ATHENS – Greek prime minister Costas Karamanlis called a snap election yesterday, saying the global crisis was hitting Greece hard and he needed a fresh mandate to push through difficult economic measures.
His scandal-plagued conservative New Democracy government trails the main opposition socialist Pasok party by about six points in opinion polls. An election was not due until 2011 but Pasok had warned it would force one by March, when parliament elects a new president, forcing Mr Karamanlis to pick his moment.
The winner must deal with a global crisis that threatens to push Greece’s economy into recession this year for the first time since 1993 while the national debt, the euro zone’s second biggest after Italy as a percentage of gross domestic product (GDP), is ballooning.
Polls show Pasok is likely to win the election but may not get enough votes to form a government on its own. Coalitions with smaller leftist parties are unlikely, and it has said it will call for a repeat election under a revised electoral law that makes it easier to get enough deputies in parliament with a smaller percentage of the vote.
New Democracy, hit by numerous scandals and the economic crisis, is trailing badly in opinion polls, after winning the 2004 election on a pledge to clean up Greek politics. If it wins a surprise victory, it will probably need the backing of the far-right Laos party to form a government, an option Mr Karamanlis has repeatedly rejected. An alliance with the populist Laos would make it even more difficult for New Democracy to implement tough policies.
Whoever wins must tackle low budget revenues, a growing deficit and a national debt seen at 103 per cent of GDP in 2009 as the economy slows after years of steady 4 per cent growth.
New Democracy has given a €28 billion support package to the banks, but far less relief to the poor. New taxes to plug budget holes have angered the public and similar measures will not go down well, leaving more borrowing as the more palatable option.
Seen by foreign investors as the euro zone’s weakest link, Greece must submit a 2010 budget by November and must try to rein in deficits that have risen out of control.
After bringing its budget deficit below the 3 per cent of GDP EU limit, Athens has been put back under supervision for breaching the ceiling. With unemployment up and tourism taking a hit, it will take a brave government to cut the public sector, which employs one in 10 Greeks. – (Reuters)