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After Elections, Greek Implementation Of Bailout Terms Now Iffy

It will be hard to put a coherent Greek government together, increasing jitters in the Eurozone.
By Amiel Ungar
First Publish: 5/8/2012, 6:25 AM

Anthonis Samaras
Anthonis Samaras
Reuters

Those who claimed that our attention should have been on Greece rather than on France were proven correct.

The cataclysmic elections humbled mighty PASOK,  the Greek Socialist Party, reducing it to third place and giving it and New Democracy --the parties who signed on for austerity - less than thirty-five percent of the vote.

PASOK and New Democracy, the two centrist parties, commanded over eighty percent in the outgoing parliament. This is what gave them the needed legitimacy to impose severe austerity on Greek citizens. That legitimacy is gone.

Therefore, New Democracy's leader Anthonis Samaras, the pyrrhic victor of the elections, is already conditioning coalition agreements on preparedness to renegotiate the terms of the bailout and staying within the Eurozone.The approach to government budgets should be that of a "surgeon and not a butcher," argues Samaras' economic advisor Dimitri Tsmocos.

This concession was not enough to coax the second place Syriza party from the radical left into the government, leaving Greece with a political impasse and creating mass uncertainty in the EU and euro bloc.

The party's leader, Alexis Tsipras, has called his victory a "peaceful revolution" and a defeat of German Chancellor Angela Merkel's fiscal-austerity policy."  He chortled that Greece's two years of repression were over.

It took herculean efforts to hammer out the bailout deal and to reopen it risks all sorts of complications. Additionally, it sends a message to others on the bailout austerity wagon i.e. Ireland and Portugal, as well as countries who have opted for austerity to get their finances in order, that there is no need to resort to drastic measures.  The Irish referendum on the European Stability Pact, that appeared secure a short while ago, may be jeopardized because there is no reason to put on an economic straitjacket if the policy is about to go out the window.

Even if growth is now a buzz word in the European councils, the financial markets and bodies like the IMF are less tolerant. Aware of this threat , the European Commission announced that it "hopes and expects that the future government of Greece will respect the engagement that Greece has entered into." There is a tremendous difference between hopes and expects.

If the EU itself is no longer secure in its policy, why should Greek leaders commit political suicide?