Stratfor does not forecast election outcomes, but there are four main scenarios that could result from the vote:
Scenario No. 1 – A Single-Party Government
A single-party government is the least likely outcome. An absolute majority in the Greek parliament (151 seats or more) would allow the winning party to control the legislative process and to streamline decision-making. However, opinion polls indicate that neither Syriza nor New Democracy is close to winning enough seats in the Greek parliament to govern alone.
Scenario No. 2 – A Coalition Government
The election could also produce a ruling two-party or multi-party bloc. The Greek constitution awards a bonus of 50 seats to the party that wins the most votes. Should Syriza or New Democracy perform well, they may need support from only a small party to form a government. In this scenario, small parties such as the centrist To Potami and the center-left Panhellenic Socialist Movement (PASOK) would be natural allies for either Syriza or New Democracy. However, polls currently suggest that more than two parties will be needed to form a government. A multi-party administration could lead to near-constant periods of crisis in which lawmakers would threaten defection.
Scenario No. 3 – A Grand Coalition
Grand coalitions used to be exceedingly rare in Greek politics because mainstream parties traditionally refused to work together. But a significant shift occurred in 2012, when Greece's long-time adversaries, New Democracy and PASOK, agreed to govern together to fend off a rising Syriza. With PASOK weakened, a grand coalition this time would involve New Democracy and Syriza. While on the surface this may look like a stable government, the nature of the parties involved would generate perpetual friction and a convoluted decision-making process. New Democracy has said it would consider forming a government with Syriza, but Tsipras has rejected the idea so far.
Scenario No. 4 – No Government
After the elections, according to the Greek constitution, the president must ask the party with the most votes to form a government. If that party fails to form a government, the opportunity to do so then passes to the second-largest party in parliament and so forth. If no ruling coalition emerges, new elections would be expected. This scenario played out in 2012, when Greece had to hold two elections before a government could be formed. However, under pressure from the European Union, the Greek president could also try to form a "government of national unity," possibly consisting of technocrats and uncontroversial figures. Such a government would still require ratification by the parliament.
Effects on the Bailout Timeline
With the first scenario improbable, Greek parties will have to cooperate if new elections are to be avoided. In broad terms, most parties support the continuity of the existing bailout program. However, during the campaign, the pro-bailout parties have been promising to introduce changes in the program — or at least to prioritize some of the reforms stipulated in the bailout deal over others. No matter who is in charge, the next administration in Athens will try to slow the process of economic reform, heightening tension with Greece's creditors.
So long as a pro-bailout coalition is in power, the lenders are likely to give Greek politicians extra time to come up with a program of governance and a plan for reform. But several governments in northern Europe (particularly Germany, the Netherlands and Finland) have invested significant political capital in approving the Greek bailout, and they promised to conservative lawmakers at home that they would keep Athens in line. This means that the creditors will have some patience with Greece, but pressure from the lenders will return by the end of the year as Athens looks for wiggle room in the bailout terms.
However, the Greek elections will probably delay the existing schedule of bailout-program reviews and the disbursement of funds. The creditors are supposed to assess the evolution of the Greek rescue in October. But with election season in full swing, Greece has virtually stopped the process of reform. (For example, decisions about the privatization of state-owned companies have been postponed.) As a result, the creditors will probably push back the October review and withhold upcoming bailout installments. The new timeline will also stall the International Monetary Fund's decision on whether to participate in the program. Thus, while talks on debt relief — a key issue for the IMF — could begin shortly after the election, they are unlikely to bear any fruit before the end of the year.
To a certain extent, Athens has some breathing space. After making substantial debt payments to the European Central Bank in July and August, Greece faces a somewhat quieter schedule of debt maturities for the rest of the year. This means that Athens can probably survive a delay in the disbursement of bailout funds. However, Greece is not out of fiscal trouble yet. And the longer implementation of the bailout program is delayed and money is withheld, the more likely fears of a so-called Grexit will be reignited.