Don't get comfortable -- Greece's elections could make Europe extremely messy again

Greece has fallen out of headlines around Europe, after debt negotiations thrust the country into the spotlight earlier this year.

Greece’s January elections launched radical Syriza to power and reopened the country’s old bailout wounds. Uncertainty reigned until July, but the agreement of a bailout seemed to cool things down a great deal.

Even when Prime Minister Alexis Tsipras announced his resignation and snap elections earlier in August, Europe shrugged off the news.

But the latest headlines suggest that the continent might want to pay a bit more attention.

Some people, including myself, thought that Tsipras would ride it out and win another vote. New Democracy, the mainstream centre-right party that Syriza replaced in office in January, has tumbled in the polls. Tsipras seems like the only natural fit as the next Prime Minister.

It looked like the new Syriza would need to make a coalition with centre-left former mainstream party Pasok, or perhaps centrists To Potami, but that they would slide back into government with relative ease. That case now looks a little shaky.

For starters, the polls put Syriza in the lead but certainly don’t look great. One early this week put the party on just 24%, two points ahead of New Democracy. Another similar one on Friday but them on 23%, 3.5 points ahead of ND.

If the undecided voters in that poll don’t vote, Syriza would end up with about 30.8% of the vote, 5.5 points less than they got in January. Then, they got 149 out of 300 seats in parliament. A 30.8% result would give them fewer than 130.

Which wouldn’t be too much of a problem, but for the fact that Tsipras has ruled out coalitions with basically all of his potential partners. Speaking on television on Wednesday, he ruled out coalitions with New Democracy, Pasok or Potami.

Greece sentimentCapital EconomicsGreek economic sentiment is back to its worst levels ever.

KKE and Golden Dawn, the unreformed communist and fascist parties, are way off the table. Popular Unity is a new party which has just split off from Syriza and is running on an anti-bailout programme. A sudden alliance is unlikely.

That leaves the Independent Greeks, Syriza’s semi-reliable current coalition partners, though their 13 seats, if repeated again, wouldn’t be enough to give Tsipras a majority.

One positive aspect of the election was that Syriza would be less of a big tent, and the government could be somewhat less confused about its position with regards to Greece’s new bailout agreement. But that’s only true if they get back in with a centrist/centre-left coalition.

And that’s bad news for Greece, because it will slow down or stall the implementation of the things agreed to in the bailout. And without implementation, there’ll be no debt relief. Getting Greece’s European creditors to ease off on its debt obligations requires that the country pass its bailout reviews, which won’t happen without a fairly committed government.

It’s hard to see how this situation gets sorted, unless Syriza’s popularity is being underplayed by the polls.

And that could mean problems for Europe too — although the resolution of the bailout negotiations required a massive Greek capitulation, it was received coolly at best across much of Europe, where voters are tired of what they see as providing a bankrupt country with endless lines of credit.

It’s incredibly difficult to predict what will happen if Syriza fails to form a government. There’s no appetite among the Greek people either for a return to the drachma, or for the sort of governments the country had between 2010 and 2014. But without a stable government, the painful progress made in the last two months could quickly be reversed.

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