.
With today’s vote in favour of a medium term fiscal plan, Greece has just escaped the immediate danger of financial collapse. But this will prove a short lived victory for the Greek government: in the coming days and months a series of crucial decisions are pending which mean the prospect of both fiscal default and political crisis will rarely be far from the headlines.
Greek Prime Minister George Papandreou’s problems begin again tomorrow, with a second parliamentary vote on the implementation of the plan that was barely agreed today. This would create a new body to handle the planned €50bn privatisation drive, and a new package of tax hikes, including on those earning small salaries. A “solidarity tax” is also planned on everyone earning above €12,000 per year, along with higher taxes for consumers and businesses. In short, it offers a little something for everyone to hate.
That said, tomorrow’s vote is likely to pass too. It seems unlikely that anyone voting for austerity today would undermine the good it might do for Greece by voting against implementation tomorrow. Yet while passing both votes is a considerable achievement, ongoing waves of public outrage and protest make it difficult to see how this plan can be faithfully and efficiently implemented.
More political problems are certain to follow. PASOK, Mr Papandreou’s ruling socialist party, enjoys a thin parliamentary majority of just 155 of 300 deputies. Public fury against the government is unlikely to abate and may grow stronger. Greece’s bureaucracy inspires little confidence that it’s up to this job. In sum, today’s vote has bought the government several months, but by the end of the year, Greece will probably have new elections.
This is where the real problems begin. Mr Papandreou might have survived a parliamentary vote, but the chances on him surviving a public vote are slim. Any fresh elections will probably yield a new coalition government with New Democracy, the main opposition party, as leading partner and PASOK as the junior partner.
Superficially, that looks like it will create the new national political consensus and conciliatory approach that European Union negotiators wisely demand. It will, for instance, be much easier to demand future sacrifices from Greece if virtually its entire political class has publicly accepted the need for it.
But for a preview of the way any new coalition government will consider further austerity measures, consider the fact that New Democracy leader Antonis Samaras warned before today’s vote that any ND deputy voting in favour of the plan would be expelled from the party. There is little room for a conciliatory approach in his attitude, nor is one likely to emerge in the coming months. In short, there is simply no reason to believe that the opposition will throw away its chance to vilify PASOK for every imposition of pain when it doesn’t have to.
All that said, gaining time is the least bad outcome, both for Greece and Europe as a whole. The breathing room provides European negotiators to keep pressure on Greece to stick with as much austerity as its citizens and lawmakers will stomach. Any other available solution – restructuring the debt, bridge loans or outright default – would be much more painful for both Greece and the EU.
The successful vote limits the prospects for financial contagion, and gives the other peripheral nations precious time to buttress their fiscal accounts, and to dampen public opposition to further reforms in their own countries. It must be hoped that all concerned use this short period of grace wisely and effectively – or Europe’s problems will soon return with a vengeance.
.
Ian Bremmer is the president of Eurasia Group, a political risk consultancy, and author of ‘The End of the Free Market’
With today’s vote in favour of a medium term fiscal plan, Greece has just escaped the immediate danger of financial collapse. But this will prove a short lived victory for the Greek government: in the coming days and months a series of crucial decisions are pending which mean the prospect of both fiscal default and political crisis will rarely be far from the headlines.
Greek Prime Minister George Papandreou’s problems begin again tomorrow, with a second parliamentary vote on the implementation of the plan that was barely agreed today. This would create a new body to handle the planned €50bn privatisation drive, and a new package of tax hikes, including on those earning small salaries. A “solidarity tax” is also planned on everyone earning above €12,000 per year, along with higher taxes for consumers and businesses. In short, it offers a little something for everyone to hate.
That said, tomorrow’s vote is likely to pass too. It seems unlikely that anyone voting for austerity today would undermine the good it might do for Greece by voting against implementation tomorrow. Yet while passing both votes is a considerable achievement, ongoing waves of public outrage and protest make it difficult to see how this plan can be faithfully and efficiently implemented.
More political problems are certain to follow. PASOK, Mr Papandreou’s ruling socialist party, enjoys a thin parliamentary majority of just 155 of 300 deputies. Public fury against the government is unlikely to abate and may grow stronger. Greece’s bureaucracy inspires little confidence that it’s up to this job. In sum, today’s vote has bought the government several months, but by the end of the year, Greece will probably have new elections.
This is where the real problems begin. Mr Papandreou might have survived a parliamentary vote, but the chances on him surviving a public vote are slim. Any fresh elections will probably yield a new coalition government with New Democracy, the main opposition party, as leading partner and PASOK as the junior partner.
Superficially, that looks like it will create the new national political consensus and conciliatory approach that European Union negotiators wisely demand. It will, for instance, be much easier to demand future sacrifices from Greece if virtually its entire political class has publicly accepted the need for it.
But for a preview of the way any new coalition government will consider further austerity measures, consider the fact that New Democracy leader Antonis Samaras warned before today’s vote that any ND deputy voting in favour of the plan would be expelled from the party. There is little room for a conciliatory approach in his attitude, nor is one likely to emerge in the coming months. In short, there is simply no reason to believe that the opposition will throw away its chance to vilify PASOK for every imposition of pain when it doesn’t have to.
All that said, gaining time is the least bad outcome, both for Greece and Europe as a whole. The breathing room provides European negotiators to keep pressure on Greece to stick with as much austerity as its citizens and lawmakers will stomach. Any other available solution – restructuring the debt, bridge loans or outright default – would be much more painful for both Greece and the EU.
The successful vote limits the prospects for financial contagion, and gives the other peripheral nations precious time to buttress their fiscal accounts, and to dampen public opposition to further reforms in their own countries. It must be hoped that all concerned use this short period of grace wisely and effectively – or Europe’s problems will soon return with a vengeance.
.
Ian Bremmer is the president of Eurasia Group, a political risk consultancy, and author of ‘The End of the Free Market’
0 comments:
Publicar un comentario