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The last time Greeks went to the polls was for the July 5th referendum, when Tsipras was asking and actively campaigned for a “resounding no” to the deal that the country’s creditors had offered just a few days prior.
Tsipras got his wish. The “No” was as loud as it could get but then events unfolded quite predictably. The eurozone called a summit which lasted until 7 a.m. on Monday July 13th, they closed Tsipras in a room for 17 hours (as he often likes to remind us) and he eventually agreed to a new programme with terms not much different, and in some aspects far worse, than the ones he had previously rejected and asked Greeks to do so too.
Following this major turnaround, Tsipras’s party split, and the more radical side formed Popular Unity. What’s left of SYRIZA is in a state of disarray to the extent that Tsipras did not even follow through the plan of a party congress in early September in fear of a possible challenge to his leadership and instead called snap elections for this Sunday.
The election campaign has been a complete anti-climax compared to the intensity of the referendum or January elections, when Tsipras’s passionate anti-austerity rhetoric beguiled and mobilised many in Greece and caught the interest of international media.
Although this election seems to be more of a disappointing sequel, having attracted little interest at home and abroad, once the dust from the campaign settles it will become apparent that what happens next for Greece is hugely important.
Despite the signs that the Greek economy had finally hit rock bottom and started recovering modestly at the end of 2014 and in the first half of 2015, following the imposition of capital controls, the reduced operations of the banking system, combined with the additional fiscal consolidation that creditors require, the economy is expected to contract this year between 1.5 to 2 percent and a further decline of 1.3 percent in 2016.
Unemployment was on a downward trajectory from the high of 27.8 percent in the third quarter of 2013. Even as recently as the second quarter of this year it recorded its lowest reading since 2012 at 24.6 percent, with the number of employed rising by over 120,000, in parts boosted by seasonal hirings. Even this modest rebound is expected to evaporate this year with the unemployment rate reaching 26.9 percent in 2015 and peaking at 27.1 percent in 2016. Greece will pretty much find itself where it started, having to recover the same distance up to 2017.
Greece has been battered by austerity, social turmoil, political instability and a huge redenomination risk over the last few years. What it really needs to restart the economy is a shock from an investment boost.
The budget constraints and the programme’s restrictive targets remove the government from the equations as far as the fiscal side is concerned, private spending is expected to remain subdued due to a numbers of cuts and higher taxation, and exports of products are yet to take off, leaving only services to improve the trade balance. This means it is only investment from the private sector that can pull the cart out of the mud, create jobs, boost domestic demand, increase fiscal revenues and effectively get the country back into a virtuous cycle.
The problem is that neither of the parties that are challenging for the top spot have a true reformist nerve and an intention of creating the conditions for that boom to materialise.
Historically, Tsipras’s party takes issue with the private sector and overall company profitability due to its near-communist roots. Even during its recent tenure in office, the only project that it actively pursued was a gas pipe from Russia, having put on ice every other investment scheme, partly due to it being completely absorbed by the negotiations with lenders but also due to ideological sclerosis.
SYRIZA is the kind of party that will object to the development of land at the site of Athens’s old airport but prominent party member will not have any issue using parts of one of the most valuable plots in the Mediterranean for neighboring municipalities to dump their rubbish.
It remains to be seen whether the new version of SYRIZA - should it win the elections and reshape itself at a party congress - will become business friendly. But at the moment there is nothing to suggest that ideologically they will reconsider their view of the state playing a central role in the country’s economic activity, crowding out private initiative.
Equally, New Democracy’s Evangelos Meimarakis is bringing to the elections the same party that resisted virtually every reform while his predecessor Antonis Samaras was prime minister, especially since losing the European Parliament elections in May as it spent most of its remaining time in government opposing the implementation of the OECD reform toolkit. Who can forget that his administration reached breaking point over the shelf-life of milk.
Not having attempted to reshape itself in the slightest, New Democracy remains a party that likes calling itself reformist but with no evidence to back this up. The four decades that it has been alternating with PASOK in the country’s management have engrained it with smaller or bigger vested interests and lacking the necessary personnel to overcome its old self.
Even looking beyond the two parties that compete for the top spot, there is little hope in those that follow to instil and push a reform agenda in a potential coalition.
PASOK carries the same baggage as New Democracy and is kept alive only by a few loyal followers that saw their lives dramatically improve through its policies back in 1980s, Potami has failed to make a mark and its message remains vague and unconvincing, and then you have the communists, the neonazis, the party of a cult TV persona and those that had visions of raiding the country’s mint. It is hardly a confidence-boosting mix.
Unfortunately, unless there is a spectacular turn of events, Greece seems to be short of inspiring options. Instead there is high probability that all the factors that have been pulling the country down the recessionary spiral could quickly resurface.
There are doubts about the longevity of a SYRIZA-led government given its deep ideological wound from the signing of the latest memorandum and no sign of a true reform agenda from a government with New Democracy as its core. Add to this the tough measures and interventions that the creditors will require to keep the programme going and the scenario of perma-crisis state with political uncertainty and economic depression does not seem that remote.
Tsipras won the January elections with the slogan “Hope is coming”. Many had warned that the hope he was offering was false. Eight months later, hope seems to be in short supply.
You can follow Yiannis: @YiannisMouzakis
You are absolutely right. This new elections would certainly dash any New Democracy hopes for meaningful recovery as a political party worth listening to.