Greek Elections 2012: The End of the Beginning for Europe's Economic Crisis

Two years ago, I stood outside a firebombed bank, microphone in hand, in a throng of thousands on Athens’ Stadiou St. in what proved only the beginning of life under austerity. Three employees had died inside, among them a pregnant woman who had passed up a safer, more lucrative life in London for a shot at raising her children with the Greek dream.

The dream died for most Greeks that day. Sunday’s elections will prove yet another reminder that era is gone. Greece’s options range from political gridlock to electoral anarchy.  At either end of the spectrum, the country’s creditors rattle their coffers with more punishment instead of pursuing an agenda that would legitimate the government- any government.

The Greek political system has fragmented past the point of repair as the two party system that has reigned since 1974 implodes into a supernova, as my mentor John Psaropoulos put it. Almost a dozen parties have a legitimate chance of securing enough of a percentage for seats in parliament (3% needed). More than half of them can agree on one thing: they hate internationally imposed austerity. 

They have sympathy among voters. Turnout could reach an all-time low between no-shows, blank and torn-up ballots. Unemployment is above 20%. Two years of wage cuts and tax increases have turned Greeks into the working poor of the original EU countries. A sort of serfdom has emerged for thousands of Greeks who go to work every day even though they haven’t been paid in months. Those workers who are owed money from government contracts shouldn’t hold their breath. Justice is hard to come by. Greece’s lack of governance is part of daily life, not just another frustration for the country’s Troika of creditors (European Union, European Central Bank and the International Monetary Fund). 

After years of suffering bruising austerity, voters seem intent on “punishing” their politicians. Who can blame Greeks for feeling their lives ruined for the sake of investors abroad? If this is what life looks like under austerity, what would default and a euro zone exit look like? Euro or drachma, it matters little if you have neither in your pocket.

Analysts have coalesced around the (wishful) idea of the two major parties – socialist PASOK and sort-of conservative, sort-of neo-liberal New Democracy – unifying into a coalition government, not unlike the current interim government under technocrat Lucas Papademos … except without Papademos. Not likely to happen. Those two parties combined are polling in the mid-30s. It’s complicated, but essentially they would need to cross 40% to form a government. More than likely, they will need a third party to join. Nationalist LAOS will not likely oblige after sipping the poisoned chalice in the Papademos government. 

The other “third parties” are angry as hell thanks to a Pandora’s box the two major parties opened. Many of the little parties are headed by ousted operatives of the two big parties who were purged for supporting or not supporting the various bailout agreements over the last two years. 

Greeks have proven “responsible” in the past and beaten the polls to avoid chaos as recently as 2009. They even elected an unholy union of conservatives and communists in 1990. Eventually one of the major parties regains a foothold and the seesaw began anew. But not since the restoration of Democracy in 1974 have Greeks felt so hopeless for so long.

So what is the alternative?

These elections could fail to produce a government. Another round of elections would be called, then another and another until game theory kicks in and enough parties decide to collaborate. How long that would take, how much it would damage the ‘reform agenda’ and how the markets would respond are purely speculation at this point.

Europeans have, in their perpetual short sight, threatened the Greeks with consequences if electoral anarchy ensues. From Berlin … er Brussels' … perspective, the next government needs to implement a host of items agreed during the outgoing six-month government. If such statements are for public consumption, fair enough. Behind the scenes though, European leaders should make sure Greece stays funded and out of the headlines. The theater of” will they or won’t they” release tranches of funds contributes to Greeks’ feeling the country has completely lost control of its destiny and the markets’ suspicion that the euro zone will mismanage itself into oblivion.

To paraphrase Churchill, Sunday’s elections are not the beginning of the end of Greece’s crisis. None of the candidates, none of the parties have the solutions. So these polls might be the end of the beginning and the start of a new chapter in the austerity passion play.

Might.