May 4, 2012
In the two years since Greece asked for a foreign bailout, its leaders have had trouble governing even with a clear majority. Now, as the country heads to elections on Sunday in which no single party is expected to secure enough votes to form a stable government, they may have to try governing with political chaos.
Along with elections in France, and with a rising tide of anti-austerity sentiment across Europe, Greece’s vote is expected to have a clear impact on the future of the euro. The next government, amid a deepening recession and facing likely social unrest, will have to enforce the country’s loan agreement with its foreign creditors, which stipulates slashing $15.5 billion from the state budget over the next two years and completing a crucial bank recapitalization.
Yet fierce opposition to the bailout terms — tax increases and wage cuts that have seen Greece’s gross national product drop 20 percent since 2009 and unemployment hit 21 percent — has led to the implosion of the two parties that have dominated Greek politics for four decades, the Socialists and the center-right New Democracy, and the rise of fringe parties on both the right and the left that oppose the loan deal.
“It’s the end of an era. A discredited political system and its contract with society are coming to an end,” said Stavros Lygeros, a political commentator and the author of From Kleptocracy to Bankruptcy, about Greece’s economic collapse. “The problem is that there is nothing to replace it. The old order is dying, but the new one has not yet been born.”
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