No Delphic clarity as Greek vote looms
By Howard Schneider,
DELPHI, GREECE — The ancients came here for guidance, but the moderns are all over the map.
The clerk at the gift shop of the sprawling archaeological complex on the edge of town hopes upstart leftist Alexis Tsipras becomes Greece’s next prime minister, and dismisses fears he will pull Greece from the euro zone. The worker at the coffee shop is for the right-wing Golden Dawn party. At the entrance to the Temple of Apollo, where the old Athenian treasury is as empty as the country’s modern-day version, they haven’t made up their minds.
“The politicians have just taken our money,” said one gate attendant, throwing her hands in the air. “I’ll decide tomorrow.”
Greeks will cast their lot Sunday in a parliamentary election that could determine the country’s future in the euro zone — and potentially the future of the euro zone itself. Now including 17 nations, the European Monetary Union is one of the continent’s main modern-day political projects. There is no precedent or procedure for a country leaving, and the predictions about what might occur in the aftermath range from global financial meltdown to a mild bump on the road to recovery.
The two leading candidates, Antonis Samaras and Tsipras, have told voters that they will keep Greece within the euro. But Tsipras has drawn a hard line regarding the terms of an international bailout needed to keep Greece afloat, raising the risk of a collapse in relations with the country’s lenders and possibly an exit from the currency union.
Samaras, head of the center-right New Democracy party, has struck a more moderate tone, saying he will bargain to slow the budget cuts demanded in return for International Monetary Fund and European help, but pledging to keep the key parts of the bailout program intact and keep Greece in good standing with its creditors.
“It is a scary situation,” said Dmitrios Tsomocos, a New Democracy candidate and economic adviser to Samaras. “We don’t want more money. We don’t want leniency. We want to meet the targets [of the bailout], but we need a chance to do so.”
Sunday’s election is the latest turning point in a more than two-year drama over Greece’s slide into insolvency, an economic low point it has reached after a multiyear recession and a crippling level of government debt. The country has produced Europe’s first-ever sovereign default, gotten private lenders to shoulder more than $100 billion in losses on Greek government bonds, absorbed massive emergency loans from the IMF and other European countries — and is still far behind in financial stability.
Investors and public officials worldwide worry Sunday’s vote may lead to a breaking point between Greece and a world that is, as one investor here put it, “fed up.”
World central banks have been girding for the possible aftershocks of victory by Tsipras and other members of his Syriza coalition, a consortium of left-wing political parties that surprised the world by finishing second, behind New Democracy, in an indecisive parliamentary vote last month. Group of 20 officials meeting in Mexico will also be monitoring the outcome to see if they need to respond with efforts to prop up the world economy.
The effect of Sunday’s vote won’t be immediately known. Whoever finishes first will probably have to build a coalition to reach the 151 parliamentary seats needed to form a majority, a process that could take several days — if it succeeds at all.
If a government is formed, the new prime minister would then promptly open talks with the IMF, the European Commission and the European Central Bank over disbursement of Greece’s next round of bailout loans, as well as some $30 billion needed to replenish the country’s depleted banking system.
Greece’s latest bailout program was finalized only a few weeks ago but is already behind schedule due to the country’s political stalemate — a campaign that occupied much of April, the inconclusive vote last month and the weeks of campaigning since. The country is not only broke at this point but operating without a government, or clarity about its direction.
The IMF has said it will first hold preliminary talks with any incoming Greek prime minister to judge if there is a commitment to put the program back on track. If those talks break down it could set the stage for a dramatic choice by the country’s new leadership: whether to default on the hundreds of billions of dollars the country owes to international bondholders, the IMF, other countries in the European Union, and the ECB.
Such an event might seem inconceivable. Greece’s debts to the ECB, for example, are enough to wipe out the central bank’s capital base and force other euro-zone nations, primarily Germany, to replenish it. Default would almost certainly push Greece from the currency union, and quite likely drive up borrowing costs for an array of countries, including Italy and Spain, that would then need help of their own.
That’s one reason Tsipras and members of his Syriza party say the worst won’t happen. The risks to the rest of Europe will be so great, they argue, that other European leaders will compromise and give Greece a better deal rather than forcing the country to shoulder heavy debt payments and further austerity.
“If one country leaves the euro zone, it is a calamity, it’s the end,” said John Milios, a Syriza candidate and party economic adviser who predicted that borrowing costs for the government of Spain would quickly pass 10 percent — destabilizing the country — if Greece leaves the currency union.
But there are deep concerns about a bad outcome even if no one intends it — the risk of what one government adviser deemed a “mistake.” With world markets on a seeming hair trigger over events in Europe, and politicians not in full control, a breakdown in talks could push events in an unpredictable direction — perhaps even prompting other European nations to push Greece out of the euro to make an example of it.
Public debate, in that environment, has taken on an almost millennial air — that Tsipras will ruin Europe; that Samaras is a pawn of international bankers; that the country is in such a tight corner neither can help it out.
At the National Technical University in Athens, where Tsipras studied engineering 15 years ago, Yiannis Papadimas and Stefanos Samaras — no relation to the candidate — sparred over backgammon and politics one afternoon.
Samaras was worried about social stability and the possible rise of extremist parties, an oblique endorsement of the more centrist New Democracy party. Papadimas said it was time for someone — namely Tsipras — to stand up to German Chancellor Angela Merkel’s demands for Greece to quickly bring its government budget into balance.
But both despair of finding a job in an economy where unemployment is 25 percent, and estimated to be twice that for youths. They spoke of possible jobs in Germany or Australia or Dubai, and relayed the end-of-semester joke that was making the rounds: that they would get their diploma and an unemployment card on the same day.
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