17 December 2014

Round one of the Greek presidential elections

At 5pm GMT today, the Greek parliament will take its first step in an important process – deciding the country’s next president. This is usually a largely ceremonial process, but it has taken on a life of its own this time around. As we noted in our post a few days ago, if the government cannot garner the support of 180 out of 300 MPs by the final third round vote, snap elections will need to be called.

Tonight is the first round, with the second next Tuesday and the third on 29 December. The government has almost no chance of winning in the first and second rounds, since it needs a super-majority of 200 MPs. As the graph shows, the government is currently well short of even the 180 target.

PASOK (Yes) 28
New Democracy (Yes) 127
Independent MPs (Yes) 6
Independent MPs (Undecided) 9
Independent Greeks (Undecided) 2
DIMAR (Undecided) 3
Independent MPs (No) 9
KKE (No) 12
SYRIZA (No) 71
DIMAR (No) 7
Independent Greeks (No) 10
Golden Dawn (No) 16

What to watch in tonight’s Greek presidential vote

  • While the vote is almost a forgone conclusion, the negotiations before and after will be important.
  • Some still hold out hope that a unity candidate can be found to help avoid the need for snap elections. This is possible but does not seem entirely likely. The current candidate Stavros Dimas, former European Commissioner and Greek Foreign Minister, has quite wide appeal, a decent reputation and is liked by European partners.
  • There could also be talk or reaching an agreement to delay elections until later in 2015, with a temporary unity candidate stepping in. Again, possible, but not entirely probable. If SYRIZA smells blood in the water, we can’t imagine it would bend over to the government.
  • Expectations and reports in the Greek media suggest the government will get around 161 MPs, while anything above 163 will be seen as a success. Any significant moves could bode well for hopes of attracting more support.
  • It’s also important to watch to make sure that all MPs from the New Democracy and PASOK coalition vote in favour of Dimas. If they lose any of their own support, the game is essentially over.

 Things will probably get worse for Greece before they get better

  • When it comes to Greece, this always seems to be the story. The market (over)reaction to the moving up of the election has been somewhat surprising. The fundamental facts have not changed, Greece was always going to face this dilemma, it’s not clear that moving it up a couple of months makes too much difference. In fact, as we argued in our previous blog, it could prove to be a good thing if it gives the current government the advantage.
  • Nevertheless, market jitters are a certainty going forward as politicians have entered election mode. Both sides have increasingly become involved in slanging matches. Greek Prime Minister Antonis Samaras has also taken to playing the fear card quite forcefully, by warning of renewed Grexit possibilities if SYRIZA comes to power.

One thing that seems certain is that the Greek Presidential election will go down to the wire on the 29 December. At the moment, it looks as if the government will struggle to stop snap elections being held. That means more uncertainty for Greece.