Greeks choose austerity over chaos

New Democracy came out on top in the Greek election, but now faces tough choices Keystone

Sunday’s Greek election result favouring the conservative New Democracy party is a vote in favour of some stability, but the new government will be between a rock and a hard place, warned Swiss editorialists on Monday.

New Democracy is now seeking an alliance with once-mighty Socialist party Pasok, now reduced to third place behind the radical left Syriza bloc.

With just short of 100 per cent of ballots counted, New Democracy had won 29.7 per cent of the vote, ahead of Syriza on 27 per cent, while Pasok had 12.3 per cent.

A 50-seat bonus automatically given to the party which comes first would give a theoretical New Democracy-Pasok alliance 162 seats in the 300-seat parliament, enough for a majority broadly committed to the €130 billion (SFr156 billion) bailout deal signed in March with the European Union and International Monetary Fund.

For Bern’s Bund, Greek voters reached a decision based on “fear and pressure”, while the Blick tabloid said the result was very different from what many feared: “Greece didn’t vote for chaos, but for pain!”

For the Bund though, voters also showed by voting first and foremost for two different blocs that they wanted one thing: a government that negotiates the future.

Time for action

For Zurich’s Neue Zürcher Zeitung (NZZ), the time for action has certainly come. “No further delays are acceptable and Greece cannot afford another round of elections,” it wrote.

The Bund agreed, adding that “an already bankrupt Greece […] could not live in a political vacuum any longer”. 

For Fribourg’s La Liberté, it is also time for some stability. “Greek political leaders seem tired of the electoral uncertainty that has delayed any long-term solutions for the country,” it said.

But after four years of deep recession, crushed under its huge public debt and facing rising social tensions, Greece faces a daunting struggle to restore its battered economy. Plus, the new government may face a renewed wave of protests once it takes office.

Syriza, which had promised to tear up the bailout plan, promised to continue its opposition to the painful austerity measures demanded of Greece. The leftwing party’s result shows just how tired the Greeks are of austerity as demanded by German Chancellor Angela Merkel.

“Unlike the recent Irish referendum result in favour of the EU budget pact, the Greek rebellion against Merkel’s demands for financial rigour was confirmed at the ballot box,” pointed out La Liberté. 

Both New Democracy and Pasok have said they want to renegotiate the terms of the bailout to spread the burden over a longer period and take measures to boost growth.

“European tragedy”

For the Bund, the election result is not a blank cheque either for Antonis Samaras, the leader of New Democracy.

“The left won’t give him any peace,” it wrote. “It will continue to protest against tough austerity measures and will demand Samaras deliver what he promised: an easing of the savings programme imposed by the Europeans.”

For the NZZ, the question is how much wiggle room the new Greek government will have. “That will not be decided in Athens,” it said.

A sentiment echoed by the Tribune de Genève.

“The Greek tragedy is also European since the entire eurozone is under threat if Greece goes under,” it wrote, pointing out that any support for Athens could well come from France, where the new president, François Hollande, has called for spending in favour of economic growth.

Grexit cost

One of the biggest concerns before the latest Greek elections was whether Greece would leave the eurozone.

BAK Basel, one of Switzerland’s most respected economic think tanks has calculated the  possible consequences on the Swiss economy of: a) Greece exiting the euro; and b) the exit of other peripheral euro countries.

  

GDP growth consequences of a Greek exit: -1.1% (year 1), 0% (y2), +1% (y3), 0% (y4).

GDP effects of a euro break-up: -4.2% (y1), -3.6% (y2), +1.9% (y3), +2.2% (y4).

Exports under Grexit: -1.4%, +0.4%, +0.4%, +0.1%.

Exports under eurozone break-up: -6.8%, -4.5%, +0.7%, +2.8%.

Jobs growth Grexit: -0.4%, -0.5%, +0.8%, 0%

Jobs growth break-up: -1.6%, -3.5%, +0.5%, +0.9%