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The coming depression blog | December 17, 2018

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Greek Political Crisis

Greek Political Crisis

 

Politics and economy are interrelated to each other in Greece. This means economic decisions shape political outcomes and political decisions tend to shape the economy in this country. There is a new government formation in Greece after the elections that were held earlier this month. The left-wing anti-austerity Syriza Party has got the Greek mandate and the party has secured 149 seats which is just 2 short of majority. With support of smaller coalition partners the Syriza Party government led by Prime Minister Alexis Tsipras was sworn in on 26th January 2015.
Background
•    Greece is going through a financial crisis since the global financial crisis of 2008. The Greek government debt crisis started to develop in 2009 and till date has had bailouts from the Troika meaning the IMF, ECB and the Eurogroup. But this bailout of the government debt, so that Greece does not default, has come at a price for Greece.
•    Strict austerity measures, tax hikes and spending cuts have also accompanied the bailout. These have made the lives of the common citizens in Greece extremely difficult over the last few years.
•    The previous New Democracy government was seen to be accepting the conditions of the bailout like the austerity measures and was seen pro-bailout and pro-Europe parties.
•    There has been a political crisis simmering in Greece over the last few months. The previous government first had a slim majority and the then Prime Minister announced early presidential elections. However the elections gave a hung verdict and after three rounds, the Prime Minister asked the incumbent President to dissolve the Greek Parliament for a snap Greek Legislative election in January 2015.
•    Now that the Syriza party has come into power in Greece, political and financial decisions are likely to see a major change. The Syriza party became popular because of its anti-austerity stand and anti-bailout stand.
•    The Troika suspended the installments of the bailout aid schedule when elections were announced in Greece. The new government has announced that it wants to re-negotiate the terms of the bailout with Europe which is not something that is acceptable to Europe.
•    Athens Stock Exchange has suffered losses over the last two months and the government bond rate has considerably risen again.
Greece is going through a difficult time politically and economically. It is still part of the Eurozone and must work with Europe for a long term strategy in dealing with the future of Greece.

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