Tuesday, September 27, 2011

Vote Poses Test for Greece's Austerity

Wall Street Journal
September 27, 2011

Greece's ruling Socialists face a key vote in parliament Tuesday amid growing fears that discontent within the ruling party could force a change in government, opening up a risky new chapter in Europe's widening debt crisis.

The vote on a property-tax law is expected to pass on the back of the Socialists' narrow four-seat parliamentary majority, analysts say. The law is one that Greece has promised its international creditors as it scrambles to secure fresh aid and avoid default.

Many analysts, however, see the vote as a first test of confidence in the ruling Socialist government as it tries to push unpopular reforms. They fear that further austerity measures that must also be voted upon in the weeks ahead may bring about an open revolt within the party, forcing Prime Minister George Papandreou to go to the polls.

"Everyone is waiting for the issue that will lead to a rebellion within the Socialist party. It probably won't come Tuesday, but it is coming," said David Lea, an analyst at Control Risks, an independent risk consultancy. "At that point, the only realistic option for the government is to call early elections, which would be the last thing the country needs."

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