Changing of the guard in Greece

MADRID: Voters in Greece head to the polls Sunday in their sixth general election in a decade to elect a new parliament.

While the vote wasn’t due until October, Prime Minister Alexis Tsipras decided to call the vote early after his ruling Syriza party suffered heavily in elections to the European parliament at the end of May.

It’s a decision he may be regretting, given that opinion polls across the nation of 10.7 million put the centre-right New Democracy (ND) party, led by Kyriakos Mitsotakis, is running roughly 10 percentage points ahead in the race to fill the 300 seats in the Hellenic parliament. ND also swept regional elections then, putting more pressure on Tsipras to call the election earlier than scheduled. Here’s some things to ponder on Sunday’s election:

Don’t Greeks vote a lot?

Yes, they did — they had a string of four general elections over the course of five years, but the current coalition government had been relatively stable. Syriza was first elected in January 2015 and formed a coalition government with the far right populist party ANEL. That coalition was based on an anti-austerity programme and rhetoric. After six months of intense negotiations with Greece’s lenders and a referendum held in July that year, the government signed a third bailout programme. And the country went back to the polls in September to decide whether Syriza or ND was best placed to implement the austerity measures mandated by the Greek creditors.

So, the last election was September 2015?

Yes. Syrza won and again formed a government with ANEL. This coalition lasted until January 2019 when ANEL quit the government due to their opposition to the Prespa Agreement.

What’s the Prespa Agreement?

It’s the deal signed between Greece and North Macedonia (then the Former Yugoslav Republic of Macedonia or FYROM) on the future name of Greece’s neighbour. The deal was heavily criticised in Greece, particularly in the northern region of Macedonia. ND, under Mitsotakis, also strongly opposed this agreement, and some of its most prominent MPs joined the demonstrations against it. Mitsotakis also said that he would veto a North Macedonian bid to join the EU if he were in power.

Isn’t Greece broke?

No, not quite — but it does owe a lot. Between 2009 and 2016 the government in Athens received three bailouts primarily from the EU, the European Central Bank and the International Monetary Fund. It needed bailouts totalling €242 billion (Dh998 billion) because of its high debt levels then, which meant that for every €1 in circulation in the Greek economy, another €1.90 was owed by the government to creditors. It still owes a staggering €350 billion, but it has reached a deal to pay that back over a much longer term. Giving Athens breathing room for a couple of decades and more. The situation has improved somewhat, meaning that €1.90 figure is now €1.80. And for that, the Tsipras government should get credit.

So why did Syriza lose the EU elections?

Commentators believe its defeat in the EU elections is a result of the party losing touch with the middle class. That austerity programme meant the middle class paid a lot more in taxes, and those taxes, rather than increased economic activity, paved the way for better times.

But Syriza is a left-wing party …

Yes, and the working class, upon whom Syriza relied heavily during the 2012 and 2015 elections, also appeared to have broadly turned its back on the ruling party as it failed to mitigate the effects of the labour market deregulation. The steady decrease in the unemployment rate and the increase to the monthly minimum wage to €650, seem to not have been enough.

What’s New Democracy promising?

ND is running on promises of lower taxes and strong growth to generate better paid jobs. Greece has committed to primary budget surpluses of 3.5 per cent of GDP up to 2022 and New Democracy officials insist public finances will remain in line with lenders’ demands. Further down the line, however, they hope to negotiate a lower surplus target.

What else is ND offering?

Leader Kyriakos Mitsotakis plans to cut corporate tax from 28 to 20 per cent in two years and slash the tax rate on dividends to 5 from 10 per cent. He also wants to legislate a growth clause on the minimum wage, meaning increases will be twice the economy’s expansion rate. The minimum wage will rise to €730 a month in three years from €650 euros currently. Other measures include halving VAT, lowering income taxes for higher earners, lowering property taxes, hiring more police and giving €2,000 for every new baby born in Greece.

What’s Syriza offering voters?

Greek Prime Minister Alexis Tsipras says his plan for the economy will include tax relief for those who suffered more during the crisis years. A lighter tax burden for corporates will also help boost growth with Greece now out of the bailout straitjacket. Syriza has not called for a lowering of the budget savings targets agreed with lenders.

Any other promises from Tsirpas?

The Prime Minister promises 500,000 new jobs in the next four years and 25,000 hirings in the public sector, helping to reduce unemployment to EU averages from 18.5 per cent currently. He’s also promising the monthly minimum wage will be raised by 7.5 per cent in 2020 and by another 7.5 per cent in 2021, lower property taxes, cuts to lower tax rates, tax relief for Greeks living on small islands. He will also lower VAT and other corporate taxes.

What are the other key issues?

The unemployment rate stands at 18.5 per cent, and higher for younger people. Greeks too are concerned at the large numbers of refugees still living in camps on Greek islands. While the EU and Turkey struck a deal to return those seeking asylum to Ankara’s care, 50,000 refugees landed in Greece in 2018 compared to 36,000 the year before.

— With inputs from agencies