Directorate-General for Internal Policies of the Union Directorate for Budgetary Affairs Policy Department for Budgetary Affairs Brussels, 31 March 2010 The Political and Economic Situation in Greece 1. Introduction This note aims at summarising the present political and economic situation in Greece. It includes an overview of the Greek political system (the separation of powers, a description of the main political parties and information on the latest and previous parliamentary elections). The economic section comprises Eurostat's analysis of Greek statistical data and recent indicators concerning Greece's economy and its debt crisis. Annexes included: Annex A- Chronology of the Debt crisis, Annex B- Information on the Greek National budget and swap transfers, Annex C- Greece's agricultural expenses and the problems with the IACS system. 2. Overview of the Greek political system Greece is a parliamentary republic. Its current President is Karolos Papoulias, who has been elected for a five-year term. The President of the Hellenic Republic is elected by the parliament for a maximum of two terms in office. When a presidential term expires, the parliament votes to elect a new president for Greece. The country's constitution provides for a separation of powers between executive, legislative and judicial responsibilities. The executive power is exercised by the President and the Government of the Republic. Following the 4th October 2009 general elections, Georges Papandreou, the leader of the Pan-Hellenic Socialist Movement (PASOK), formed a government, which was sworn in on 7th October. He won 160 out of 300 seats in the parliament. The new cabinet is composed of fewer ministers than in the past and responsibilities were modified (the posts of the Vice- President, the Ministry for Economy and Finance, some regional ministries, the Ministry for Transport and Communications, the General Secretariats of Public Order and the Ministry of Culture and Tourism). Legislative powers are exercised by a unicameral Parliament. The Greek Parliament has 300 members, elected for a four-year term by a system of 'reinforced' proportional representation in 56 constituencies, 48 of which are multi-seat and 8 single-seat. The party, receiving the largest number, of votes receives a 40-seat premium, which is filled by candidates from that party not declared elected on the lower rungs (the constituencies). Constituencies in Greece have traditionally been multi-seated, and they mostly coincide with prefectures. Under the current electoral law of "reinforced proportionality", any single party must receive at least a 3% nation-wide vote in order to elect Members of Parliament. The law in its current form favours the strongest party to achieve an absolute majority (151 out of 300 parliamentary seats), provided it obtains about 41.5% of the total vote. This is claimed to enhance governmental stability. The previous law (applied in the 2004 legislative elections) was even more favourable for the first party. The current electoral law reserves 40 parliamentary seats for the strongest party or coalition of parties, and apportions the remaining 260 seats proportionally according to each party's total valid vote percentage. By constitutional provision, the electoral law can be changed by simple parliamentary majority, but a law so changed enters into force only for the election following the upcoming one, unless a 2/3 parliamentary super-majority (200 or more votes) is achieved. Only in the latter case is the new electoral law effective immediately. A case in point is the current electoral law, which is roughly similar to the previous one, except it allocates a premium of 50 seats, instead of 40, to the first-past-the-post party. Since this law was passed by simple majority, it will not be used for the upcoming election, but for the one after that. Compulsory voting is the rule, but the law in Greece is not enforced. The civic duty of voting is still considered "mandatory", but there are no sanctions for failing to vote. Turnout is usually high, typically between 70% and 80% for legislative elections and slightly lower for local administrative and European Parliament elections. Greece has a two-party system, which means that there are two dominant political parties, the liberal-conservative New Democracy (ND) and the socialist PASOK. Coalition governments occur only rarely in two-party systems. The left is mainly represented by the Communist Party of Greece and the Coalition of the Radical Left. Recent years have seen the gradual emergence of a staunchly conservative, populist party, the Popular Orthodox Rally, with a platform based on nationalistic, religious and immigration issues. Greece has had a representation of Members of the European Parliament in the European Parliament since Greek accession to the EU in 1984. Originally, the Greek delegation numbered 25, but after 2004 this number was reduced to 24 (due to the increase of EU member states). In 2009, it was further reduced to 22. Presently, there are six Greek political parties represented in the European Parliament: New Democracy, PASOK, The Communist Party of Greece (KKE), The Coalition of the Radical Left (SYRIZA), The Popular Orthodox Rally (LAOS) and The Ecologist Greens. New Democracy is the main centre-right political party and one of the two major parties in Greece. It was founded in 1974 by Konstantinos Karamanlis and formed the first cabinet of the Third Hellenic Republic. After serving as the Cabinet of Greece from 2004 to 2009, New Democracy is now the main opposition party in the Hellenic Parliament after its defeat in the 2009 Greek elections. After the defeat former president Kostas Karamanlis, nephew of the party's founder, resigned and Antonis Samaras was elected the new president of the party through a leadership election in November 2009. New Democracy is a member of the European People's Party and currently has 8 out of 22 Greek MEPs in the European Parliament. 2 ND is also a member of the International Democrat Union (IDU) and the Christian Democrat International (CDI). From 2003 onwards, ND was consistently leading the PASOK government of Costas Simitis in opinion polls. In January 2004 Simitis resigned and announced elections for 7th March, at which Karamanlis faced the new PASOK leader, Georges Papandreou. Despite speculation that Papandreou would succeed in restoring PASOK's fortunes, Karamanlis had a victory in the elections and became Greece's first centre-right Prime Minister after eleven years. On 16th September 2007, Kostas Karamanlis won re-election with a diminished majority in parliament. However, on 2nd September 2009 Karamanlis asked President Karolos Papoulias to dissolve parliament and call an election. Parliament was dissolved on 9th September, and the Greek legislative election 2009 was held on 4th October. New Democracy won only 91 of 300 seats. On 29 November 2009, Member of Parliament and former minister Antonis Samaras was elected the new leader of New Democracy. The Pan-Hellenic Socialist Movement, better known as PASOK is a Greek centre-left political party and the current majority party in the Greek Parliament. It is a member of the Party of European Socialists and of the Socialist International Party. In the European Parliament it has 8 out of 22 Greek MEPs. On 31st January 2006, the party's president, Georges Papandreou, was elected President of the Socialist International, the worldwide organisation of social democratic, socialist and labour parties. Following the 2009 legislative election, PASOK became the majority party and Georges Papandreou became Prime Minister. On 7th January 2004, in order to revitalize PASOK's chances for the next elections, Costas Simitis announced his resignation as leader of PASOK. He was succeeded by George Papandreou, son of Andreas Papandreou. PASOK hoped that Papandreou could reverse the slide in the opinion polls which saw the opposition New Democracy party, under Kostas Karamanlis, 7% ahead at the start of the year. Although Georges Papandreou reduced ND's lead in the polls to 3%, he was unable to reverse the view of a majority of Greek voters that PASOK had been in power too long and had grown lazy and corrupt. ND won comfortably at the 7th March elections, placing PASOK in opposition after eleven years in office with 40.55% share of the vote and 117 seats.On 16th September 2007, the New Democracy party headed by Costas Karamanlis won re-election with a marginal majority of 152 seats in the parliament. The dismal result for PASOK led to a new leadership campaign. During the leadership election of 11th November 2007 Georges Papandreou was re-elected by friends and members of the party as the leader of PASOK. In June 2009, PASOK won the 2009 European Parliament election in Greece. Four months later, the party enjoyed a resounding victory in the October 2009 general elections with 43.92 % of the popular vote to ND's 33.48 %, and 160 parliament seats to 91. 3 Founded in 1918, the Communist Party of Greece better known by its acronym, ΚΚΕ is the oldest party on the Greek political scene. The KKE stands in elections and has representatives in the Greek Parliament, local government, and the European Parliament, where its two MEPs sit with the European United Left - Nordic Green Left. The Coalition of the Radical Left commonly known by its Greek abbreviation SYRIZA is a coalition of left political parties in Greece. In 2007–2009 its parliamentary leader was Alekos Alavanos, former president of Synaspismos, the largest of the parties that form the coalition. SYRIZA currently occupies 13 seats in the Greek parliament. The Popular Orthodox Rally or The People's Orthodox Rally often abbreviated to L.A.O.S. is a Greek right-wing populist and Christian nationalist political party, founded and led by journalist Georgios Karatzaferis who founded LAOS in 2000, a few months after he was expelled from the centre-right New Democracy.