July 16, 2015
The outcome of fiscal measures voting yesterday in the Greek Parliament was positive for Eurozone leaders. The measures passed with absolute majority as Syriza coalition partner Independent Greeks, the front opposition New Democracy, PASOK, and The River voted in favor. But Syriza had major losses, as 39 MPs voted against or abstain. Amid these MPs, the most resounding “No” came from the former Minister of Finance Varoufakis, the President of the Greek Parliament Konstantopoulou, the leader of the Left Platform Lafazanis, the adamant support of drachma Lapavitsas.
Rupture in Syriza is now official. The losses are big, and it is expected that in the second round of voting next week, more MPs will distance themselves. PM Tsipras is faced with huge dilemmas as he is committed to reach a deal on a third bailout. These dilemmas do not only stem from his own party, but also from the opposition, as well as from technocrats and non-elected political and economic personalities that resist to take part in the government reform that Tsipras is planning to do. Why? Because most of them do not want to take the blame for conceding to take measures that might not be successfully implemented, that go against the public feeling and verdict, or measures that might be blocked and hindered by snap elections in the coming months.
Furthermore, Tsipras has to deal with the members of Syriza. The majority of Central Executive Committee members and the Political Secretariat are against the new measures and exert fierce criticism to the Prime Minister, while calling for unity in the party. In addition to that, both bodies asks Tsipras to call for extraordinary conference of the party in order to decide on the steps ahead. Similar is the reaction of Syriza Youth that released yesterday a statement calling Tsipras to take back the measures as they are devastating for the Greek society, go against Syriza political program, ideology and vision, and considered appalling for the younger generation that had massively supported Syriza in last elections and the referendum.
Moreover, the German Minister of Finance Schauble still insists on his proposal for a 5-year temporary exit of Greece from Eurozone. Fact is that his proposal has been endorsed so far by the majority of Eurozone member-states, except for France, Italy and Cyprus. Such an option is gaining ground, especially after Eurozone’s institutional requirement that traditional debt haircut cannot take place. In similar respect, there are also some collateral problems for Greece and Tsipras, with one of them coming from Spain. The Spanish government through the voice of its Minister of Finance de Guindos said yesterday that the ratification of the Greek bailout will not take place before August, a fact that further hinders the entire process for all parts involved.
Meanwhile, the Greek economy is suffering under continuous capital controls. Transactions have been blocked, and hopes for return to proper functions are decreasing. Why? Because as long as the political puzzle in Greece is getting more and more confusing, the ratification and full implementation of the measures, and the necessary financial assistance will take long, many Eurozone partners are faced with a daring reality. That the Greek bailout might not work after all. The ECB decided to increase the limit of ELA, but this does not mean that the banking system will start functioning properly. Some facilitation is provided, but it remains unclear for how long the business world, the public and private sector will stop being dependent to restrictions on transactions and third-party payments.
Another impediment to the whole process is the fact that Tsipras is planning to call for early elections, probably in September of October. Why is he seriously thinking of such an option? Not necessarily to escape, but due to the strong pressure he is receiving from his MPs and the opposition. If next Wednesday during the voting on second round of prior actions he takes another blast, opposition that is supporting his government will ask him to call for elections or alternatively take part in the government. The latter does not seem very plausible, as Tsipras will need to deal in equal terms with these leaders that he was fiercely criticizing for the last 5 years. And these leaders will have the power to impose actions and measures that even the MPs that support Tsipras will be reluctant to accept.
The current political and economic quagmire in Greece have put Tsipras in the middle of a powerful typhoon. And as social grievances and unrest are growing against himself and the government, Tsipras might need to step down or adopt another agenda, closer to the counter-austerity Thessaloniki Program. Will he be able to accommodate all these issues?
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Author : Dimitris Rapidis