The Greek electoral impasse moved into a new chapter yesterday. As expected, Syriza the far left grouping which wants to tear up the EU/IMF bailout accords and their attendant biting austerity measures; has failed to form a new government. The baton is now passed to Pasok to see if they can pull a rabbit out of the hat. Should this not be possible then a fresh election will need to be held.
Undoubtedly, the Greek people feel that the crisis is not of their making and are resentful that the brunt of the austerity measures should fall on them. However, Greeks are notoriously keen to avoid paying income tax and so the populace is to blame, in part at least, for the deficit by denying the exchequer revenue from a substantial proportion of working Greeks.
Given that a major section of the elected politicians in Greece are now calling for reform to existing and binding international agreements which the Greeks themselves asked for to get them out of a hole of their own making, it is unsurprising to learn that the EC is withholding €1 billion of the next tranche of funding. The move may just provide a wake-up call to the Greek politicians and the populace at large that tearing up international agreements and burying one’s head in the sand is no solution to long-standing, complex financial problems. The Greeks will be receiving the lion’s share of the current tranche of funding some €4.2 billion, so financial collapse is not likely to be an immediate problem. According to the original timetable, the Greeks were due to receive €39.4 billion of the €110 billion second bailout fund by the end of June.
Pasok will have three days to assemble a coalition of national unity to lead Greece forward. If this cannot be agreed, then fresh elections will be called, but it is far from certain that a different outcome would ensue since the anger of the people will not have been assuaged and financial Armageddon will still threaten the land.