Angry Greek voters punished both their main political parties in the general election on May 6, but all subsequent attempts to form a government have failed, and another election is to be held on June 17. Under the reinforced proportional electoral system, the Panhellenic Socialist Movement, which had been part of Lucas Papademos' interim national unity government, crashed by about 30 percentage points, and its 13 per cent vote-share sent it down to third place with 41 seats in the country's 300-seat unicameral parliament. Its former governing partner, the conservative New Democracy, benefiting from being in opposition during the economic crisis and downplaying its earlier vote for budget cuts, got 19 per cent, but won a 50-seat bonus for coming first. It had 108 overall, but could not assemble a government; neither could the election's surprise package, Alexis Tsipras' anti-austerity left grouping Syriza, which won 17 per cent and 52 seats, on a 65 per cent overall turnout. Looming over the situation too is the fact that the far-right Golden Dawn party won 21 seats with a vote-share of 7 per cent. President Karolos Papoulias has appointed a senior judge, Panagiotis Pikrammenos, to head another interim government until the next election.
Greece is now in chaos. The European Union, the European Central Bank, and the International Monetary Fund have provided a €130-billion loan to follow the 110 billion lent in 2010, but the money has been used mainly to compensate private investors; the 2011 sale of public assets realised only a third of the expected €5 billion. Other loan conditions, like higher taxes, deep cuts in pensions, pay, and public sector jobs have hit ordinary Greeks hard. Unemployment, at 21 per cent, is twice the eurozone average, and in the 15-24 age-group it has risen from 17 to 51 per cent in three years. The resulting slump in aggregate demand has caused business closures and has worsened the slide. While almost 70 per cent of the May 6 vote was for parties opposed to the bailout terms, the majority of Greeks wish to stay in the eurozone. Therefore, Mr. Tsipras's level of support — currently rising through 27 per cent — makes it highly significant that he intends to renegotiate the bailout terms. Ominously, vulture funds which hold Greek debt are demanding interest payments, but the key problem is the intransigence of the EU and the German Chancellor, Angela Merkel. The sooner the EU moderates its position, the better the prospects for a solution which both respects Greek public opinion and allows the country to remain in the eurozone.
Is there a lesson for us in the Greek tragedy? Union Finance Minister’s speech about austerity measures is a late admission of the country’s economic crisis. But is that enough to put the things in order? Or by just refusing to accept that country’s fiscal and financial health is not at all good, we can live in peace for ever? As usual State governments have shown little concern about their fiscal crisis. Also bitter truth is that no political party wants implementation of austerity measures nor can it offer workable solutions for issues like increasing imports of crude oil, rising prices of petroleum products, imbalances in prices of these products and above all, bulging current account deficit. Regional parties are not really bothered and have not shown any concern about these issues and would be happy to be insulated from such ‘national’ issues. Hence would we follow Greece?
The problem with EU and Merkel's approach is that this type of drastic solution may work with Germans but not the Greeks. Unfortunately, austerity may be the right solution but this is a bitter pill and some cultures may find it harder than others. Generally, Greeks have lived for years without worrying about fiscal discipline. This is a country where less than 10% pay taxes and they have got used to a lifestyle that is hard to change overnight. The right approach for the EU is to look for a phased solution, rather than crippling the country and its social fabric. Having a common currency without a common Treasury was a disaster and the EU must have known this!
The left party of Greece rose from 2% to 20% vote share this election.
Greeks are against austerity measures taken by the incumbent government
and this was reflected in the voting pattern. But they are to realize
their economic volatility. IMF and EU can't offer them free loans, as
philanthropy measures. I suspect the left there made unrealistic
promises to the public only to woo. If they don't soften their stand
then it will be difficult for Greece to remain in EU and they will have
to return to drachma. In already shaky and volatile economic scenario
breaking of EU is the last thing the world wants. Euro has lost it's
value so dollar has gained causing rupee downturn. Shaking euro zone is
affecting Indian export to EU which happens to be India's biggest
trading partner. If Euro breaks the export-import ratio of entire world
will be harshly affected. It's looking very alarming. I hope before
next election the political parties in Greece, EU leaders sit together
to discuss way out.
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