GREECE IN CRISIS

Greece held a general election yesterday but the leader of New Democracy, the largest party, has said that he is unable to form a government. Antonis Samaras has suggested calling new elections as the only way out of the country's political crisis.

New Democracy (centre right) and PASOK (centre left) had dominated Greek politics, but they haemorrhaged support at the election as the public blamed them for the economic storm that has engulfed the country. Where previously one or other party would have been able to govern alone, their combined share of seats in the Greek parliament would leave them short of a parliamentary majority. Together they won less than a third of the vote and are only in striking distance of a majority because Greece gives a sixth of the parliamentary seats as a bonus to the party winning the largest share of the votes, in this case New Democracy; they also benefited from nearly 20% of Greeks voting for parties that failed to secure parliamentary representation.

In Greece if the leader of the largest parliamentary party is unable to form a government, the leader of the second biggest is then invited to have a go. That is Mr Alexis Tsipras, leader of Syriza, an umbrella grouping of various far left groups who are opposed to the EU/IMF bailout and to further austerity measures. Anti-austerity parties won more votes than supporters of the bailout, but they have less parliamentary seats. Even if Mr Tsipras was leading a coherent group that wanted to govern rather oppose things, he would find it impossible to form a government unless he can somehow lure PASOK into a coalition that would also have to include the Greek Communists. As PASOK contested the election on a pro-bailout ticket, such efforts are unlikely to succeed.

So maybe Greece will face another election. Or maybe Evangelos Venizelos of the third-placed PASOK can form a coalition including New Democracy and the small centre left Europhile party Democratic Left. Together these three groups would have a parliamentary majority and their share of the popular vote would not be too embarrassingly behind that of the anti-bailout parties represented in parliament (38.2% v. 42.9%).

If fresh elections are held then Syriza will be hoping to pass New Democracy and gain the 50-seat bonus for being the largest party. Their leader would then be in position to form a far left anti-bailout coalition, particularly if the people who voted for parties that failed to make the country's 3% threshold can be persuaded to vote for Syriza or the Communists. Things would then get very interesting. A Syriza-Communist government would most likely repudiate the EU-IMF deal, cutting the country off from any external sources of funding. The country would then be looking at a disorderly default on its international debts, expulsion from the Eurozone, and at having to balance its government books from its own resources. Given the predilections of the Communists and Syriza, Greece might also withdraw voluntarily from the European Union. I suspect that all this would be accompanied by economic collapse as anyone with Greece with anything that is not nailed down tries to get it out of the country, but either way it could be rather exciting.

More:

Greek election: Antonis Samaras coalition bid fails (BBC)

Greek legislative election, 2012 (Wikipedia; with breakdown of votes and seats for parties elected to the Greek parliament)