October 05, 2016
Snap elections in the air
Another poll shows New Democracy even more in the lead this time, with 36% ahead of Syriza with only 14%. The intriguing aspect of this poll is that the survey was published in the newspaper Avgi, a strong supporter of Alexis Tsipras and his government. This immediately sparked speculation that some parts of the party are trying to signal to Tsipras ahead of the party congress later this month that he needs to consider snap elections to hand over power to New Democracy and take Syriza out of the fire line. Officials at the conservative party, on the other hand, suspect that the poll may be an attempt to rally Syriza members before the congress. A third explanation put forward by Macropolis is simply be that the polling institution Public Issue has a contract with Avgi obliging the newspaper to publish all the monthly surveys it conducts on its behalf. In this case, not publishing the latest poll would have been more damaging for Syriza than publishing it, so the article.
One interesting aspect of the poll is that it shows a growing proportion of Greeks are in favour of the idea of snap elections. The survey finds that 51% think that early elections are “probably necessary” versus 46% who feel they are not. This is the highest figure Public Issue has seen during the Greek crisis and flagged this as an important trend to follow. Greeks are also realistic about what an alternative government could achieve. 52.5% of respondents do not believe that New Democracy has more to offer than the current government.
The government finds it easy to dismiss polls, though, on the grounds that they have been so wrong in the past. The prime minister’s office published the predictions for the 2015 elections and for the referendum, and compared them with the actual outcomes. We are also very sceptical about polls. But this time it seems different to us. Alexis Tsipras' political capital is much more depleted, so that he may find it much harder to project himself as a titan of a politician. Also, last year, the New Democracy party was de facto defunct, while this time its new leader Kyriakos Mitsotakis is playing hardball with the government. True, by emphasising debt relief, Tsipras keeps the option open to blame others for non-delivery. But there are many open fronts. And positive news, like the turnaround the IMF predicts for this year, might not be enough to make up for the people’s disillusionment (remember Antonio Samaras lost out against Tsipras despite signs of a recovery). A rumoured cabinet reshuffle, to symbolise a new start, might not do the trick either, writes To Vima.
And there is more burden to come. The public faces yet another rise in direct and indirect taxes worth €2.5bn in the 2017 budget tabled in parliament yesterday. Higher pensions for freelancers and the self-employed will kick in next year and those labour reforms are far from agreed with the institutions. It did not help that former governor of the Bank of Greece Giorgos Provopoulos told a parliamentary committee that the third recapitalisation of banks in November 2015 “was not necessary.”
Manos Giakoumis and Yiannis Mouzakis show how financially disastrous the management of the government was in the past. They write that the Greek financial stabilisation fund HFSF has lost most of the €44bn it injected into the banking system. The market value of the €25bn used to recapitalise the four major banks is now under €1.3bn, and of the just under €13.5bn used to support the resolution of a dozen smaller banks the estimated recovery is just above €2.5bn with €516m already recovered. The HFSF still holds over €4bn in CoCos, and has received €355m from the exercise of warrants. Given that the amount spent supporting the banks is about one quarter of GDP, they call this the largest investment ever made by the Greek state. The Greek political elite, they write, had an incentive to preserve this investment but squandered it, and nobody seems bothered by the huge bill.
The mismanagement Giakoumis and Mouzakis describe is not at the banks or the HFSF, but in the general direction of the country in the two years since Antonis Samaras started rolling back reforms in Greece in response to the local and European elections of 2014. The banks' stock fell by just under 34% in the last quarter of 2014, and over 46% in the whole year, as Samaras failed to close the fifth review of the second programme. In the first half of 2015, under Syriza's confrontational first cabinet, shares fell by another 32%, and by 91% in the second half of the year under the capital controls. Just the third bank recapitalisation in November 2015 caused the share prices to fall 77%.