Political sustainability and the euro deal

by Gideon Rachman

Financial Times
February 21, 2012

After the latest Greek bail-out, there is a great deal of focus on whether the new deal is economically or financially-sustainable. The FT’s story on the leaked “downside scenario” report suggests that even those putting the deal together have severe doubts about whether it will stick.

But it is not just economic sustainability that matters. There is also the question of whether the deal is politically sustainable? What if the voters simply reject the deal?

The question of political sustainability arises most obviously in Greece – where the economy is falling apart and an election is due in April. Parties of the far-left and the far-right currently command around 50% in the opinion polls.

But the problems of euroland are also disrupting politics in creditor countries, where the economy is in better shape. The Netherlands is a fine example. There, Job Cohen, the leader of the Dutch Labour Party has just resigned as his party sinks ever further in the opinion polls. The party that currently tops the polls is the hard left, Dutch Socialist Party – which, unlike Labour, is strongly opposed to the Greek bail-out.

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