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Four tough months for the Greek government

19 October 2014 / 18:10:46  GRReporter
1881 reads

At a time when Greece is moving along a thin line between survival and demise as the market crisis early last week has shown, and when political confrontation has peaked, Samaras has to tackle the negotiations on these two issues, with both the economy’s pace and the environment for presidential elections depending on them.

The government is facing four difficult months of a new round of negotiations with the troika and backstage discussions with the partners on the post-Memorandum era.

However, the country's starting position is now weaker compared to two months ago. What makes these negotiations tough and uncertain is the hasty announcement of the strategy for full exit from the Memorandum, and most of all the emergence of the ‘Greek political risk’, stemming from the prospect of the current Parliament contesting the election of president and SYRIZA openly vowing it will strive for deletion of a large part of the country's sovereign debt and will not recognise any agreement between the government and the partners. Until the presidential election by Parliament, the government might achieve a majority on its choice for a candidate, but the reverse might happen as well, with political developments shunted into a more turbulent course.

The government has substantial reason to believe that the tough equation it is facing could be solved. The supporting gestures coming from the European Commission through Jyrki Katainen, from the European Central Bank through Mario Draghi, and from Berlin through Wolfgang Schäuble, might well underpin its hopes.

Samaras’ goal is to achieve a formula of exiting the memorandum in such a way as to ensure:

  • upturning the existing political trends, given SYRIZA’s consolidating lead in current polls;
  • setting up such a framework of negotiations with the Troika as will not lead to further popularity slippage of government partners and be fit for adoption by their parliamentary majority;
  • building up a strong alternative, which will influence the setting for the election of a president; if not achieved, the dilemma will fall into the hands of voters in the parliamentary elections that will follow.

Negotiating with the Troika

Antonis Samaras and his coalition partner Evangelos Venizelos are unanimous that negotiations with the Troika are the first big hurdle to be overcome. As far as the government, and specifically the finance minister, Gikas Hardouvelis, is concerned, the creditors’ representatives appreciate the current situation in Athens and will not demand measures to test the government's strength as some critical reforms could be carried over to the agreement package to be implemented after the current programme expires by the end of this year.

Yet it is also clear that the forthcoming negotiations won't be successful unless Athens makes concessions on some issues, e.g. the new law on trade unions or the salaries of civil servants. Samaras is willing to set the negotiations agenda whereas PASOK's chairman is more cautious.

Some even see prospects for bickering within the government, which might precipitate events and result in a split in the governing coalition or the triggering of earlier presidential elections.

In parallel with that, it is critical for Samaras and Venizelos to cope well with the ‘big negotiations’ on Greece’s leaving the memorandum and its sovereign debt. These will be key for the outcome of the presidential election process as well as for eventual early parliamentary elections. It is known that Greece is negotiating towards replacing the memorandum with a framework of commitments with lighter controls and without a new loan. But a crisis-prevention credit line will still be established to facilitate the country's coming out on the financial markets.

Government circles seem to share the view that this agreement will have to be concluded prior to presidential elections, so that Samaras might be able to claim he was the one who took the country out of the memorandum whereas SYRIZA – with their ideas for debt cancellation and their economic programme – will put Greece back under the thumb of creditors.

PASOK headquarters seem to believe the agreement must be drawn up and presented to MPs and constituencies without being signed by the government. If Parliament fails to elect a president, the agreement might be used as a trump at subsequent parliamentary elections.

Tags: Antonis Samaras Evangelos Venizelos negotiations memorandum Greek debt
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