Greece Votes Itself in the Foot

[RB TexLa]

Stathis N. Kalyvas



June 12, 2012

The outcome of the June 17 Greek legislative elections will not only determine whether Greece exits the eurozone, but it could also seal the fate of the entire postwar European project. According to the latest polls, the center-right New Democracy (ND) party and the Coalition of the Radical Left, known as Syriza, are in a dead heat. Taking first place is crucial, because it comes with a 50-seat bonus in parliament, which means that no government can be formed without the winner.

For its part, ND's chances hang on whether it can rally the voters who deserted the party in the last national elections on May 6. Those elections were an attempt, at least, at a power grab by ND's leader, Antonis Samaras. He had built his political profile by standing in opposition to the May 2010 bailout agreement and adjustment program championed by the European Union, the European Central Bank, and the International Monetary Fund -- popularly known as the troika. Then, Samaras' moment came in November, after former Prime Minister George Papandreou called for a referendum on Greece's euro membership. Brussels quickly threatened to withdraw support from Greece, and Papandreou, realizing that he had slipped up, threw support behind a coalition government led by the former ECB Vice President Lucas Papademos. That government successfully negotiated a debt write-down and finalized the latest adjustment with the troika. Samaras backed that government, too, on the condition that both its duration and mandate be limited. But that turnaround undermined his credibility among voters.

Samaras is widely seen as representing the corrupt and ineffective Athens political establishment that led the country to ruin. After all, Greece's public debt and deficit significantly worsened during ND's last tenure in government, from 2004-9. It should come as no surprise, then, that when he forced the May 6 elections, hoping to win big, he brought home the worst ND result ever: Not even one in five voters backed the party.

But the premature elections did something else: They paralyzed the real progress that was afoot. In the months before the elections, austerity measures dictated by the troika had boosted exports. Athens' deficit was on a sharp downward trend, on schedule to be eliminated by 2013. Despite its limited mandate, the Papademos government introduced concrete measures to fight corruption, the misappropriation of public funds, tax evasion, and inefficiency -- policies that had begun to bear fruit. A census of public pensions uncovered a stunning 200,000 bogus disability and old-age claimants, whose annual cost to the budget is conservatively estimated as upwards of $870 million. A drive to improve the efficiency of health-care spending resulted in effective cost-control measures. The Greek bank recapitalization was on course to stabilize the banking sector and inject liquidity into the market. The flight of bank deposits reversed, and the tail end of the debt "haircut" would have increased stability. The nearly $8.7 billion payment by the state of its trade and tax-refund arrears would have gone ahead, providing a huge and badly needed stimulus to the economy.

http://www.foreignaffairs.com/articles/137710/stathis-n-kalyvas/greece-votes-itself-in-the-foot

[trumad]

1. a Pro-austerity story...LOL

Hey---look over there----it's the confidence Fairy.

[Scootaloo]

2. "austerity measures dictated by the troika had boosted exports!"

Yes, because raising the Austerity flag sends a signal to business that says "come and loot at the people's expense!" The state self-cannibalizes by selling off public assets to foreign "investors" (who of course, aren't really investing; they're pirating). Revenue DOES go up, but actual wealth plummets, and the loss is borne by the populace of the nation.

Also the word "dictated" is important - no national austerity plan has never been democratically implemented by the people affected. Never. It's imposed every single time.