRIZA
The truth is that the recent developments caught the main opposition party by surprise. Mr. Alexis Tsipras believed that the negotiations with the troika would conclude, the government would bring a difficult bill in Parliament and the election of a new President would be doubtful. As such, general elections would be called and he was certain to win.
Things now are radically different. There is no agreement with the troika, all of the measures are on the table and he will have to explain how he will negotiate with the troika, if he will accept the bailout agreement and its extension and primarily he will be called upon to assure the people that he will not lead the country into a major crisis.
The way things are turning out SYRIZA will have to face major pressure to change its stance on the Presidential election and subsequently, if that is not achieved, to offer guarantees of the country’s stability in the election campaign period and afterward.
At present Mr. Tsipras’ people reject the aforementioned, treating it as the fear-mongering product of government propaganda, but deep down there are doubts and an abundance of concern.
And justifiably so, as many consider that SYRIZA is danger of losing its footing on its path to power. Where once he was certain of an upcoming major win, he may find himself in the difficult place of having to apologize for the upcoming chaos.
Antonis Karakousis
Originally published in the Sunday print edition
