Hard times ahead for new Greek government

The new government in Greece started its new life with two patients: the prime minister and the economy minister. Prime Minister Antonis Samaras was taken ill and underwent an emergency eye operation for a detached retina, while Economy Minister Vassilis Rapanos was hospitalized for unspecified abdominal pains and a high fever. Samaras was expected to be released from hospital today, but he will miss the important Eurogroup Summit this week. Rapanos – who has still not been officially sworn in – was still in hospital. The “evil eye” was a popular explanation for this mysterious double malady, yet a more pragmatic approach would detect realistic causes to the impaired health of the new Greek prime minister and the occupant of the next hottest seat in the government, that of the economy minister: high anxiety!

Samaras’ sudden illness and his most important minister’s health problems must have created a certain degree of anxiety also among the inspectors of the “troika” who were expected to arrive in Athens today for their first meeting with the new government. They were said to be waiting eagerly to hear from the Greek medical doctors whether there was a need to postpone their trip to Athens.
 After an almost two-month break for two rounds of general elections, a pro-bailout tripartite coalition is now in place, dominated by the center-right party of New Democracy. It has to face a powerful opposition dominated by the radical left movement of Syriza and a society on a course of steady economic deterioration. The “troikans” – the representatives of the EU, ECB and IMF – will now have to have an even harder job to get their message across: that no matter what the politicians promised during their election campaign, Greece has to abide by the painful commitments it agreed to with its creditors in the first place. 

The new Greek government – which is really a government of New Democracy with the support of socialist PASOK and the Democratic Left, but without any of its members in the Cabinet – has an enormous task: It promised to fight for a milder adjustment to the austerity package and hopes to persuade the troika for an extension to the deadline agreed by the George Papandreou government to reduce its budget deficit. Not in 2014 but in 2016. They have promised to prevent further cuts to salaries and pensions and layoffs of public sector employees – the current agreement called for the layoff of 150,000 civil servants by 2015. Also, a written agreement between the three coalition parties calls for the new government to seek to increase minimum wages, help taxpayers in arrears, reduce the VAT, restore collective bargaining and improve unemployment benefits. Will the troikans lend a sympathetic ear to all that? It is doubtful with the exception of perhaps an agreement to an extension of the loan repayment deadline. Eurozone leaders – Angela Merkel most of all – have reminded everybody that Greece will have stick to its commitments. 

This first coalition government in Greece in recent history will meet with the troikans before it gets a vote of confidence in the new Parliament, where it enjoys a majority of 29.

With a dim prospect of persuading the country’s foreign creditors to ease off the misery of the Greeks, the new government may have to struggle to remain in power even as it insists on its long prospects. Its life will depend on what help it gets from Europe and the United States and to what extend Syriza will use its time in opposition to solidify its ideological ground and continue to enjoy credibility among an increasingly skeptical electorate.