Viewpoint: Greece must avoid new elections

Prof Dimitri Mardas

Greece has entered a very delicate political period. Greeks have expressed their preferences and the onus now is on politicians to respect their choice.

The two big parties of Greek politics, Pasok and New Democracy (ND), have been punished and that issue of punishment is vital to the aftermath of this election.

The voters appear to have decided that they did not fulfil the expectations of both the poor and the middle classes. The two parties did not push for development with a search for growth, nor did they manage the debt.

They did not negotiate properly with the troika (the EU, IMF and ECB) and did not have a team with the strategy or knowledge that could have produced a better deal for Greece.

Athens made mistakes from the start of talks in 2010. The whole tone of negotiations might have been different had Greece appreciated the real anxieties of the EU.

In March this year, a report by the International Institute of Finance concluded that Greece leaving the euro would cost the eurozone 1t euros: in other words that it was too big to fail. If we had had this in our minds in 2010, the terms we secured might have been different, better for Greece.

Arrogance

But just because voters punished Pasok and New Democracy in the first round, that does not mean they would do the same if coalition talks fail and there is a repeat election in June. The left-wing parties cannot guarantee they will have the same support in new polls as they had on Sunday.

Next time, the voters might punish them as well as ND and Pasok - and I believe the second-placed party, Syriza, may have made a presumption about their support based on arrogance.

Syriza too could be punished if they do not seek a compromise. And if the other left-wing parties do not join them, such as the smaller Democratic Left of Fotis Kouvelis, they too could suffer at the ballot box.

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Now for the sake of the economy and Greek democracy it is time to respect the will of voters who cast their ballots in the way they thought appropriate”

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The left-wing parties are unlikely to find a solution by themselves: one of the two big political parties has to be part of the game.

Critical situation

While it may not be a necessity to have either Pasok or ND in government, I believe it cannot be avoided. The two parties' leaders, having felt the anger of the people, will be more rational in the future. In fact all Greek leaders will have to think in another, more thoughtful and strategic way or otherwise they will become history.

The financial situation for Greece is critical. It will have to find 450m euros on 15 May when a euro bond expires. It may not be a significant amount of money but it no payment is forthcoming it could become what is known as a credit event.

Many Greek voters have voted against austerity but want to stay in the euro. And there is no reason why Greece should leave. Indeed leaving would not be a solution.

After all, if the US were faced with a similar situation, there would be no talk of the Americans leaving the dollar as there is no alternative.

Back to the drachma?

For Greece, too, there is only the euro. The drachma is no longer a reality. If we abandoned the euro for the drachma, Greece would devalue its currency. From recent experience of devaluing the drachma, we know that would not help increase our competitiveness as an economy.

Between 1980 and 2000 we had two devaluations. In 1980, the dollar was worth 43 drachmas while in 2000, before euro entry, it was worth 309 drachmas. In that period, Greek exports rose from $5bn to $10bn.

From 2000-2008, when Greek exporters operated in the euro, exports rose from $10bn to $25bn.

The anti-euro parties are under an illusion and have not evaluated what would happen if we left the eurozone.

The solution for Greece is to negotiate in a tougher way with the eurozone and then focus on development on a national and European level. From 2009-11 Greece had the potential of 20bn euros in EU structural funds but used just 5bn of that sum. It was the Greek government that was responsible for not using the money appropriately. Fifteen billion euros was left waiting for Greek proposals or Greek action.

Now for the sake of the economy and Greek democracy it is time to respect the will of voters who cast their ballots in the way they thought appropriate. The political leaders should do their utmost to avoid a repeat election - because if they are unable to find a compromise, Greece could experience an even more painful economic process.

Dimitri Mardas is Associate Professor at the Department of Economics at Aristotle University of Thessaloniki. He was Secretary General of Commerce at the Greek Ministry of Development from 2000-2002

Greek election results graphic

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