The people of Greece spoke out: two thirds voted for parties clearly opposing austerity. Nevertheless, Greek election law means that the pro austerity, pro-bailout mainstream parties will likely continue ruling and having the same policy.
Many Greeks will likely be even more angry after the elections. Here’s how it works.
There are 300 seats in the Greek parliament. The party that wins the most votes in the elections receives 50 seats. The rest of the 250 seats are divided between all the parties that passed the minimum threshold of 3%. Elections are nationwide, not regional.
This simple and straightforward system is meant to guarantee the largest party more power to pursue its policy and to ensure more stability.
This law could now change the course of Greece in a very critical juncture.
At the time of writing, these are the results after counting around 90% of votes.: Center right New Democracy came in first, winning 19.26% of votes. Left wing (anti-austerity) SYRIZA won 16.54% and came in second. Center-left pro-austerity PASOK came in third with 13.42%.
Update: After counting 99.36% of votes, the mainstream pro-bailout parties have only 149 seats: ND with 108 and PASOK with 41. There is an option that Samaras will try to woo the pro-European Democratic Left party to join a coalition, but he will have to work extremely hard for that, as they refused such an option so far. If a government isn’t formed, new elections might be held on June 17th.
All the rest of the parties in parliament, ranging from communists to extreme far right parties are all anti-austerity. Some even want Greece to leave the euro, something that might be eventually good for Greece.
So, pro-austerity parties got just under 33% or votes.
But, Greek law grants them half of the parliament. Coming in first, New Democracy got a bonus 16.66% of seats.
A seat or two can still shift from one camp to another and the pro-austerity parties may gain an absolute majority. If this is the case at the end of the night, negotiations will likely end in another coalition government. Another round of elections is also possible.
The outgoing coalition government was led by a technocrat, Lukas Papademos, who had both New Democracy and PASOK under his government.
The new government might be led by Antonis Samaras, head of New Democracy, or yet again by a new technocrat. If more of the same policy will be made, Greeks have all the reasons to be angry, very angry.
Results aren’t final, and perhaps the pro-austerity camp might lose a seat, making the result closer to reality. This doesn’t mean that the anti-austerity camp will form a coalition: the differences are too big between the various parties. But this will force some change of thought.
Markets haven’t reacted well to the Greek uncertainty and the victory of Hollande over Sarkozy in France: EUR/USD lost uptrend support and fell under 1.30.
The count is still going on, and negotiations will take some time. Parties might try to woo members to join potential coalitions. This uncertainty is certainly bad for the euro.
Further reading: European Spring – Tables are Turning in the Old ContinentGet the 5 most predictable currency pairs