12th December 2014

Greece heading into problems

Tough times are expected for the suffering Greece. International lenders and the government are unable to reach agreement about the last assessment of Greek program-compliance. In a desperate move, the conservative Greek PM Antonis Samaras, with the consent of his socialist coalition partner, decided to hold presidential elections as early as on 17 December. The president is elected by the parliament in Greece and normally the elections would be held in March. But Mr Samaras has little maneuver space and decided to accelerate things. His government approved its first balanced budget, with the highest primary surplus in the eurozone, on Monday and got a two-month program extension from his colleagues in the Eurogroup on Tuesday. However, he declared the necessity to act and avoid instability, since the main opposition party, the far-left Syriza is harpooning the negotiations and it is sure now that Greece will need new austerity measures next year – for this the government needs stability the most. However, it is precisely the opposite that is a probable outcome of the move. Prime Minister Samaras put forward the former Commissioner Stavros Dimas as his candidate for the presidency. But Mr Dimas has little chance of winning the elections and thus avoiding political instability. In the 300-member Greek parliament, the candidate must obtain at least 200 votes in the first and second round to be elected. In the third round, he needs at least 180. If no president is elected, though, the parliament dissolves itself and new general elections are to be held. The current coalition holds a majority of 155 in the parliament, thus not having enough votes for its candidate. Syriza, the communists and the neo-nazi Golden Dawn will surely not support the government´s candidate – these make up 99 votes. Having in mind that the remaining votes are distributed among New Democracy-secessionist Independent Greeks (12 MPs), the unpredictable Democratic Left (10 MPs) and the all the more unpredictable non-aligned (24 MPs), the outcome of the election is hard to predict.

If new elections are called, Syriza of Mr Alexis Tsipras would almost surely win and form a government. With Mr Tsipras as Prime Minister, Greece would abandon its austerity policies, thus alienating its international lenders and private investors. Economic and financial instability would follow. That is why after the announcement of the presidential elections, the markets reacted in panic.

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Members of the American Chamber of Commerce in the Czech Republic