Sep 7th 2015, No one seems eager enough to become Greece’s next prime minister

September 7th

·         Greece is heading on snap elections of Sep 20^th, amid economic deterioration and escalating refugee crisis. However, pre-election rhetoric so far is very calm and comparatively more realistic, considering the traditional aggressive rhetoric which is typical for Greek politics.

·         In contrast to last year’s extremely populist rhetoric, Tsipras appeared less populist during his Thessaloniki’s speech. More specifically, a) he focussed on his ability to negotiate for MoU’s improvements and implement the structural reforms b) he vowed to boost investments and jobs and c) promised to start the process for Constitution’s change.

·       Kappa research’s poll which was published in the newspaper Vima of Sunday, showed that New Democracy gained significant ground vs SYRIZA last week. However, SYRIZA maintains a narrow lead of 0.6% vs. New Democracy (it was 3.1% in favour of SYRIZA the previous week). It also shows that Tsipras’ ally ‘Independent Greeks’ will cross the threshold of 3% resulting to a 9-party parliament.

·         Marc’s poll which was published in newspaper Ethnos of Sunday, showed a narrow lead of 0.4% in favour of SYRIZA. It also showed that 70.4% of Greek voters are in favour of a coalition government after elections. This poll showed that Greece will have an 8-party parliament after elections (Independent Greeks won’t succeed to enter next parliament).

·         Greek Banks’ recapitalisation process continues. The local newspaper Kathimerini of Sunday published an article, mentioning that existing shareholders are lobbying Frankfurt (ECB) to proceed on a moderate capital injection. Needless to say that existing shareholders have lost more than 90% of their initial investment to Greek Banks during the recapitalisation process which occurred in 2014.

·         Exports decreased by -10.4% in June (compared to June 2014). However, imports decreased more (mainly due to the decrease of price of oil) resulting to an overall decrease of trade deficit from 2.5 bios euros to 2.35 bios. Needless to say that the implementation of capital controls also impact exports. This is due to the fact that a significant part of exports, which is related to capital goods, packaging etc., is imported  
 

Risk assessment: In all recent polls, SYRIZA appears to lose a significant portion of its January’s voters; polls also show that the majority of those ex-SYRIZA voters, have not decided yet to vote other political parties but it is highly likely to abstain from elections. The ex-SYRIZA voters who respond that they will abstain represent over 33% of voters who have decided to abstain (the other 33% also abstained in January’s elections). As we approach to elections’ date, this specific part of Greece’s electorate may decide to vote and this will impact who is going to win elections. If these voters, decide to vote in favour of SYRIZA then Tsipras will win the elections. If these voters decide to vote in favour of other political parties, then Meimarakis will win the elections.

In general, despite the surrounding high stakes and risks, the pre-election rhetoric is relatively calmer. We could say that these elections represent a milestone in Greece’s contemporary history due the following reasons: a) the main political leaders avoid promises b) there are more arguments related to policies focussing on investments and economy c) despite refugee crisis, this time the ultra-right rhetoric doesn’t seem to gain ground, so far.

According to a recent report published by Hellenic Federation of Enterprises (SEV), Greece’s economic outlook has worsened significantly due to a) implementation of capital controls b) political instability. Polls show that whoever will be elected as prime minister will need to handle significant matters such as a) recapitalisation of Greek Banks, b) restoration of confidence in economy and c) refugee crisis, amid a fluid regional geopolitical environment.

Because of the narrow gap between SYRIZA and New Democracy, the winner will have to second political party will maintain significant power in the next parliament. The question this time, is not ‘who wants to become prime minister’ but ‘who wants to achieve a marginal defeat as a tactical move of a strategy to win the next elections (after those of Sep 20^th). However, the deterioration of economy and regional geopolitics increase probabilities for the formation of a 'Grand Coalition' government.