GREECE: TEACHING THE MORTALS A LESSON

The Greek gods have their own way of punishing the arrogance of mortals. Things were going so well for Greek prime minister Antonis Samaras. He had kept together an unlikely 3-party coalition for one challenging year, appeased the fearsome troika and found some common ground with Germany’s Angela Merkel. He was starting to savour the first fruits of success.

Signs have multiplied in the last three months that Greece can return to growth in mid-2013, economic sentiment has surged above the euro-average, tourists are returning to the Greek islands in droves. Despite record unemployment, Samaras and his Nea Dimokratia party were starting to pull ahead of the loony left opposition in the opinion polls.

And then, quiet confidence turned into pushy arrogance. That Samaras decided to close the unloved state broadcaster ERT was quite understandable. That he did so without getting the consent of his two coalition partners first was not. As their punishment, the gods sent the would-be highflyer straight back to Earth. But they also took care to not let him crash.

The one coalition partner, PASOK, forced Samaras to beat a humiliating retreat: Ahead of a major overhaul, ERT will reopen with temporary contracts for 2000 of its roughly 3000 employees. The other partner, Dimar with its 14 parliamentarians, left the coalition completely.

The rump coaltion now has 153 of the 300 seats in parliament. That is an uncomfortably small majority. Since the start of the crisis at the end of 2009, Greek governments usually suffered some attrition in tough votes on austerity and reforms. And although Greece has done much of the very heavy lifting, Samaras will need to win further very contentious votes to keep Greece on track.

The saving grace for Samaras and the future of Greece could be that Dimar and many of the dissidents who had left ND and Pasok in previous austerity votes have nothing to gain from new elections. Most of them would probably lose their seats. Many of them genuinely care about the stability of Greece.

When push comes to shove, we expect Samaras to muster the votes he needs to get further reforms through parliament. But he better make sure that he does not test fate again by forgetting to fully consult with his remaining coalition partner. And the troika needs to learn the lesson that a little flexibility may be needed to secure the success of the Greek programme.

The progress in Greece has started to become visible in the data. Greeks may soon be rewarded for the tough sacrifices most of them had to make in the last three years. But political mistakes could still put all this at risk.