The most interesting news out of Greece this weekend was not the result of the parliamentary elections. No, much more interesting is the news that Greece will play Germany in the quarterfinals of the Euro Cup soccer tournament on Friday. This will be one to watch.
But why were the Greek elections such a letdown? Well, after weeks of build-up we now have a parliamentary situation in Greece that looks…exactly like the situation that led to this latest round of voting in the first place. It’s called gridlock.
The most viable establishment party, New Democracy, has won the elections with an ever-so-slight advantage. It now has just three days to form a ruling coalition, meaning it will have to convince its other establishment nemesis, Pasok, to join in. Both of these parties are pro-austerity and tend to follow Germany’s lead. Meaning that they’re still looking at the same old problem: how to convince a nation that’s tired of austerity that even more austerity is the answer. Meanwhile the upstart, anti-austerity Syriza party came in second place with a very strong showing. Its leader, Alexis Tsipras, will likely not join the ruling coalition. Why should he? He can continue leading a staunch opposition to austerity, wait until the ruling coalition falls apart again and then participate in new elections that will probably need to be held sooner rather than later. As Matthew Iglesias says, New Democracy has won a booby prize.
More impactful perhaps is the election news out of France. François Hollande, the new socialist president, has just won legislative elections. He now has control of the both houses of parliament, and thus seemingly a mandate to continue pressing Angela Merkel of Germany to temper the austerity talk with more support for growth-stimulating policies. Gone are the cozy Merkozy days; the Franco-German alliance that has been the political foundation of the European Union is getting ever more testy. As Mike Shedlock points out:
Merkel and former French President Nicolas Sarkozy did not see eye-to-eye on many important issues, but they did not openly feud like Hollande and Merkel. The differences between the latter pair are major in every way.
- Hollande wants Eurobonds, Merkel says no
- Merkel wants a tighter political union, Hollande says no
- Hollande wants bank recapitalizations by the ECB and Merkel says no
- Hollande wants more stimulus, more government workers, increased difficulty to fire workers and Merkel disagrees on all counts
- Hollande is more willing than Merkel to make concessions to Greece
- Hollande wants bigger “firewalls”, Merkel does not.
Regardless of what happens on the soccer field this is the long game that will be the one to watch.