Why Greek voters may need two elections

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Greece may need two elections this summer to choose its next government thanks to rancour between two potential coalition partners and a likely failure of any single party to win a governing majority.

The country is used to going through the electoral process at frequent intervals in its recent, turbulent history. It had two elections in 2012 and 2015, while no government between 2009 and 2019 saw out its full four-year term. This turmoil was the by-product of a devastating economic crisis that led to Greece receiving almost €300 billion ($326.27 billion) in loans via three EU-IMF bailout programmes that involved successive administrations in Athens performing drastic fiscal adjustments.

During that period, the Greek economy contracted by around a quarter and the unemployment rate rose above 25 per cent. This, in turn, triggered social upheaval, the degradation of public services and political instability. However, most of this is in the past. While the economic and social legacies of Greece’s long crisis have not been completely flushed out of the system, the country is in a much healthier state as it gears up for elections on Sunday.

In 2019, the centre-right New Democracy party returned to power with support of almost 40 per cent of the electorate. It was tasked with overseeing the start of the transition to a new era for the country. New Democracy’s leader Kyriakos Mitsotakis, the son of a former Greek prime minister, positioned himself as a political liberal. He pledged tax cuts, business-friendly reforms aimed at boosting investment and a more modern public administration. Mr Mitsotakis has largely delivered on these promises: a range of taxes have been brought down, foreign direct investment has risen to record levels and digital services are being used more widely in the Greek bureaucracy.

The government argues that these policies have been vital in delivering growth, which reached 5.9 per cent in 2022, despite the challenges posed by the Covid-19 pandemic, the energy crisis and rising inflation. There have been some flagship investments announced by global giants like Microsoft and Pfizer. Mr Mitsotakis has also raised the minimum wage twice this year, taking it to a pre-crisis level of €780 per month.

Based on this alone, one might think that the Greek leader and his party should be cruising to re-election, but that is not exactly the case. For each of the successes that New Democracy holds up as a sign of its good stewardship over the past four years, there is a counterpoint. There are, for instance, questions about how tangible and sustainable Greece’s economic growth is. While there has been a boom in Greek exports over the past few years, this has been overshadowed by a much bigger rise in imports, leading to a current account deficit of just over €20 billion in 2022, almost €8 billion higher than a year earlier.

Also, a closer look at investments reveals that much of the FDI coming into Greece is directed towards real estate and tourism development, not greenfield schemes. Although unemployment has fallen, reaching 10.9 per cent in March – the lowest level since 2009 – salaries in Greece remain low and many of the jobs being created, particularly for young people, involve precarious or seasonal work for low wages, mostly in tourism and the food service sector.

Several crises over the past four years have exposed continuing problems with Greece’s public sector that the government has not been able to address. After navigating the first wave of Covid-19 in 2020 relatively well, Greece subsequently had one of the highest mortality rates in the EU, reflecting the poor state of its health service, particularly in non-urban areas. A deadly train crash at the end of February, when a passenger and freight train collided in central Greece, killing 57 people, also put the government’s reform drive under scrutiny as an incomplete signalling installation, lack of railway staff and poor training were blamed for the accident.

The ruling party’s re-election has also been put in some doubt because of repeated criticism about the quality of democracy in Greece. For the last two years, Greece has scored the lowest ranking in the EU for press freedom, according to the annual index compiled by Reporters Without Borders (RSF).

The government has also become embroiled in a wiretapping scandal. Reports have identified the alleged widespread use of Predator spyware to illegally target politicians, journalists, businessmen and other figures in Greece. It has been revealed that some of the targets were also legally monitored by the National Intelligence Service (EYP). Mr Mitsotakis has denied that Greek authorities used spyware. However, one of the surveillance operations conducted by EYP could yet have an impact on these elections.

Last year, it was revealed that Nikos Androulakis the leader of the centre-left Pasok party, which is polling third ahead of Sunday’s vote, was bugged by Greece’s secret services, with a prosecutor’s approval. Mr Androulakis claims that the government has blocked a proper parliamentary investigation into the surveillance issue and that the judiciary is delaying its probe.

Until the wiretapping was revealed, Mr Androulakis was seen as a potential coalition partner for Mr Mitsotakis as the coming elections will be held under a proportional representation system, which means the winning party or combination of parties will need upwards of 45 per cent of the vote to form a government. No single party is anywhere near this. New Democracy is polling at about 35 per cent, Syriza close to 30 per cent and Pasok about 10 per cent.

Ill feeling has developed between Mr Androulakis and Mr Mitsotakis, making it doubtful that they will be able to co-operate after May 21. It is more likely that the Prime Minister will opt for a second round of elections, which will be held under a different electoral system that awards a bonus of up to 50 seats to the winning party, making it easier to reach the majority of 151 MPs in the Greek parliament. A majority in the second vote could be clinched with less than 38 per cent of the vote, which could be within New Democracy’s reach.

Should he fall short, Mr Mitsotakis might seek to tempt some opposition MPs to cross the aisle. If he needs more than a handful of MPs, though, he might have to mend his relationship with Mr Androulakis and seek an alliance with Pasok.

The only potential obstacle to Mr Mitsotakis’s return to power is if left-wing Syriza upsets the odds and either comes first or gets enough seats to give it a chance to form a coalition with other opposition parties, such as Pasok. The chances of this happening appear slim as the leftists and their leader, former prime minister Alexis Tsipras, are still carrying some of the baggage of 2015, when they came to power and engaged in haphazard negotiations with the eurozone over a new bailout that inflicted considerable economic damage and almost forced Greece out of the euro.

During the current campaign, Syriza has tried to convince the Greek public that it is wiser now. But opinion polls suggest that in almost all policy areas, especially the economy and foreign policy, New Democracy and Mr Mitsotakis elicit much greater trust than the leftists. The opposition party has also found itself on the defensive about the cost of its economic proposals, which the government claims will result in Greece needing a new bailout.

It is this fear of plunging back into uncertainty, which Greeks paid such a high price for in recent years, that may ultimately decide the result of the coming elections. While the Greek public might have doubts about the success story presented by the current government, it seems to be even more sceptical about whether the opposition can offer a better alternative. This could secure Mr Mitsotakis’s re-election, even though it might come after a second vote later this summer, rather than on Sunday.