Angry Greek voters headed to the polls on Sunday for an election shrouded in uncertainty that could reignite Europe’s debt crisis and renew doubts about the country’s future in the euro zone. At stake in the first general election since the debt crisis exploded at the end of 2009 is whether Greece sticks to the terms of deeply unpopular EU/IMF bailouts which saved it from bankruptcy but propelled it into a deep, protracted recession.
Opinion polls show voters hit by record unemployment and steep wage cuts will send to parliament an unprecedented number of small parties opposed to the austerity and punish New Democracy and the Socialist PASOK – the two parties who have ruled Greece for decades and the only major ones backing the bailouts.
Polling stations opened at 7 a.m. local time (0400 GMT) across Greece and will close at 12:00 p.m. EDT (1600 GMT), with many voters making up their mind at the last minute.
Many flinched and turned their head away at a polling station in the southern Athens suburb of Ilioupoli when asked if they had voted for one of the big parties. “The big parties’ policies are terrible, people are hungry,” said Panagiotis, a 46-year old truck driver, after casting his vote for the anti-bailout Left Coalition. “I hope all the small parties are strengthened.”
The election could see as many as seven small parties opposed to the bailout enter parliament, raising the possibility that the country which dragged the euro zone into the worst crisis since its creation could veer off the reform track and push the region back into turmoil.
Euro zone paymaster Germany has warned there would be “consequences” to an anti-bailout vote and the EU and IMF insist whoever wins the election must keep implementing tough austerity measures to keep receiving the aid the debt-choked country needs to stay afloat.
Many voters feel, however, that threats about bankruptcy or Greece’s future in Europe if they do not stay the debt-cutting course are not credible. “We are already bankrupt. I don’t think that voting for a small party will make us go bankrupt. We already are,” 53 year-old Panagiotis, a craftsman said after voting for the conservative rebels Independent Greeks.
TOO CLOSE TO CALL
Pollsters say this is the most unpredictable election in decades, as the traditional left-right divide has given way to pro- or anti-bailout lines. “All our tools are based on a society that does not exist any more,” said Costas Panagopoulos, at ALCO pollsters. “We cannot exclude any scenario.”
The election is too close to call. The anti-bailout parties are too divided to rule and it is not clear whether New Democracy and PASOK will scrape just enough votes together to renew a fractious coalition they set up in November to clinch a second bailout worth 130 billion euros.
Even if they do manage to gather enough support to stay in power, their marriage of convenience could well be too weak to weather public anger for long. “The risk is high that after the elections, no stable coalition can be formed which would be willing to implement the next budget cuts and reforms,” Berenberg Bank said in a note.
“The risk is also high that Europe will then cut the financing if Greece fails to fulfill the conditions, or if the continued depression leads to further fiscal slippage. In that event, Greece would probably have to exit the euro.” The acid test will come fast: the new government must next month come up with over 11 billion euros in extra spending cuts for 2013 and 2014 to keep getting bailout aid, and get the plan approved by parliament.
With an economy which has already narrowed its budget deficit from 15.6 percent of GDP in 2009 to 9.1 last year and is forecast to shrink by another five percent in 2012, that will be a tough task given a parliament that could feature as many as seven small parties opposed to the bailout, including the extreme-right Golden Dawn.
The first indication of the result is expected from about 1830 GMT but it could take many more hours to get the final outcome or even a clear picture under a complex electoral system that gives a 50-seat bonus to the first party.
If no party wins outright, as is expected, the president will give the biggest group – expected to be New Democracy – three days to form a government. If it fails, the next largest party gets a chance and so on down the line. If they all fail, new elections would be called in about 20-25 days.
The Greek ballot could well steal the limelight from the likely election on the same day of a Socialist to lead France as president for the first time in 24 years. “The wild card is Greece, and markets are starting to get nervous about it,” said Sassan Ghahramani, CEO of New York-based hedge fund advisers SGH Macro. “We could see peripheral bonds and the euro pressured on Monday.”