FRANKFURT
Even though the Greek government managed to extend its financial bridge program by four months, the ruling SYRIZA party is yet to fulfill key pledges of its election campaign, experts warned on Thursday.
On Feb. 21, the finance ministers of the Eurogroup and International Monetary Fund agreed on extending Greece’s international bailout package for four months, in exchange for Greece's new reform program. This was an agreement which the Greek government vitally needed.
Experts said that although the four month extension of the bailout program is positive, SYRIZA’s failure to keep its key election promises, such as cancelling most of the country’s debts, new social rights and an increase in minimum wages, poses a risk for political stability in Greece in the short term.
“Syriza promised a lot to the voters, but delivered almost nothing of it so far: there is no write-off of the Greek debt, there is no increase in the minimum wage, etc. The four-month extension of the bailout is far from writing off the country’s debt,” Grigory Vilkov, Professor of Finance at the Frankfurt School of Finance & Management said.
“In effect, Greece had to adapt, while the rest of Eurozone dictated the rules of the game. Now the question for the next phase is really how to explain to the voters why most of its promises are written-off,” he added.
Regarding the possible exit of Greece from the Eurozone, Vilkov said that Greece may have to stay in the group despite its arguments.
“Greece would have to comply with austerity and the rest of the rules, even though it might lead to political complications. Grexit would lead to far worse economic (and hence political) problems in the short run than a continuation of austerity,” Vilkov said.
Claus Vistesen, Chief Eurozone Economist at Pantheon Macroeconomics, said that imminent danger for both Eurozone and Greece was dodged but there is still much to be worked out.
“My main point though is that Greece is much better off inside the Eurozone than outside, and that this will ultimately guide a solution that both parties can agree on,” Vistesen said.
“The reforms proposed by Greece are alright, but will probably be tweaked further. The point is really that the parties in principle agree to reach a solution,” he added.
Vistesen also stressed that although unfulfilled promises may undermine the public support of SYRIZA, an imminent election risk is unlikely.
New Greek government sees trouble on bailout deal: Expert
Greek political analyst George Kratsas sees trouble ahead for the new government after its agreement to the bailout deal with the Eurogroup and the European Union.
Greece’s young coalition government, led by the left-wing party, SYRIZA, has come to a difficult pass, in less than two months of rule.
The government has come to an agreement with Greece’s European creditors, in a deal which prolongs the country’s bailout program – a measure that SYRIZA had pledged to reject in its election campaign.
SYRIZA has been forced to make a sudden turn away from its core electoral promises, namely overturning the bailout program, imposing a large haircut on Greece’s external debt and hiring public sector employees.
In an interview with The Anadolu Agency, Greek political analyst George Kratsas looks at the future for the new government.
AA: How will the new Greek government coalition survive under the circumstances? What about the other party in the coalition? Are the voters unhappy?
George Kratsos:
SYRIZA’s electoral result, only two seats away from an overall majority, has forced the group into an uncomfortable coalition with the nationalist party Independent Greeks. SYRIZA had proposed a coalition to the Communist Party, far closer to it in outlook, which however has a long standing policy against coalitions.
At the same time, the somewhat market driven principles defended by To Potami, a newly formed party, did not sit well with SYRIZA’s anti-capitalist rhetoric, thus leaving SYRIZA no choice but to side with Independent Greeks.
The current coalition is, in many respects, a stabilizing force. The nationalist views defended by Independent Greeks guarantees that SYRIZA will not implement its planned immigration proposals or deviate from Greece’s usual policies towards Turkey and FYROM. This aspect has made the prospect of a government led by SYRIZA appear to a number of voters as less threatening to Greece’s national interests.
On the other hand, divergent views defended by many members of both parties will undoubtedly surface in the near future. The ideological profile of members of both SYRIZA and Independent Greeks is often characterized by deep mistrust and opposition to the policies advocated by each party, and the populist election campaigns led by both parties may have increased the expectations of voters to unrealistic levels.
In addition, Greece lacks the culture of political compromise and cooperation often observed in other European countries.
Taking the above into consideration, there is little doubt that the coalition will face serious instability in the coming months.
AA: What is the state of SYRIZA?
George Kratos:
SYRIZA is currently facing a paradox, not usually seen so early after election. Firstly, despite the fact that it has already backtracked from many of its core electoral promises, its popularity has skyrocketed, partly because of its initial efforts to obtain better terms for Greece’s bailout agreement with the Eurogroup and the IMF. It is also relevant to note that a significant number of Greek voters did not expect SYRIZA to implement most of its unrealistic electoral promises; rather, their support of SYRIZA was a reaction against traditional parties seen as responsible for Greece’s failed economy and the on-going corruption.
At the same time, significant opposition has already been raised within SYRIZA against what is seen as an extension of the current bailout program and, thus, a continuation of austerity measures and market driven reforms. A frequent criticism is that nothing has been changed other than a renaming of the Memorandum between Greece and its lenders (now called the “Agreement”) and the Troika overseeing the progress of the bailout agreement .
Manolis Glezos, a member of the European Parliament for SYRIZA and a WWII veteran has apologised for contributing to deceiving the public into thinking that the election of SYRIZA would signify the end of austerity. On Wednesday Giannis Milios, one of Prime Minister Alexis Tsipras’ closest advisors, wrote an article criticising the economic policies laid down by Finance Minister, Yanis Varoufakis.
Similar, but less vocal statements have been made by a number of other MPs and even government ministers, such as Georgios Katrougkalos and Panagiotis Lafazanis. On Tuesday, Alexis Tsipras attempted to map out and address the concerns of its MPs in a 12 hour long discussion in which MPs were called to vote on the party’s recent agreement with the Eurozone. Officially, only a handful of members voted against the agreement. MPs belonging to the party’s more radical wing however speak of at least 30 negative votes.
SYRIZA’s wide popularity within the electorate is uncontested for the time being.
However, once the real impact of the terms agreed between the Greek government and the Eurozone is felt by society, this popularity will be severely diminished.
