Greece's Ruling Party Develops a New Plan of Attack

5 MINS READApr 6, 2015 | 09:21 GMT
Greece's Ruling Party Develops a New Plan of Attack
Greek Prime Minister Alexis Tsipras delivers a speech at the Syriza party headquarters in Athens on Feb. 28.

The Greek government continues to fight political battles at home and abroad. As negotiations between Athens and the Eurogroup continue, the Greek government is dealing with internal dissent while also trying to weaken the opposition. A proposal by Athens to create a parliamentary committee to assign blame over Greece's bailout programs is a part of Prime Minister Alexis Tsipras' efforts to keep his left-wing Syriza party together. It also has the benefit of targeting prominent opposition figures. This strategy could herald the beginning of an electoral campaign for a Greek default, but also poses severe risks.

On March 30, the Greek government announced plans to create a parliamentary committee to investigate the previous governments' handling of the country's economic crisis. The committee will focus particularly on the circumstances that led Athens to request two bailout packages from the European Union and the International Monetary Fund.

A Significant Plan

This decision is meaningful for several reasons. First, the creation of such a committee was part of Syriza's electoral platform. At a time when Greece's lenders are trying to persuade the left-wing party not to honor many of its campaign proposals, Tsipras probably sees the committee as a relatively low-cost strategy to appease dissent within the party.

Second, a probe into previous administrations is an opportunity for Syriza to create rifts within the opposition. A government led by the center-left Panhellenic Socialist Movement party, commonly known as PASOK, requested Greece's first bailout in mid-2010. A caretaker government supported by PASOK and Greece's main conservative party, New Democracy, requested the second bailout in early 2012. Subsequently, the inquiry into the political responsibilities related to Greece's aid programs probably will involve officials from the country's two largest traditional parties.

Athens' plan is already creating friction between the former allies; PASOK officials suggested that any probes on Greece's financial crisis should also include the New Democracy-led government of Kostas Karamanlis. Karamanlis was prime minister between 2004 and 2009, when PASOK believes many of the policy decisions that led to Greece's financial crisis were taken. Syriza's decision not to probe events before 2010 suggests the government may try to be harder on PASOK than on New Democracy.

But Syriza's strategy is risky: PASOK is weak — it barely made it into the Greek parliament in the Jan. 25 elections — but still has strong links with Greek business and unions. If it feels threatened by the probe, the party probably will use its political and economic connections to try to destabilize the government.

Finally, the decision to create an investigation committee could open the door for Athens to repudiate some of its debt. If the committee finds that mistakes were made during the bailout negotiations or, more important, if it decides that part of Greece's debt is illegitimate, it could be the first step for a decision not to honor it. Stratfor believes Greece and its lenders will reach an agreement and Athens will complete its bailout program in June. After that, Greece will request some form of debt relief, and a deal with the European Union and the IMF is still possible.

However, Greek officials have suggested that, if Syriza fails to reach a long-term deal with its lenders, a referendum on Greece's membership in the eurozone cannot be ruled out. Under this scenario, Syriza could use a negative report on Greece's bailouts as the basis for a campaign supporting a default and Athens' withdrawal from the eurozone. While this situation is unlikely at this point, any decision on a referendum would probably be preceded by increased anti-eurozone rhetoric.

New Democracy Fights Back

Syriza is not the only party making political maneuvers. In a recent interview with U.S. media, former Prime Minister Antonis Samaras said his New Democracy party would be willing to cooperate with the Greek government on any measures meant to secure Greece's membership in the eurozone. Although Samaras had his own share of conflict with Greece's lenders, his government was cooperative with the European Union and the IMF and was responsible for introducing many of the harsh austerity measures adopted as a reaction to the crisis.

Samaras' statements have two goals. The first is to portray New Democracy as a responsible political party willing to honor Greece's commitments. Opinion polls show that most Greeks reject austerity measures but also want their country to reach a deal with the European Union and the IMF and remain in the eurozone. In this regard, Samaras is counting on New Democracy to benefit from a potential collapse of the Greek government.

In addition, Samaras probably is trying to deepen Syriza's internal divisions. Tsipras' electoral campaign focused heavily on criticism of Greece's traditional elites, of which Samaras is a clear exponent. As a result, any formal or informal deal with New Democracy would only exacerbate the internal divisions in the Greek government. With Syriza still divided on whether to make concessions to the Eurogroup, Tsipras could find himself in the awkward position of having to either make a deal with the opposition and secure Greece's deal with its lenders, or appease the more radical members of Syriza and jeopardize the negotiations with the European Union and the IMF.

The fall of Tsipras' government would please many members of the Eurogroup, who would support the creation of a technocratic government in charge of introducing unpopular reforms  — something similar to what happened in Greece and in Italy in late 2011. However, Greek voters are likely to resist any attempts by European officials to interfere directly with their country's domestic politics. In 2011, the European Union played a decisive role in the appointment of Mario Monti and Lucas Papademos as prime ministers of Italy and Greece, respectively. Six years into the Greek crisis, voters would probably resist the formation of a government without elections. In addition, New Democracy would not necessarily perform well if elections were held this year.

With the Eurogroup Working Group set to meet again on April 8 and 9, Athens will reach a deal with its lenders before the end of the month. However, the Greek government is still working on contingency plans. The creation of the committee to analyze Greece's bailout programs is mostly meant to appease the most radical elements of Syriza and honor one of the party's electoral promises. However, it could serve as a backup plan for early elections or a referendum should Athens decide to use it.

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