Early elections will be held in Greece by October 2016, Balkanalysis.com can predict. This is due to factors such as the sustained economic downturn, multiple private sector defaults, rising security issues, political tensions and some high-profile recent meetings between powerful foreign financial interests and domestic politicians.
The Greek general elections should be normally held in September 2019, but credible sources analyzing the present trends in Athens support our view that Syriza leader and prime minister Alexis Tsipras will call early elections, to prevent a further worsening of his party’s dropping approval ratings, and to defer difficult decisions for others.
Controversial Moves from the Tsipras Administration Hit Citizens Hard
The Greek government needs money and assets, and its increasingly aggressive means of achieving these goals is striking a heavy blow against ordinary citizens- not to mention contradicting the social- and economic-justice platform that the ruling government’s voters support.
Between January and June 2016, more than 600,000 persons saw the tax service confiscate bank savings – depending on amounts owed to the state plus monthly penalty interest rates – with an additional number of citizens expected to be affected by the end of 2016.
Concurrently, some 10,000 real estate plots were confiscated by the tax service, with an additional 30,000 expected to be taken over. This has happened while 60,000 housing units and businesses saw their electricity connection cut off, with possibly more than 300,000 people affected.
At the same time, however, the public sector has seen pay rises for particular categories of civil servants- even though the inefficiency that has chronically characterized most of the ministerial apparatus has only been growing. As a result, we are seeing an increase in mainstream Greek public disaffection and anger against a perceived “conspiracy” of Syriza to keep all state sector benefits and to turn against the private sector.
Potential Defaults, Debt Accumulation and a Politically Crippling Bail-in Recapitalization
Furthermore, large Greek private companies are defaulting or are about to default, informed sources attest.
The Marinopoulos chain is the largest supermarket chain in the country, with 13,000 employees and 40,000 suppliers’ jobs at stake. New information indicates that the company is on the verge of total collapse. If this happens, it will cost Greek banks 750 million euros in outstanding loans, and around 1 billion euros in suppliers’ debts. It should be noted that since Syriza came to power, the prices of average grocery items have also been rising in general, despite the poor economy.
Similarly, the energy-sector major, Mamidakis Jet Oil, is bursting at the seams, with 350 million euro loans and 100 million euro debts to the Greek ELPE refinery group.
Other companies in imminent danger include Chalyvourgiki (once Greece’s largest steel producer), the Elfsina shipyard, ELVO (Hellenic Vehicles Industry), and the EuroMedical private clinics chain. In total, due to potential company defaults, there are seven billion euros in bank loans that could blow up in the coming 10 weeks; the defaults and company crashes would mean additional 100,000 jobs lost.
As a result, a new recapitalization of the Greek banking system would be needed. That will only be accomplished by a bail-in of citizen’s deposits. No government would be able to withstand the public outcry that this would cause.
In addition, the lenders have obliged the Greek government to accept not only a de facto control of the banking system but also a de jure one, culminating with the consequent appointment of foreign board members in all Greek systemic banks. As the Financial Times recently reported this is part of the 2015 agreement with Greece’s lenders, a fact that nullifies Greek state control over the economy, and ensured the failure of Syriza to enact a “Socialist” implementation of its rhetoric.
Criminality on the Rise amidst Economic Torpor
Crime rates are steadily increasing too. In June 2016, a network of 150 Georgian thieves was rolled up; this group had conducted “raids” on private houses, using highly sophisticated burglary methods. In this way, they stole hundreds of thousands of euros per month.
At the same time, the Attika anti-drug directorate (which covers Athens and its periphery) currently arrests more than 10 people daily on narcotics charges, while pick-pocketing is becoming a major headache for police- not only in major urban centers, but even in the countryside.
At the same time the approximately 60,000 “trapped” refugees inside Greece will only tend to increase once Erdogan decides to open the flow once again, as Balkanalysis.com has predicted. The degree of organized crime based on the illegal migration trade includes long-established local networks, as Balkanalysis.com has reported in the past.
On top of the above, urban extremism is on the rise. The Greek postal service has decided to close down its Exarcheia outlet, due to “vandalism” in the traditionally anarchist-friendly neighborhood. Meanwhile, anarchist groups have even made trips from the city to Athens International Airport, just to blockade the Israeli El Al company’s check-in counters as a form of political protest.
At the same time, other attacks, including arson, are being observed on public transport. Security services are also anxiously focused on new far-left terrorist groups emerging, as they have seen a considerable increase in recruitment of radicalized urban youth recently. Again, the continuing poor state of the economy and high unemployment seems to be feeding this trend.
Volatility, Leaks and Bets on Early Elections
Analysts on the Athens stock market, as well as foreign diplomatic representations in Greece, are already drafting memos predicting a 70% chance for early elections in September-October 2016.
The former premier, Kostas Karamanlis of the conservative NeaDimokratia (now in opposition) is said to have expressed the same view in early July 2016. His thoughts were carefully “leaked” to the local press.
In the same period, the notorious Yannis Varoufakis, the Syriza government’s flamboyant original finance minister, was once again implicated in a plot by the Greek press. Varoufakis has been accused of seeking, back in mid-2015, to stage a sort of “coup d’etat” that would have invoked martial law. This plot was meant to ensure the swift entrance of a national currency (the drachma), once negotiations with the creditors collapsed.
This plot was mentioned by an American academic, James K. Galbraith, in his recent book Welcome to the Poisoned Chalice. Greek judicial sources now comment that these revelations, along with similar ones made by Yannis Stournaras in 2015 concerning the background of Varoufakis’s negotiations then may eventually lead to court proceedings against many people allegedly involved. It remains to be seen.
It is worth noting, in this context, that since early 2015 (the time when Syriza first came to power) there have been constant crises and claimed coups across the Balkans, with most of them being associated with billionaire hedge fund manager George Soros. Many consider Varoufakis one of Soros’ financial protégés, though the Greek public was not really considering Varoufakis’ background until after he suddenly left the government last summer.
Brexit and the Concerns of Greece’s Creditors
The still-uncertain Brexit outcome coincides with developments in Greece, and is making Greece’s creditors even more conservative. Obviously, the Brexit vote will have a huge impact on all of Europe’s economic policies and activities, but considering that bailed-out Greece is considered a ‘special case,’ we can expect to feel the first aftershocks of the vote here.
Therefore, due to one shock (the actual Brexit vote itself), the EU is concerned to avoid any more surprises. So, whether or not it will ever prove successful, the policy of austerity towards the Tsipras government will continue. The bottom line is that creditors fear a total loss of control over Greece’s line-of-credit program. Thus Athens can expect no leniency in the coming months. Italy’s brewing banking crisis is an added negative factor for Athens in this regard.
Kyriakos Mitsotakis, Meet the Bilderbergers
The main opposition party leader, Kyriakos Mitsotakis, was recently invited to the 9-12 June 2016 Bilderberg group’s meeting in Dresden. The annual meetings of this secretive informal body of Western power-brokers inevitably inspire protests and conspiracy theories. The Greek media and public were thus highly interested to know more about why the elite group had invited the opposition politician this year. (The two other Greek participants at Bilderberg this year were George Logothetis, CEO of Libra Group, and Dimitri Papalexopoulos, CEO of Titan Cement).
In any case, it is surely not accidental that soon after the event the new ND president participated in high-level meetings with London market-makers (PIMCO, Blackrock, KKR, Blackstone, Paulson & Co, Soros Capital). Mitsotakis had already met German Chancellor Merkel weeks before, as well as ECB strongman Mario Draghi in Frankfurt.
It is more than obvious that in meeting Mitsotakis, the creditors’ representatives and those having a stake in the Greek debt crisis chose someone they assume will be leading the country in the near term. Balkanalysis.com expects a meeting between the IMF head and Mitsotakis to be announced, followed by rapid political developments in Athens. This will likely lead to new elections as the Tsipras government continues to lose popularity.
Dynastic Rule To Return in 2016
Last but not least, Mitsotakis is not only a prime minister in-waiting, but also the heir of perhaps the most important Greek political family in modern history. His sister, Dora Bakoyannis is an MP, former minister of foreign affairs, and former mayor of Athens. Kyriakos’ father was the premier of Greece between 1990-1993, and an MP from 1946-2000; further back, his grandfather was the leading political figure from Crete, even before the island’s unification with Greece.
Further, Mitsotakis is also related with another Cretan family, the Venizelos dynasty spawned by Eleftherios Venizelos, the most important figure in recent Greek history. The Nea Dimokratis leader is related as well to dozens of others influential political and business families, mostly descended from Crete.
It is worth mentioning that all of the globally well-known Greek political dynasties (Mitsotakis, Papandreou, Samaras/Benakis) are offshoots either literally or politically of the Venizelos family and parties that have ruled Greece since the early 20th century.
The Venizelos family itself descends from an ancient clan in the Peloponnesian region of Laconia (Mystras), which fled to Western Crete in the 18th century. Thus it is safe to conclude (along with lots of other research of a similar nature) that the so-called Greek political elite was formed even before the establishment of the modern Greek state. Furthermore the vast majority of that elite descend from the Southern Peloponnese and Western Crete. These two regions experienced frequent exchanges of populations between them for centuries, and in geography and temperament always proved the most formidable challenge to the Turks. A safe prediction is that this dynastic control will continue for the foreseeable future, to the relief of foreigners with a financial stake in the country.
Political Parties and their Likely Positions
The smaller parties are also taking their seats for the show. To Potami, which emerged as a centrist ‘third way’ in time for 2014 European Parliament elections, is gradually losing hope of re-entering the Greek parliament, and the majority of its members are opting for collaboration with the long-established ND.
Meanwhile, the similarly established PASOK, which had been left for dead following the rise of Syriza, is actually faring better, and will definitely seek an autonomous role. We predict that it is 99% certain that in case ND needs a coalition partner , PASOK will gladly accept the role of the junior partner.
Additionally, Enosi Kentroon (Union of Centrists) has already expressed its desire for a coalition government. While the party had not cracked the 3 percent threshold for participation in parliament in the January 2015 elections, it gained nine seats in the September 2015 election, its biggest recent success. This result was a symptom of public frustration both with the establishment parties and perceived Syriza incompetence.
The leftist parties such as the Communists, plus the Syriza splinter ones, LAE and Plefsi are in serious opposition with Tsipras himself viewing him as a traitor to the “cause.” And, despite his controversial qualities, Varoufakis still has an X factor among some disenchanted voters, and he will definitely play a role in some form, most probably as a commentator who will provide “revelations.”
In such a case, Syriza cannot expect support from these previously vital allies. ANEL, the conservative junior partner in Syriza’s current government, is unlikely to surpass the 3% threshold again, as it only narrowly managed to do so back in September 2015.
The remaining party to be surely represented in the next parliament, the fascist-leaning Golden Dawn, remains an outcast, following a lonely “anti-system “path. Thus it is not a real part of the equation.
Conclusion: Fall 2016 Elections Are Probable
We expect the Syriza administration will opt for the best solution, regarding its own political survival. The solution which leaders perceive is to have elections early enough to guarantee that even if it loses, it will still have a strong presence in the parliament, and will oblige its successor (i.e., ND) to implement all of the harsh laws that it itself is now delaying. Thus it will continue to ensure that others pay the price.
Otherwise, if elections are deferred past fall, the winter 2016-2017 will see a complete collapse of Syriza’s remaining popularity. In that case, a later election would result in a total victory for ND, and turn the tables in the established political game. This would probably lead to the disintegration of Syriza, which in any case is just a combination of various diverse leftist factions. We thus predict that there is a 75% chance of early elections before November 2016- and that those with a financial stake in Greece are betting on Kyriakos Mitsotakis and his establishment Nea Dimokratia to win them.
Originaly posted in Balkanalysis, 7th July 2016 (