EU Quietly Prepares Plan B for Greece Amid Early Election Fears

24/12/2014

By Angelika Papamiltiadou

Troika will insist on further structural measures even if government changes; but further extension could be granted if coalition succeeds

The European Union is quietly mulling contingency plans for Greece as political uncertainty rises after Parliament rejected the coalition’s presidential nominee, Stavros Dimas, for a second time on Tuesday.

Even though Greece’s Prime Minister Antonis Samaras has been assuring his peers that he has the necessary votes to elect his choice as president, a high ranking Eurozone official told EI after Tuesday’s vote that Brussels “is becoming nervous.”

The source said that while Greece is no longer seen as a systemic threat to the Eurozone, the possible rise of the radical left party Syriza to power would bring the country into “uncharted territory.”

“It would be an anti-austerity party becoming a government in the most difficult country under a bail-out programme,” the source said, “So we don’t know what to expect.”

Another senior Eurozone official, though, appeared more sanguine and said that Syriza’s leader, Alexis Tsipras “has been showing a more pro-European face the past few months.”

“He met with officials in Brussels, in Germany even the ECB President. The question is whether he can control his own party when the time comes” the official said.

Syriza is currently leading in opinion polls by about 6.5 points against Samaras’s New Democracy party.

Asked whether the EU, which has extended Greece’s EU funding programme until the end of February, would give another extension in the case of early national elections, the first source said, “there’s always an alternative plan.”

“Discussions are taking place at a top level. Despite the holidays, all eyes are on Greece” he said.

The high ranking Eurozone official also said that the creditors’ stance would be determined by the election result. He hinted that, if necessary, a second extension could be granted to Greece if Samaras is re-elected, because “the current government has already committed in writing” to further steps.

In the event that Syriza manages to form a coalition government, the source said that “hardliners within Europe and the IMF would want to avoid giving further extensions in an effort to exercise pressure and keep the deadlines.”

“But let’s wait and see,” the source added.

According to a document prepared by the European Commission, the IMF and the ECB and seen by EI, Greece must, by the end of February, adopt further measures in order to fill the 2015 fiscal gap, proceed with changes in the insurance sector to bring further reductions in wages and pensions, completely revamp the foreclosure/bankruptcy law, further liberalize the labor market allowing group lay-offs and speed up privatizations.

According to the document, the Greek government has already signed its consent to the measures (it has the finance minister Gikas Hardouvelis’s signature on it), despite the fact that Samaras has repeatedly vowed to free the country of austerity. In the event of Syriza gaining power, its leader, Tsipras, says he will not adopt any of the measures.

The first high ranking Eurozone source insisted, however, that “these measures will be implemented. They are not negotiable.”

In Tuesday’s ballot, Dimas increased his votes to 168 from 160. But he still needs 12 more votes to get elected in the third poll on December 29, when a majority of 180 out of the 300 votes is required.

Among the 168 “yes” votes were two former members of the ultra-nationalist party, Golden Dawn, who were persecuted by the government and are now in jail. They were allowed to temporarily exit jail and vote.  

A senior government official told EI: “I wouldn’t exclude that more independent or undecided lawmakers support Dimas in the final vote, if they get something.”

Asked to elaborate what that “something” meant, the official said that Samaras could give “more incentives” but he did not elaborate.

Mathematically though, Samaras must find a way to break the cohesion of one of the smaller parties in order to get the necessary majority as he cannot solely depend on the 24 independent lawmakers, some of which remain firmly opposed to Dimas.

So far, members of the Democratic Left and Independent Greeks, a right wing party, have maintained their anti-coalition line. But the government hopes some members can divert at the last minute if they are included in a new Cabinet after a reshuffle.

Samaras has already made concessions in an effort to gain more votes for Dimas, saying he will call early national elections at the end of 2015 and make changes in the constitution.

After the second vote, he again appealed to lawmakers saying that rejecting Dimas would place Greece in danger.

“At the third ballot, there won't be a 'present' vote. Each lawmaker will be called to put their names on a 'yes' or a 'no' vote and will be responsible for the consequences of their vote and for Greece's stability," Samaras said.

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