Papandreou Braces for Austerity Backlash as Greece Holds Local Elections
By Maria Petrakis - Nov 6, 2010 11:00 PM GMT+0100 Sat Nov 06 22:00:00 GMT 2010
Greeks head to the polls today for local elections that Prime Minister
George Papandreou has called a key test of support for his government as it grapples with a crippling budget deficit and debt burden.
Almost 10 million people are entitled to cast ballots to elect officials for 325 Greek municipalities and 13 regions. Voting will close at 7 p.m. local time with an initial tally of the results due around 9 p.m. A run-off election between candidates who don’t win a majority will be held Nov. 14.
Papandreou’s 13-month-old government has cut wages and pensions and raised taxes after inheriting an economy that required a 110 billion-euro ($154.3 billion) rescue package from the European Union and International Monetary Fund in May. He told Greeks on Oct. 25 to rally behind his Pasok party and suggested he might call an early national vote unless they endorse him. Polls show most Greeks will protest his policies.
“All of them are mocking us, telling lies,” Spyros Varkatzoulis, 27, a construction worker in Athens, said on Nov. 6. “There’s no reason to vote for any of them.”
The prospect of political upheaval has unnerved investors again, just after Greece’s cost of borrowing had started to decline. Yields on 10-year Greek bonds climbed above 11 percent last week from a low of 8.77 percent on Oct. 13.
The
spread against German bunds of the same maturity has widened 211 basis points since Papandreou raised the possibility of early elections last month. It had narrowed to 649 basis points on Oct. 18 from a record 965 on May 7, five days after the EU and IMF approved the bailout.
Voter Anger
Most polls show Greeks will vote against Pasok-backed candidates and the government’s wage and pension cuts, designed to narrow a budget deficit equal to almost 13.6 percent of gross domestic product. The size of the shortfall was revealed after Papandreou won elections in October 2009 on a promise of higher wages and increased state spending.
About 67 percent of 5,000 voters surveyed by GPO in a poll published Oct. 22 had a negative opinion of the government, up from 57 percent in August. Almost 66 percent of 1,183 Greeks in a Kapa Research poll released Oct. 10 said the country could have avoided asking for funds.
Papandreou and his socialist party lead the main opposition New Democracy party. Forty-one percent had a higher level of trust for Papandreou, compared with 23 percent for New Democracy leader Antonis Samaras, according to the Kapa poll.
Rebel Lawmakers
Yiannis Dimaras, one of three lawmakers expelled from Pasok after defying Papandreou in the May vote on terms of the bailout, is poised to beat the ruling party’s candidate in the race to head a new regional authority for the greater Athens area, the biggest in Greece.
Dimaras, 66, has campaigned under the slogan: “Memorandum for the people,” a reference to the May agreement with the EU and IMF.
Today’s ballot is the first since Papandreou reshaped local government. The Kallikratis plan, named for one of the architects of the 2,500-year-old Parthenon Temple, aims to save the government at least 1.5 billion euros over three years.
Greece’s 1,034 local municipalities will be cut to 325, and 67 regional and prefectures will be replaced with 13 more powerful regional authorities.
(Bloomberg)