Greece’s conservative New Democracy party regained power with a sweeping general election victory on July 7. The party won 39.8 per cent of the vote and 158 seats in the 300-member parliament, giving it the free hand to deliver needed institutional and economic reforms.
Syriza, the leftwing party of charismatic Alexis Tsipras, took 31.5 per cent of the vote and gained 86 seats. Former finance minister Yanis Varoufakis’s MeRA25, the Greek wing of his pan-European movement DiEM25, won 3.4 per cent of the vote. The neo-Nazi Golden Dawn, previously Greece’s third largest party, has been voted out of parliament as it failed to reach the 3 per cent parliamentary threshold. The results broadly confirmed pre-election polls.
Mr Tsipras warned during the election campaign that the conservative party would cut social benefits and sell state-owned assets, but those warnings were dismissed by voters.
Mr Tsipras came to power on an anti-austerity platform in 2015. In July 2015 a referendum rejected the terms of a bailout proposed by the “troika” of international lenders by a margin of 61 per cent to 39 per cent. The Tsipras government, however, accepted even harsher terms from its creditors than those the referendum had rejected, which squeezed middle-class incomes. Greece emerged from a third international bailout last year.
Mr Tsipras gambled by calling a snap election almost four months before his government’s term was due to expire after the Syriza party finished 9 percentage points behind the New Democracy at the European Parliament elections in May.
Greece’s national output shrank by one-quarter during the crisis. Unemployment is stuck at about 18 per cent, the highest in the eurozone, despite mass emigration. The economy is growing more slowly than forecast. A banking sector is burdened under the weight of non-performing loans, hindering them from helping the economy to grow.
Greece has one of the largest debt burdens in the world, at about 180 per cent of gross domestic product, with official creditors holding 76 per cent of central government debt (Greece’s debts, however, are long-dated). Borrowing costs are at record lows, partly thanks to rising hopes of a renewed bond-buying programme from the European Central Bank in a bid to boost growth across the bloc and send inflation nearer to its target of close to but less than 2 per cent. That is in stark contrast to the rates Greece paid at the height of the eurozone crisis, when ten-year bond yields reached 40 per cent.
Kyriakos Mitsotakis, the son of a former centrist prime minister, was sworn in as Greece’s new prime minister on July 8. He wants to renegotiate Greece’s commitment to maintaining an annual primary budget surplus, before debt-servicing payments, of 3.5 per cent of gross domestic product until 2022 as – he argues – this commitment strangles the nation’s growth prospects. He also plans to cut taxes, reduce bureaucracy and increase foreign investment, including a revival of a €8bn investment project to redevelop the coastal site of the former Athens international airport.
Photo: European People’s Party
