Article / 31 August 2015 at 12:00 GMT

Greece says hello to bickering, bailouts and ballots

Managing Partner / Spotlight Group
United Kingdom
  • The second Greek election this year is set for September 20
  • This is the fourth Greek poll in less than three and a half years
  • Syriza leader Alexis Tsipras is unlikely to secure a majority in the vote
  • Is Greece becoming ungovernable?

By Stephen Pope

The Greek election campaign officially began when the President, Prokopis Pavlopoulos announced that the ballot would be held on Sunday, September 20. The first election period opinion poll conducted by MRB for the Agora newspaper indicated that Syriza led by Alexis Tsipras would gain 24.6% of the vote, giving the left of centre party a narrow 1.8% lead over the right of centre New Democracy.

In a poll that followed from Alpha TV the lead was just 2.1% whilst the third poll from the University of Macedonia for Skai TV had Syriza ahead by a slim 3.0%.

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Alexis Tsipras won office in January on his "hope is coming" slogan, but he will find it hard to come up with a winning slogan this time around. Photo: iStock
 

These first polls imply that Tsipras does not have a large enough lead to avoid tricky horse trading and compromise in coalition negotiations. Perhaps as the campaign moves on toward polling day the realisation that protracted negotiations may not deliver a strong coalition, then support may swing more toward the Prime Minister of the past eight months. After all, the polls have 25% of the electorate listed as undecided.

Track record

In his time in office, Tsipras was forced by the weight of economic reality to backtrack on the campaign promises, including rejecting austerity whilst keeping Greece inside the Eurozone. During his term as Prime Minister, Greece came perilously close to being forced out of the single currency union, a situation that was only avoided by accepting a third bailout with harsh terms and conditions.

Looking at the levels of the Athens General Stock Exchange (the Athex) and the 10 year Government Bond yield from Friday January 23, which was before the last election, and at the close of trading last Friday, you can see that the losses during the Tsipras premiership have been considerable:
  • Athens General: January 23 840.55; August 28 633.81; down 24.6%
  • Greece 10 year: January 23 8.460%; August 28 9.307%; +84.70bps

The stock market had to be closed for a five week period during a time of high stress in the domestic banking system and when it reopened on Monday, August 3, the Athex suffered its worst loss in decades. It fell over 22% just minutes after the opening; investors seized their first opportunity since June 29 to react to the latest twists in the country's six year economic drama. 

On that first day of trading the index closed 16.2% lower, with bank shares hitting the daily trading limit of a 30% loss.

The stock market and banks were closed when the government placed limits on cash withdrawals and transfers to keep a run on the banks from bringing down the financial system amid panic that Greece was set to fall out of the Eurozone after its talks with international creditors broke down.

This was avoided despite winning a referendum that rejected the tough conditions of austerity that creditors were demanding because the Tsipras government capitulated and accepted new terms that were even worse than those rejected.

Election fatigue

Such was the dismay of the left and far left of the Greek political spectrum that bloc of MPs who formed the Syriza coalition became increasingly splintered. Leading ministers were removed from office, new left wing parties have been formed and despite the contempt Tsipras has shown for the parties of New Democracy, Pasok and Potami (The River), he has had to look them for the support to get the bailout ratified in parliament.

It could be argued that the electorate is suffering from election fatigue, as this will be the fourth election to be held in just 42 months. One poll found that almost 66% of voters felt Tsipras should not have sought a fresh mandate and three surveys showed that his favoured coalition ally, the Independent Greeks, will not actually win any seats in parliament.

Does that mean that despite his statements that he would never work with New Democracy, Pasok or even Potami, he may actually have little choice? They may be seen as the embodiment of the old and tarnished political process, scarred by accusations of representing vested interests, corruption and kleptocracy.

Tsipras told his party members on Saturday that the leaders of these three parties, which lent their support to his agreement with Eurozone member states last month, are responsible for Greece’s “national tragedy”. He added … “The risk is that if Syriza doesn’t get an absolute majority in parliament, that if the allies it wants don’t make it to parliament, then we’ll go to new elections again in November and December".

Potami Party leader Stavros Theodorakis said in an interview on Thursday. “We’ll become a country which will hold elections every three to six months.”

Third election talk

If the result of the election necessitates a coalition which will include Syriza, then Potami, which had 17 MPs in the previous parliament, is ready to discuss such a scenario, Theodorakis said.
How likely is a third election in 2015?

By accepting the tough conditions that were demanded by the international creditors, Tsipras set in motion a chain of events that has taken Greece to the edge of being ungovernable.
The former Energy Minister, Panagiotis Lafazanis parted ways with Syriza to establish a new party, Popular Unity that has one objective. To finish off the country's bailout.

Lafazanis has led a group of dissident lawmakers and has a founding membership of 25 lawmakers. Therefore Popular Unity immediately becomes the third biggest force in parliament behind Syriza and the conservative opposition New Democracy.

If Tsipras has ruled out any deal with the parties that back austerity, he will have little option but to talk to Popular Unity. That has little prospect of forming a robust coalition as Popular Unity aim to restore wages and pensions that were cut during the past five years as austerity policies demanded by foreign creditors were enforced. It has also pledged to reject new taxes and supports nationalizing the banks as well as redistributing wealth in the country. The last objective of Popular Unity is that Greece's huge debt burden has to be eased.

Lafazanis said: "The country cannot breathe and stand on its feet unless a big part of the debt is cancelled … The country cannot take more bailouts. We will either finish off the bailouts, or the bailouts will finish off Greece and the Greek people."

This may be early days in this second election campaign of the year. However, there is an extremely high probability that the electoral maths imply there will be a third election before the year is out. My passing thought is how much does this electioneering cost, and where is the money coming from?


– Edited by Robert Ryan

Stephen Pope is managing partner at Spotlight Ideas. Follow Stephen or post your comment below to engage with Saxo Bank's social trading platform.
4y
Sultan73 Sultan73
Good afternoon Pope
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and U.S. index .?
thank you
4y
Stephen Pope Stephen Pope
Dollar Index:
Short opened on Aug 27th at 95.78
Targets 96.07 ... 97.05 ... 98.02 Stop Loss 93.50

Current level at 13:21 BST 95.97 Trade is still open

Soybeans:

Short opened at 879.05 on August 28th
Targets 865 ... 857 ... 850
Stop was cancelled and is now open

Current level 876.50 at 13:25 BST Trade is still open
4y
Sultan73 Sultan73
you are life saver thank you

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