Analysis: Breakdown in negotiations would be disastrous outcome for Greece

Greece is at a crossroads two years after negotiating a bailout package with the IMF/EU, conditional upon implementing severe austerity measures. Today’s election will be dominated by the austerity agenda that will decide the future of Greece – in or out of the Eurozone.

Greeks return to the polls after the election on 6 May failed to produce a government and showed support for the major centre parties plummeting, while parties of the far left and far right made significant gains. At the heart of today’s election is an apparent paradox: most Greeks demand changes to the terms of the bailout agreement, but 80 percent of them continue to support membership in the Eurozone. One of these is certainly possible. The extent to which parties can convince voters that they can guarantee both at the same time holds the key to victory.

The volatility of the system, the high number of undecided voters and the mixed results in pre-election polls make this race too close to call. Conservatives New Democracy and radical left Syriza will compete for first place, which comes with a crucial bonus of 50 seats in the 300-seat Parliament, under the Greek electoral law. They will then each take turns to attempt to form a government in the order of the electoral result.

New Democracy represents the austerity camp, having already signed the bailout agreement. A possible coalition led by the conservatives could be formed on the basis of an unequivocal commitment to the European orientation of Greece. The socialist Pasok and the social democrats of the Democratic Left fit the description. The populist right Independent Greeks may also offer their support, although they would propose a different prime minister than Antonis Samaras, New Democracy’s leader.

European and IMF elites, such as Angela Merkel, have expressed their support for this option, though urging Greeks to vote for New Democracy has often achieved the opposite effect.

Syriza, led by its young charismatic leader Alexis Tsipras, represents the camp of voters that are distraught by the austerity measures and are disillusioned with the former political establishment that brought Greece to breaking point.

Its first priority would be to form a government with all parties of the Left, a prospect rejected by the Greek Communist Party. More likely, Syriza will attempt to form a coalition on an anti-austerity platform, shared with the Democratic Left and the ideologically opposite Independent Greeks. Such an outcome would take Greece in to uncharted territory and increase uncertainty in the Eurozone, as demand for alternative policies continues to mount.

The most disastrous outcome for Greece would thus be a possible breakdown in negotiations, where none of the two camps manage to form a coalition, separately or together in a national unity government. The political instability has already cost the country heavily, as the recovery effort has stalled, the reforms put on hold and the banking system brought to its knees. Today’s election should mark the start of a collective and systematic effort at home to manage the crisis, encouraged by developments elsewhere in Europe, which favour a rethink of the overall strategy.

Dr Georgios Karyotis is a lecturer in the School of Government and Public Policy at the University of Strathclyde and secretary of the Greek Politics Specialist Group