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Fading Support for Greek Leader Puts Emergency Bailout at Risk

Greek Prime Minister is fading in the polls ahead of a Sept. 20 election. If he loses, it could be hard for Athens to implement austerity he promised in exchange for a third bailout.

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Greece’s conservative New Democracy party has overtaken former Prime Minister Alexis Tsipras in pre-election polls for the first time, raising new questions about whether Greek voters will elect a government that can deliver the austerity measures Athens agreed to in exchange for a desperately-needed financial lifeline.

Tsipras triggered new elections on Aug. 20, when he resigned after securing an 86 billion euro, or $96 billion, bailout from his eurozone partners. A new survey by Greek pollsters GPO, released Wednesday, indicates Tsipras’s leftist Syriza party would win 25 percent of the votes, while the pro-bailout New Democracy party would take home 25.3 percent. Tsipras’s support is being undermined by support for Popular Unity, a breakaway party formed by Syriza rebels who don’t want to accept the harsh austerity measures — including tax increases, pension reforms, and spending cuts — required under the deal.

According to a separate tally from the Greek market research firm Alco, also released Wednesday, the former members of Tsipras’s party have siphoned off 3.9 percent of the electorate. The Alco data shows Tsipras leading his conservative rival, Evangelos Meimarakis, by just 0.4 points. In a poll released Sunday, that lead was 1.5 percent.

The conservative surge adds new drama to elections that Tsipras hoped to use to shut down the far-left, anti-bailout elements of the Greek government he once led. By resigning, he essentially called a referendum on his handling of months of tense negotiations between Greece and its creditors — the European Central Bank, the International Monetary Fund, the European Commission, and the emergency loan-making European Stability Mechanism — that led to Athens’s third bailout in five years. Ahead of a crucial Sept. 20 election, the polls show support for the former prime minister is waning as Greek voters decide whether to force Syriza into the minority, giving the party the freedom to push back against the austerity package it urged Greek voters to reject in a July referendum.

Mujtaba Rahman, head of the Eurasia Group’s European practice, put the chances of Syriza winning enough seats to form a pro-bailout coalition at 70 percent. Still, he acknowledged the growing tide against Tsipras.

If Tsipras is defeated by New Democracy, and the conservatives form a coalition with other Greek political parties, “it will be harder for the government to implement reforms, as Syriza once again assumes a narrative of economic populism despite being the ones who signed up to the third bailout,” Rahman wrote in a Tuesday note. It would “spell more trouble for implementation of the bailout.”

If things stay as they are now, no one party would have enough votes to have a majority in Greek parliament. Continued political skirmishing, in turn, would put the future of the bailout at risk. The IMF said it would only participate in the three-year rescue package if Greece starts implementing austerity; it’s set to review Athens’s progress in October.

“The outcome is, at best, likely to be another patched-up coalition government that will soon struggle to deliver on governance and stability,” Wolfango Piccoli, managing director at Teneo Intelligence, said in a research note circulated Tuesday. “In the worst-case scenario, an inconclusive outcome could force the country to undergo another election before year-end.”

Without IMF participation, Germany’s role in the program — it’s the biggest contributor to the bailouts — could be at stake. Lawmakers in Berlin approved the rescue package after German Chancellor Angela Merkel pledged the IMF would get on board in October. The IMF wants Greece to received formal debt relief, but Germany argues that would violate EU treaties.

Photo Credit: Louisa Gouliamaki/Getty Images

David Francis was a senior reporter for Foreign Policy, where he covered international finance. @davidcfrancis

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