In Focus: Greek Bailout Opponents Have Edge in Polls
Perhaps the biggest “known unknown” affecting financial markets worldwide right now is the outcome of Greece’s next elections, scheduled to take place June 17 after a previous round early this month left power divided among numerous parties, none of whom could reach agreement on forming a coalition government. Nearly all observers, from fellow eurozone members to political scientists, agree that the outcome will prove crucial both for the country itself and for Europe’s common currency, the euro. If anti-bailout forces prevail and are able to form a government, and reject the austerity program that was the quid pro quo for a Greek bailout by fellow eurozone notions and the IMF, EU leaders have made it clear that they will abandon Greece to its fate. Greeks, meanwhile, want to cling to the euro, but nearly as many fiercely reject the austerity measures.
To help keep an eye on how voter sentiment in Greece is shifting, and how support for the myriad Greek political parties shifts in response to this tough talk from Frankfurt and Brussels, we have developed an interactive poll tracker. It displays not only the most current poll results but also shows how voter sentiment has shifted since the first election took place at the beginning of May.
It is striking that support for Syriza has surged since those election results of early May, with that left-leaning anti-bailout party now neck-and-neck with the conservative New Democracy party. Meanwhile, the gap has widened between the two leaders and the rest of the pack, including PASOK, which along with New Democracy once dominated the Greek political landscape. Whichever party crosses the finish line first gets an automatic bonus of 50 seats in the country’s 300-member legislature, meaning that a small advantage on June 17 could be transformed into a big gain in terms of political clout, perhaps enough to ensure that the winner is easily able to form a government.
Of the parties in the poll tracker, above, only New Democracy and PASOK support the bailout. The others oppose either the austerity measures that come as its price tag, or object to the bailout itself, regardless of where they fall on the political spectrum. (Indeed, opponents range from the Communists to the far right New Dawn party.)
As we noted earlier this week, Greece has certainly struggled under the burden of the austerity measures. But the impact of the uncertainty surrounding the Greek elections is taking a toll on risk assets globally, as can be seen in the chart below. While the Greek Athex composite stock index has posted the largest declines since May 4, European bank stocks, commodities, junk bonds and emerging markets also have posted declines, as investors flock once more to safe havens like US Treasury securities. Odds are that investors worldwide will be keeping a close eye on what the polls say about the likely election outcome between now and decision day.