In this sense, the May vote was a punishing one and gave a stunning rebuff to the two mainstream parties. However, the dilemma today has shifted towards the juncture of two axes: “Pro-Memorandum – Anti-memorandum” and “Within the Eurozone – Outside the Eurozone”.
It is clear from polls and everyday discussions that the polls “Outside the Eurozone” and “Pro-Memorandum” practically have no support in Greek society. The vast majority of citizens identify themselves as Europeans. They are afraid of imagining Greece out of the EU/eurozone protective shield, both from a geopolitical and an economic point of view. They are afraid to take the risk of going back to the drachma that will probably lead to an immense devaluation eating away any fortune still left and sentencing Greek youth to isolation and unemployment.
On the other hand, people are under so much pain for the tough everyday life they face that they feel they absolutely want to get out of the nightmare. They are hurt by unemployment or the fear of losing their job or home, the collapse of their living standards, their inability to keep up with financial responsibilities, the growing social misery they are experiencing around them with vulnerable social groups completely unprotected, the rising violence unleashed by the crisis and the resulting despair. Therefore, we are currently experiencing an arm wrestle between the fear and the pain, as well as a battle between logic on the one hand, which represents the wish to stay within the eurozone, and the emotion on the other hand, which stands for the wish to get rid of the austerity measures and their immense social impact.
Following the extremely fragmented May election results, the current pre-electoral debate is based on a wide polarization since political parties tried to make it clear that there is currently a battle between two fronts: between the mainstream led by centre-right New Democracy and the newcomer, the radical-left SYRIZA. By voting for the first one that looks like a familiar and responsible choice that will avoid jeopardizing the country’s European future, citizens could risk being left with a timid approach when it comes to fighting the negative characteristics of Greek politics, society and economy that citizens disapproved of at the last election. By voting for SYRIZA, at party which looks the more promising and probable to question and change the rotten current status quo, citizens could risk coming across an amateur’s dangerous and reckless approach when it comes to the handling of such delicate matters. The upcoming elections will confirm whether the May results were indeed a conscious choice of the Greek public or were rather based on the strong emotions. Since the formation of an autonomous government looks impossible, the days following the elections will determine the formation of a coalition government or the need to proceed with a further round of elections.
Scenario 1: New Democracy – PASOK coalition (with possible participation from the Democratic Left).
Sharing as a prerequisite for any further discussion that Greece will stay in the eurozone, the two parties are likely to form a coalition government aimed at implementing the EU/IMF programme and trying to renegotiate minor or technical changes of the memorandum. This would be a rather weak coalition, with frictions between the coalition members. Such a government would face strong opposition by the anti-memorandum parties and would be a government of defined duration until the European elections of 2014. In case of a lack of parliamentary majority, the Democratic Left has made it clear that it would not allow the country to go to a third round of elections, and would thus agree to join the coalition government, based on an agreement for the implementation of progressive policies. Nonetheless, given the different programme goals of the coalition, members of the government might not be flexible enough to implement the agreed reforms since the Democratic Left might press for a more far-reaching memorandum renegotiation, directed towards suspending measures undermining the welfare state and employment relations.
Scenario 2: SYRIZA – Democratic Left
If SYRIZA is the winning party, it will struggle to find partners to support it in the coalition government unless it is willing to further mitigate its position with regards to the future of the memorandum and the implemented austerity measures. SYRIZA has already modified its initial position, from favouring a unilateral denouncement of the memorandum and an instant annulment of all implementing laws, to a reassurance that it will not proceed to any unilateral decisions. They party will seek an active renegotiation of the memorandum. Unless the Democratic Left’s red line, a “gradual disengagement” from the memorandum in negotiation with European partners will be respected by SYRIZA, the former will not agree to participate in the government. However, even with the Democratic Left, SYRIZA will hardly get majority in the parliament.
Scenario 3: New elections. In case the above-mentioned scenarios fail, there will most probably be efforts by the President of the Republic to promote the formation of a government of national unity, with the participation of all or most of the parties as the last refuge from proceeding to further elections. However, given the precedent of the May elections, hopes are not high. If there are new elections, five or six more weeks of uncertainty will follow that will create a challenging political environment and increase the risk of Greece facing problems with the coverage of its financing needs, given that the loan installments will most probably be delayed until there is a clear situation with regards to the fate of the the EU/IMF program.
With the country’s liquidity severely undermined due to the additional fiscal burden of the electoral expenses, as well as a collapse beyond precedent of direct tax revenues derived from political instability and public administration paralysis, the cash is quickly running out.
With domestic consumption severely decreased, revenues from indirect taxes falling, households and companies unable to meet their obligations, the deposit outflow from banks increasing and recession maintaining a firm grip, Greece’s future lies amid many challenges. All of the above will have to be dealt with by the same government that will be asked to detail about €11 billion worth of further austerity measures to cover expected budget gaps in 2013 and 2014, and proceed with further cuts to wages pensions, social benefits and healthcare expenses as well as laying off thousands of civil servants. In this worrying context, more than the economy it is the social cohesion and the country’s future perspective which are actually at stake here.