Tuesday, 8 May 2012

Greece’s bailouts & ballots…

The ballot boxes have been emptied, the votes have been counted, but wrangling over Greece’s new government continue.  As discussed, Greece’s system of reinforced proportional representation is designed to prevent minority governments but our fears were realised when the slim majority forecast by opinion polls for a centrist government was not achieved.  The previous behemoths of Greek politics, New Democracy and PASOK (the Pan-Hellenic Socialists), won 149 seats rather than the 151 that had been our central projection and are now unable to command a majority in parliament.

Source: Brewin Dolphin

There were other losers too: the Democratic Alliance (the party which split from New Democracy because it supported the May 2010 EU austerity package); the
Greens; and, with Python-esque irony, the Popular Orthodox Rally, all failed to achieve the 3% threshold to win seats.

Indeed the real winners were the political extremes as the Golden Dawn (generally referred to as neo-Nazi) and Syriza (the Coalition of Radical Left) dramatically beat expectations.  New Democracy’s seat advantage came from the 50 extra seats awarded to the largest party but their share of the vote at 18.8% was just 2% more than Syriza at 16.8%.  Adding in the poor showing from PASOK and the strong showing from caucuses such as the Independent Greeks,  whose very conception was in opposition to the bailout, to see that this is a comprehensive rejection of the existing deal which has been struck between the EU and Greece.

Now it’s like déjà vu all over again: Greece needs a further bailout payment in June; its payment is dependent on a further series of swingeing austerity measures; but such legislation now seems politically impossible without a government.  But things are different now – unemployment is even higher.

Source: Eurostat
Guy Foster 
Head of Portfolio Strategy

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