Left and right neck and neck in polls on eve of Greek election
Published 19/09/2015 | 02:30
Opinion polls published on the final day of campaigning in Greece suggest the left-wing Syriza party and conservative New Democracy are in a dead heat before tomorrow's election.
Three surveys published yesterday show the two parties roughly level within the margin of error, with the winner likely to require the support of two smaller parties to form a coalition government.
Syriza's leader Alexis Tsipras resigned as prime minister and called the snap election last month after reaching an agreement with eurozone creditors for a third bailout that triggered a split within his party.
Up until now, Syriza has maintained a narrow lead in most polls, and has ruled out forming a grand coalition with the conservatives.
Under Greece's electoral system, the first party receives a 50-seat bonus in the 300-member parliament.
It will be the third time in just eight months that the country heads for the polls. But the economy is set to collapse under the weight of austerity
Mr Tsipras has watched his party's comfortable 15-point polling lead evaporate after the Syriza capitulated to draconian bailout terms to stay in the euro two months ago.
Greece's pro-EU conservative opposition, New Democracy (ND), is neck and neck with Syriza, and is set to gain around a quarter of the popular vote.
The party is being temporarily led by the country's former defence minister, Evangelos Meimarakis. ND, whose support was wiped out in January's elections, has capitalised on Mr Tsipras's volte-face on austerity.
No single party, however, is on course to gain the 36pc threshold to form a majority government. That means a coalition beckons.
Both Syriza and New Democracy are committed to keeping Greece in the eurozone under the new terms of an €86bn three-year rescue package.
But the conditions set out by its creditors - the European Central Bank, European Commission and International Monetary Fund - are widely seen as the most intrusive and punishing set of measures ever imposed on a debtor nation in the eurozone's history.
They include the privatisation of €50bn of Greek assets to help pay back its debts, slashing pensions, and the handing over of a veto power on domestic laws to Brussels.
The elections may bring about a semblance of political stability, but most analysts do not expect any government to meet the annual budget targets required for ever-increasing injections of rescue money.
"Achieving the programme objectives will require a miracle," says Ashoka Mody, the IMF's former bailout chief and mission head in Ireland during its rescue.
Greece is still lumbering under soft capital controls which limit the amount of cash that can be taken out of banks. The economy is on course for a deep recession this year and its banking system requires an injection of €25bn to stop it from going bust.
The tax hikes and spending cuts demanded by creditors are set to entrench the spiral of debt deflation that has plunged Greece into the worst depression suffered by any developed economy in modern times.
"Exactly as before, the programme of economics is inconsistent: the optimistic growth projections bear no relationship to the severe austerity required," says Mr Mody.
"Growth will be slower and deflation stronger than anticipated, the more so because of the weakening global economy. The debt burden will continue to rise, and the Greeks will be blamed."
Back in July, following a tortuous 31-hour ordeal in Brussels, Greece's creditors agreed to a three-year bailout deal worth around €86bn.
But plenty of the details of the package remain unresolved.
The biggest elephant in the room is the IMF. The fund is still insisting on a bold programme of debt relief for Greece before it formally commits to providing any more of its shareholder money to keep the economy afloat.
Greece needs another €50bn bailout and massive debt relief to survive, says the IMF.
But the Europeans are delaying the debt question until Athens has made enough progress in carrying out the reform package.
This first "bailout review" was due to be carried out in October, but is likely to be set back should the elections give way to a prolonged period of coalition talks.
However, there is no guarantee that the IMF will get the concessions it's looking for. Its prescriptions for the debt mountain, which stands at 200pc of GDP this year, are far more radical than those countenanced by Europe's leaders.
Extending payment deadlines and reducing interest rate costs on Greece's debt means Europe's taxpayers will not be paid back in full.
The other major question hanging over the country and its creditors is the banking system.
The ECB calculates that €25bn will be needed to recapitalise lenders.
Greece's banks have suffered from unprecedented levels of deposit flight and have worryingly high levels of "bad loans" on their balance sheets.
The deadline for recapitalisation is the end of the year. After that, new EU-wide laws could change the picture entirely and force the private bank bondholders and depositors to face the costs of the recapitalisation.
As ever, the clock is ticking.