Greece's Troubles Reach Mythic Proportions

5 MINS READAug 20, 2015 | 22:28 GMT
It can be difficult to separate the important from unimportant on any given day. Reflections mean to do exactly that — by thinking about what happened today, we can consider what might happen tomorrow.

Just as in the myth of Sisyphus — in which the gods forced King Sisyphus to carry a large boulder up a hill only to watch it roll back down every time he reached the top — each time Greece seems to have reached relative stability, new events threaten to destabilize the country. This was the case Thursday, when Greek Prime Minister Alexis Tsipras announced his resignation and early elections, which will probably take place Sept. 20. This will be the third time in nine months that the Greeks are asked to go to the polls and, just like the general elections in January and the referendum in July, the uncertain result could lead to another period of political fragility.

At first glance, an early vote seems like a bad idea. After eight months of tough negotiations between Athens and its creditors, Greece seemed to finally have found some calm. This is after the introduction of capital controls, repeated threats of expulsion from the eurozone and countless marathon meetings. Earlier this month, the eurozone drafted and approved the third bailout package within two weeks, and several parliaments — including the skeptical German Bundestag — ratified the bailout quickly. Greece also received a bridging loan in July and the first tranche of the bailout in August. This enabled Athens to make hefty debt repayments to the European Central Bank and remain in the eurozone. On the surface, the last thing Greece needs is another period of uncertainty linked to a political vote.

But the problem is that, despite the fast succession of agreements with the creditors (or probably because of them), the political situation in Athens has become unsustainable. The ruling Syriza party is actually a coalition of left-wing groups that coalesced only recently and never resolved their disputes. A key source of dissent is Greece's membership in the eurozone. The party decided during a convention in 2013 that its official political platform would be to support the euro. However, this decision was made for electoral purposes, and many members of the party never really abandoned their desire to go back to the drachma.

Athens' negotiations with its creditors only exacerbated Syriza's internal disputes. By late June it was clear that Tsipras would not be able to keep his promise of maintaining Greece's membership in the eurozone while avoiding the introduction of austerity measures. The prime minister felt that he lacked the electoral mandate to take such a drastic decision as leaving the euro, so he decided to cooperate with the lenders. He paid the price by losing the support of a third of his party's members in parliament, who began voting against the government's proposals. Tsipras retained support from the pro-bailout opposition, but it was clear from the start that this support could not last indefinitely.

The prime minister basically had two options: hold elections as soon as possible, before painful austerity measures begin eroding his personal popularity; or wait until October, when the creditors will review the Greek program and potentially offer some form of debt relief (a key element of Tsipras' electoral campaign). He chose the former. Tsipras is probably counting on the fact that the opposition is still weak and divided and that the rebels within Syriza lack the time to form a new political party, or indeed come up with a coherent electoral program.

This is a risky move, because Tsipras is operating on a very tight schedule. In September, Greece is supposed to introduce reforms in the energy sector and propose a timetable for the privatization of state-owned companies. In October, Greece is expected to come up with a supplementary budget for 2015 and a draft budget for 2016. This is in addition to lifting tax breaks for farmers and the introduction of higher taxes for households. Greece is unlikely to introduce any significant reforms during the electoral campaign, which in turn could severely jeopardize the bailout program.

Tsipras' decision is also risky because Greece's political landscape is as fragmented as ever. Tsipras remains the most popular politician in Greece, but most surveys show Syriza will not win enough seats in parliament to form a government on its own. More important, opinion polls have so far considered Syriza as a single entity, but the rebels will probably form their own party and siphon votes away from the core party.

The pro-bailout opposition, in the meantime, will struggle to form a common front. The conservative New Democracy, center-left Panhellenic Socialist Movement and centrist To Potami campaigned together for the "yes" camp during the referendum, but they will have a tough time coming up with a proper electoral alliance. Moreover, Tsipras is likely to woo some of his rivals — in part to foment discord among them, but in part to leave the door open for a potential alliance after the elections.

Finally, Tsipras' decision will once again put Greece's creditors in an awkward position. The Greek bailout is controversial in countries such as Germany, the Netherlands and Finland. These governments invested significant political capital in supporting a new aid program for Athens. The early vote, and the delay in the implementation of some aspects of the program that will probably come with it, will make parliamentarians in northern Europe even more skeptical. This is not a minor issue, because each disbursement of money will be linked to an assessment of the status of reforms. Governments under domestic pressure could decide to take a hard stance on Greece when assessing the status of the program.

Tsipras hopes new elections will allow him to reduce dissent within his party and form a more cohesive government with a clear electoral mandate. This could happen, but the dangers are many. The greatest risk connected to the early elections is that Athens could enter another round of complex post-election negotiations to form a coalition government. The irony of Tsipras' move is that early elections are needed to break the current impasse, but they could lead to more uncertainty and instability. 

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