The election of 6 May: euro or drachma?
The results of the Greek parliamentary elections on 6 May provoked surprise,
both nationally and across Europe.1 What had been a comfortable government
majority for PASOK and New Democracy crumbled, with the two parties
barely securing a third of the vote between them (32.15%). The parties fiercely
critical of the Memorandum and the policy of austerity that accompanied it
secured a staggeringly large share of the vote (approximately 41%).
The vote was an unprecedented rejection the political status quo and the
PASOK’s opportunistic optimism
New Democracy’s electioneering during the campaign was as selective as it was
cynical. It portrayed itself as the honest party, omitting any mention of its own
enormous responsibility and the challenges faced by Greece. The opposition,
PASOK, in turn placed responsibility on the shoulders of the ruling party.
However, the opposition did not provide a comprehensive or complete analysis
of what had led the Greek economy into crisis. PASOK’s campaign was equally
riddled with vague claims and generalities. The country was ‘on the
populist and political antiGreek sentiment across the EMU. Greece was increasingly viewed as nation
lacking leadership, direction or resolve, a permanent troublemaker, posing a
genuine threat to the stability of the EU.
Astoundingly, the Greek political parties remained indifferent to the
country’s precarious position and the frustration such an attitude caused across
the continent. They made no effort to promote an environment conducive
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Part V: Elections of 6 May and 17 June 2012
to dialogue. Domestically, it was widely
proposition that the measures should be enacted by a new government after
elections. The Troika stated it would not be willing to release the €90 billion
due in March while the reform of the regulatory framework remained pending.
The second challenge stemmed from the partisan behaviour of the parties
of the government coalition, principally that of New Democracy. New Democ
racy was far more concerned with how any reform might affect its position
in the upcoming elections than satisfying the terms required for the release of
further support. The party behaved as if Greece
The book examines the European debt crisis with particular reference to the case of Greece. It investigates its spillover from a Greek-specific problem to a Eurozone-wide crisis and chronicles the policy responses to combat it. The central argument of the book is that the principal cause of the Eurozone’s problems was, and still remains, the indecisiveness of European elites to tackle its underlying deficiencies. Leading Eurozone countries have been unwilling to commit to a common long-term plan which could deal convincingly with complex and inter-related problems affecting both its ‘core’ and its ‘periphery’. The guiding principle of policy responses thus far has been the pursuit of permanent fiscal discipline. Yet, fiscal discipline alone would not provide the long-term solutions required; a steady course towards economic governance and political unification is necessary. Through the detailed tracing of the evolution of the crisis, the book provides valuable insights into the crucial interconnection between Greece’s own economic troubles and the wider European search for macroeconomic stability and sustainable economic growth. As such, the book appeals well beyond those with a narrow academic interest in Greece. This is very much a discussion about the future of the Eurozone and the European Union as a whole.
be party to any solution whatsoever, this would
be tantamount to a default, and would cause a great flurry of activity in the
already unstable financial sector. In his opinion the private sector could participate in other ways, through privatisation or investment.3 France agreed with
Trichet’s analysis and reasserted objections to any restructuring of Greek debt.
Germany’s proposal was known as the ‘Vienna scenario’. It had been implemented in 2009 when the financial crisis had spread to Eastern Europe. The
European Commission, the IMF and the ECB had convinced the
-called “political taxes” that ﬁnanced the ruling party in return for favorable
The Asian ﬁnancial crisis
treatment on a range of discretionary policies from credit allocation to
taxation (Haggard and Moon 1990, 227). Thus the politicization of credit
policies also meant that recipients of preferential credit made jun jo-seh or
contributions to political parties or individual politicians as a sign of appreciation. As will be discussed, by the early 1980s several corruption scandals
involving high-ranking politicians and chaebols had been made public.
As was noted earlier
the creditor nations of the EMU regarding the
democratic endorsement of support for the Periphery. If Greece was to have
the opportunity to vote on whether it accepted the support, were other nations
not entitled to vote on whether they wished to provide it? Any comparable
referenda in Core nations would be likely to return negative results. This
could lead to the withdrawal of all support from Greece.3 The Dutch Labour
Party, for example, announced that it would vote against the agreement of
26 October when it came before the Dutch Parliament for approval if
proponents of this view came to the
conclusion that what was needed was a new patriotism, that of an ‘independent Greece’, and a new economic/political system to accompany it. According
to another widespread opinion, responsibility for the crisis rested with the
politicians, the parties and the associated corruption. In a growing sector of
Greek society there was a belief that the debt (totalling approximately €300
billion) ‘was devoured by the political elite’.
Such interpretations lie in the sphere of the absurd and lead to proposed
solutions that are dangerous for the
Commission, Miller provided more of the background to ‘Armageddon’. On 15 September 2008, Lehman was party to over 10,000 derivatives contracts relating to about 1.7 million transactions, and a major participant in hundreds of substantial real estate and loan transactions. To a limited extent, Barclays' purchase of Lehman's North American Capital Markets business to BarCap for $1.75bn plus $250m. in cash for its trading assets valued at $72bn and trading liabilities worth $68bn, within five days of the beginning of bankruptcy proceedings, helped. Miller described the sale