Could 2015 bring another bailout loan?

Po­lit­i­cal con­di­tions this win­ter share sim­i­lar­i­ties with those of 2009-10, sug­gest­ing his­tory may re­peat it­self

Kathimerini English - - Front Page - BY DIM­ITRIS KONTOGIANNIS

ANAL­Y­SIS Some say his­tory does not re­peat it­self, but oth­ers, like Ni­et­zsche, dis­agree. By choos­ing to seek the elec­tion of a new pres­i­dent by Par­lia­ment in Fe­bru­ary 2015 rather than early elec­tions, as for­mer con­ser­va­tive Premier Costas Kara­man­lis did in 2009 when he faced a sim­i­lar dilemma, Prime Min­is­ter An­to­nis Sa­ma­ras chose to prove his­tor­i­cal re­cur­rence is not common. But the coali­tion gov­ern­ment’s un­will­ing­ness since last May to pur­sue some re­forms ag­gres­sively and the lenders’ strict ad­her­ence to the terms of the bailout pro­gram seem to have in­creased the chances for a his­tor­i­cal rep­e­ti­tion, mean­ing a new bailout loan.

The 2014-15 pe­riod seems to share some sim­i­lar­i­ties with the 2009-10 era but there are more dif­fer­ences. One of the sim­i­lar­i­ties is the po­lit­i­cal dilemma faced by Kara­man­lis then and Sa­ma­ras now. The main op­po­si­tion PA­SOK party won the elec­tions for the Euro­pean Par­lia­ment in June 2009 by a com­fort­able mar­gin of 4.4 points, with the rul­ing con­ser­va­tive New Democ­racy com­ing sec­ond, prompt­ing the gov­ern­ment to breathe a sign of re­lief be­cause the mar­gin was not big­ger.

In May 2014, the main left­ist op­po­si­tion SYRIZA party won the elec­tions for the Euro­pean Par­lia­ment with 26.6 per­cent of the vote, while New Democ­racy got 22.7 per­cent. Ju­nior gov­ern­ment part­ner PA­SOK joined the Olive Tree al­liance, which got 8.02 per­cent of the vote. Once again the two-party gov­ern­ment was re­lieved be­cause the out­come could have been worse.

In both cases, the main op­po­si­tion leader, then PA­SOK’s George Pa­pan­dreou and now SYRIZA’s Alexis Tsipras, vowed not to vote for a con­sen­sus can­di­date to be the next pres­i­dent of Greece in the first months of the year ahead and de­manded early elec­tions to top­ple the rul­ing gov­ern­ment, claim­ing it was in­ef­fec­tive. Back in 2009, Kara­man­lis, fac­ing a de­te­ri­o­rat­ing econ­omy, an in­for­mal so-called “white strike” by pub­lic sec­tor em­ploy­ees and sens­ing the need for painful re­forms, sought a new man­date via early gen­eral elec­tions in early Oc­to­ber 2009. Pun­dits say Kara­man­lis faced three op­tions in 2009. First, to hold gen­eral elec­tions in June 2009 or even ear­lier. Sec­ond, to seek elec­tions in the fall after the sum­mer when peo­ple re­turned back from va­ca­tion and would sup­pos­edly be in a bet­ter mood. Third, to try to stay in power for as long as pos­si­ble.

Kara­man­lis lost by a land­slide to PA­SOK’s Pa­pan­dreou, who cam­paigned on the slo­gan “There is money,” and Greece found it­self in a bailout pro­gram in May 2010. At the time, prom­i­nent con­ser­va­tive politi­cians, among them Sa­ma­ras, ob­jected to the idea of seek­ing early elec­tions, for­mally sched­uled for the fall of 2011. They ar­gued the gov­ern­ment should pro­ceed with the re­forms, ig­nore the po­lit­i­cal cost, and go down fight­ing in Fe­bru­ary-March 2010 when the vote for the pres­i­dent would have taken place if that were the case.

Although the po­lit­i­cal land­scape and the eco­nomic sit­u­a­tion are dif­fer­ent nowa­days com­pared to 200910, Premier Sa­ma­ras faced a sim­i­lar dilemma this year but chose a dif­fer­ent path, which is con­sis­tent with his 2009 view. He de­cided to pick up the gaunt­let thrown down by Tsipras and try in­stead to get a sup­pos­edly mod­er­ate, re­spected can­di­date elected for pres­i­dent when the vote takes place in Par­lia­ment in Fe­bru­ary 2015.

In do­ing so, he counted on an im­prov­ing econ­omy and the coun­try’s emer­gence from a six-year re­ces­sion on the back of a strong tourism sea­son and a mod­est re­bound in in­vest­ment spend­ing. Per­haps, even more im­por­tant, he counted on Greece’s ex­it­ing the un­pop­u­lar bailout pro­gram at end-2014 and kick­ing out the IMF to im­prove the con­ser­va­tives’ stand­ing in opin­ion polls and help gather the min­i­mum 180 votes in the 300-seat Par­lia­ment to elect a pres­i­dent and avoid early elec­tions.

But the idea of pre­sent­ing an at­trac­tive pack­age to Par­lia­ment in Fe­bru­ary, com­pris­ing a post-bailout pro­gram with lighter surveil­lance and a pre­cau­tion­ary credit line as well as debt re­lief mea­sures, to help elect a pres­i­dent is clearly at risk now, fol­low­ing the re­cent Eurogroup. Eu­ro­zone fi­nance min­is­ters want Greece to com­plete the last re­view of the bailout pro­gram by im­ple­ment­ing the agreed upon re­forms be­fore com­ing to an ac­cord on the stricter pre­cau­tion­ary credit line (ECCL), with the debt re­lief ac­tion promised back in Novem­ber 2012 up in the air.

So, it looks as if the coali­tion gov­ern­ment has a tough task ahead, mean­ing to agree with the lenders on most prior ac­tions and have the last re­view com­pleted to move on. At this point, its best choice is to reach an agree­ment on most pend­ing items in the re­view but not to fully leg­is­late them, to avoid any nasty sur­prises in Par­lia­ment, and have its lenders agree to the pack­age of a post-bailout pro­gram with a safety net and some debt re­lief mea­sures to be pre­sented to law­mak­ers and help avoid early elec­tions in 2015.

How­ever, this kind of deal can­not be taken for granted. More­over, even if there is a deal, it may not suf­fice for this Par­lia­ment to elect a pres­i­dent. With Greece be­ing un­able to ac­cess the mar­kets for medium-term fund­ing at rea­son­able yields, all bets are off, mean­ing even a pre­cau­tion­ary credit line from the Euro­pean Sta­bil­ity Mech­a­nism (ESM) may turn out to be a credit line with con­di­tion­al­ity at­tached. There­fore, his­tory may re­peat it­self and 2015 be marked by another bailout loan, just like 2010.

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