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Greek impasse forces early elections and fears of euro crisis return Greek impasse forces early elections and fears of euro crisis return
(about 2 hours later)
and Brian Murphy ATHENS — Fresh battles over euro zone bailouts loomed on Monday after Greek lawmakers forced early elections that could favor a leftist party pledging to renegotiate the austerity rules and loans that saved the country from fiscal collapse.
ATHENS — Fresh battles over euro zone bailouts were on the horizon Monday as Greek lawmakers forced early elections that could favor a leftist party pledging to renegotiate the austerity rules and loans that saved the country from fiscal collapse. The elections were set in motion when parliament failed — for a third time — to elect a new president. The position is largely ceremonial in Greece, but the impasse reflected the deep divisions over the tough economic stewardship imposed by the European Union and international lenders since Greece’s financial nose-dive more than five years ago.
The elections were set in motion when parliament failed — for a third time — to elect a new president. The position is largely ceremonial in Greece, but the impasse reflected the deep divisions over the tough economic stewardship imposed by the European Union and international lenders. Prime Minister Antonis Samaras — who had strongly opposed the push for elections — set the date for Jan. 25. Riding high at the moment is the far-left Syriza Party and its populist, anti-austerity message.
Greece’s government now has 10 days to dissolve parliament and set a date for elections, which is expected to give a significant boost to the far-left Syriza Party and its populist, anti-austerity message. In a sign of market jitters, the Athens Stock market was down sharply. Global markets were mixed.
In a sign of market jitters, the Athens Stock market was down more than 10 percent just before the parliament vote. Global markets, however, appeared to hold firm on the news. Samaras warned over the weekend that a Syriza government could lead the nation to “bankruptcy and exit from the euro.” Hours after the parliament vote, he urged Greeks not to undo the “sacrifices” that have brought some degree of stability after an economic meltdown that left virtually no one untouched.
For Greece, the expected collapse of the government comes just as the economy had begun to stabilize. A host of problems, including decades of bloated public sector spending and mismanagement, pushed Greece into a crippling recession and far outside the fiscal rules for nations using the euro.
Huge rescue packages kept Greece afloat, but they came with strict demands for fiscal housecleaning. They included sharp cutbacks in government services, punishing public sector layoffs and other belt-tightening measures.
Syriza has vowed to halt payment on Greece’s debt until the terms of the country’s $284 billion bailout agreements can be renegotiated, and it says it will thumb its nose at international lenders by ramping up public spending.Syriza has vowed to halt payment on Greece’s debt until the terms of the country’s $284 billion bailout agreements can be renegotiated, and it says it will thumb its nose at international lenders by ramping up public spending.
The prospect of a renewed clash with creditors has badly rattled financial markets and revived painful memories for some Greeks of a time in the not-so-distant past when their country flirted with ruin. Prime Minister Antonis Samaras warned over the weekend that a Syriza government could lead the nation to “bankruptcy and exit from the euro.” Syriza leader Alexis Tsipras called the upcoming elections a chance to reverse the austerity pacts that “plundered” the country under Samaras, who took office in 2012.
“The austerity agreements will also belong to the past,” Tsipras said.
The prospect of a head-on clash with creditors has badly rattled financial markets and revived painful memories for some Greeks of a time when their country flirted with ruin.
But for others here — and in debt-ridden countries across southern Europe — the rise of the far left has kindled a once-faint hope that the continent can escape the chokehold of austerity.But for others here — and in debt-ridden countries across southern Europe — the rise of the far left has kindled a once-faint hope that the continent can escape the chokehold of austerity.
“Europe is changing,” said George Stathakis, a Syriza member of Parliament and one of the party’s leading voices on economic policy. “Because of the fact that the European economy is the only one in the world that is doing this badly and has stuck to a growthless kind of situation, it’s become clear that things have to change.” “Europe is changing,” said George Stathakis, a Syriza member of parliament and one of the party’s leading voices on economic policy. “Because of the fact that the European economy is the only one in the world that is doing this badly and has stuck to a growthless kind of situation, it’s become clear that things have to change.”
Stathakis pointed to emerging leftist groups in Spain, Italy and Portugal that share Syriza’s contempt for the European economic consensus and are prepared to join the party in pressuring authorities in Brussels and Berlin to change their tack.Stathakis pointed to emerging leftist groups in Spain, Italy and Portugal that share Syriza’s contempt for the European economic consensus and are prepared to join the party in pressuring authorities in Brussels and Berlin to change their tack.
But unlike those countries, Greece is no longer the master of its own fiscal destiny. Any shift away from austerity for Greece would require a high-stakes renegotiation with its bailout paymasters that analysts say could plunge Greece back into the depths of a debt crisis. But unlike those countries, Greece is no longer the master of its own fiscal destiny.
Any shift away from austerity for Greece would require a high-stakes renegotiation with its bailout paymasters that analysts say could plunge Greece back into the depths of a debt crisis.
“We could be entering a process that leads to a point of no return,” said George Pagoulatos, a professor at the Athens University of Economics and a former government adviser. “There is no will among the Greek public or even among Syriza to exit the euro. But if they start playing hardball, speculation about a Greek exit will revive. And that’s dangerous because speculation can become a self-fulfilling prophesy.”“We could be entering a process that leads to a point of no return,” said George Pagoulatos, a professor at the Athens University of Economics and a former government adviser. “There is no will among the Greek public or even among Syriza to exit the euro. But if they start playing hardball, speculation about a Greek exit will revive. And that’s dangerous because speculation can become a self-fulfilling prophesy.”
Syriza officials have declined to say what they will do if the so-called troika of international lenders — the European Commission, the European Central Bank and the International Monetary Fund — refuses to yield to the party’s demands.Syriza officials have declined to say what they will do if the so-called troika of international lenders — the European Commission, the European Central Bank and the International Monetary Fund — refuses to yield to the party’s demands.
Asked about Syriza’s fallback plan, Stathakis was unequivocal. “There is no plan B,” he said.Asked about Syriza’s fallback plan, Stathakis was unequivocal. “There is no plan B,” he said.
The prospect of a hard-line Syriza government going toe-to-toe with equally uncompromising European negotiators has prompted a sharp spike in Greek bond yields, even before the current government falls.The prospect of a hard-line Syriza government going toe-to-toe with equally uncompromising European negotiators has prompted a sharp spike in Greek bond yields, even before the current government falls.
Samaras’s candidate for president, Stavros Dimas, has come up short in the first two rounds of balloting this month. In the final vote Monday, Dimas again came up short of the 180 votes needed in the 300-member parliament.Samaras’s candidate for president, Stavros Dimas, has come up short in the first two rounds of balloting this month. In the final vote Monday, Dimas again came up short of the 180 votes needed in the 300-member parliament.
Polls show that most Greeks don’t want new elections. But Syriza, which is leading the charge to bring down the government, is likely to be the biggest beneficiary. It has consistently held a lead of several points over Samaras’s New Democracy Party, with a smattering of smaller parties trailing well behind.Polls show that most Greeks don’t want new elections. But Syriza, which is leading the charge to bring down the government, is likely to be the biggest beneficiary. It has consistently held a lead of several points over Samaras’s New Democracy Party, with a smattering of smaller parties trailing well behind.
Syriza, a Greek acronym that stands for Coalition of the Radical Left, has risen rapidly, having emerged as a unified party only last year. Led by a combination of far-left activists, union organizers and university professors, it has lately moderated some of its stances, including its earlier threat to tear up the bailout and default on the nation’s debt. But the party still presents itself as an anti-establishment assault on Greece’s notoriously corrupt and insular brand of politics. Syriza, a Greek acronym that stands for Coalition of the Radical Left, has risen rapidly, having emerged as a unified party only last year. Led by a combination of far-left activists, union organizers and university professors, it has lately moderated some of its stances, including its earlier threat to tear up the bailout and default on the nation’s debt.
But the party still presents itself as an anti-establishment assault on Greece’s notoriously corrupt and insular brand of politics.
The election may be especially messy given the compressed time frame — just a month for campaigning, followed by a deadline for hammering out an agreement with international lenders that pops up only weeks later.The election may be especially messy given the compressed time frame — just a month for campaigning, followed by a deadline for hammering out an agreement with international lenders that pops up only weeks later.
Antonis Papagiannidis, a veteran Greek journalist and analyst who thinks it’s more likely than not that Greece will leave the euro in the next two years, said Syriza will need allies if it wants to succeed in those negotiations. But the party may be hamstrung before it even starts by lingering resentment at home.Antonis Papagiannidis, a veteran Greek journalist and analyst who thinks it’s more likely than not that Greece will leave the euro in the next two years, said Syriza will need allies if it wants to succeed in those negotiations. But the party may be hamstrung before it even starts by lingering resentment at home.
“They will have to corral wider support to negotiate with Europe and the IMF,” he said. “After an ugly campaign, that will be very difficult.”“They will have to corral wider support to negotiate with Europe and the IMF,” he said. “After an ugly campaign, that will be very difficult.”
Murphy reported from Washington. Elinda Labropoulou in Athens contributed to this report.Murphy reported from Washington. Elinda Labropoulou in Athens contributed to this report.