Europe

It’s a Win for Syriza, but is it a Win for Greece?

Greek Election Update

It’s 2am in Athens and results are still coming in. It is clear that Syriza has won a historic victory, but it is, as yet, unclear whether it will achieve an outright majority. The nation that invented drama has not disappointed: estimates put Syriza on 149-151 seats, with 151 seats required for an outright majority. This is going down to the wire.

The unequivocal success of Alexis Tsipras’ party at the polls suggests that, even if he falls one or two seats short of an outright victory, he is likely to go down the coalition route, rather than opting not to do so with the aim of securing an outright majority at a second election. A further factor here is the likelihood that far-right Golden Dawn will be the third placed party – extraordinary not least due to the fact that a number of senior members of this party (including party leader, Michaloliakos) are currently residing in prison. The mechanical process whereby the second and third placed parties are asked to form a coalition if the winning party either cannot, or will not do so, is an eventuality that the Greek political establishment will wish to avoid. This suggests that Syriza will choose to enter into a coalition and that potential coalition partners will be more amenable. After all, Tsipras – given the size of the Syriza vote – has his choice of partners, and the rhetoric has been noticeably toned down by party representatives today, suggesting this is indeed the strategy, as well as making it easier for potential partners to enter into discussions. If he fails to achieve a parliamentary majority, Tsipras will have three days to try to form a coalition. The odds have to be that he will do so. So it looks almost certain that a new government will be formed this time around with Syriza in the driving seat.  Continue reading

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Europe

Grexit Polls

Greek Election: Update

The day of reckoning rapidly approaches: on Sunday 25th January the Greek electorate will decide on which party will lead the country at this critical juncture in its history. On the one hand we have an incumbent government that is widely seen as ineffective and prone to corruption, on the other a seemingly promising alternative offered by a young and charismatic politician in the figure of Tsipras. The majority desire some sort of change in terms of domestic politics, but there is a widespread mistrust of the possible implications of Syriza’s policy on seeking to renegotiate the terms of the bailout agreement with Greece’s Troika of lenders. On a similar note, the majority of Greeks wish to remain in the Euro, but there is widespread anger at austerity, especially given the perception that the burden is not being shared in an equitable manner. Tsipras has skilfully exploited these conflicting desires and his populist message promises less austerity, more growth and a material reduction in the national debt thanks to debt forgiveness on the part of Greece’s creditors (not to mention his promise to root out and punish those who have abused their position by putting their own self-interest before the public good). For detached observers, Tsipras’ promise to remain within the Euro whilst also achieving a material reduction in the debt burden simply does not stack up and, were Tsipras to become Prime Minister, a showdown with the Troika and an increased probability of a tail end event coming to pass looks to be inevitable. Matters are exacerbated by the sort of simplistic game theory which is part and parcel of at least the unofficial debate, which runs along the lines of Greece being too systemically significant to be allowed to exit. This sort of talk feeds into Tsipras’ belief that he can push the Troika into making material concessions. Continue reading

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Europe

Grexit or Grin?

Greek Elections: Is it Time to Buy or Sell Greek Stocks?

So the Greeks failed to elect a President, triggering a mandatory general election which is to take place on January 25th 2015. Where now?

To begin. Published polls are pretty unanimous in pointing to a Syriza win, albeit with a fairly tight margin. However, in order for Syriza to form a majority government, they need to get a minimum of 37% of the vote – this would give Syriza a parliamentary majority thanks to the automatic award of 50 seats that is given to the first placed party in the polls (technically 40% is required, equivalent to 101 seats out of the available 250 seats that are decided on the basis of proportional representation; however, this tends to be lower, depending on the % of the vote given to parties that don’t achieve representation – i.e., get <3% of the vote). So one scenario is that Syiza wins, but takes < the required 37% of the vote; in this instance, it could not form a parliamentary majority and would have to seek coalition partners. Continue reading

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