Dimitri Vorris: STRATFOR: GREEK ELECTIONS SETTLED NOTHING...

6.19.2012

STRATFOR: GREEK ELECTIONS SETTLED NOTHING...

(...)The Greek vote has settled nothing. In fact, it may not even lead to the formation of a government; the last election failed to produce a government and forced this election. That the European crisis most severely affected a country so politically fractious could be seen as pitiable. On the other hand, one could argue that the crisis inevitably would be most severe in the most divided country -- not because the divisions caused the crisis, but because the crisis caused the divisions.

The pressure brought on by the circumstances in Greece undermined whatever political order was in place; the choices for policymakers were so limited and so frightening that coherent responses were difficult. Greece has options, but it is unable to choose one. More than anything, Europe wants a decision on its future, whatever that decision might be. On June 17, Greece disappointed Europe not because of the choice it made but because it was crippled with indecision.

Crisis Management

Greece's indecisions are at the ground level of Europe. Another and more significant framework for indecision is emerging in Franco-German relations. The French Socialist Party won an absolute majority the same day that the Greeks entered another gridlock. This makes it possible for France's Socialists to form a government without the Greens, giving Hollande a strong and coherent platform from which to operate.

France's position on managing the sovereign debt crisis differs fundamentally from Germany's. Germany has said it will not agree to proposed solutions that would essentially turn the eurozone into a transfer union until the rest of Europe can balance their budgets through austerity measures. Germany believes this must be the first step to further EU and eurozone integration. Hollande takes a different position. He, too, wants greater European and eurozone integration. However, Hollande advocates economic stimulus alongside austerity measures as a means to rebalance the finances of European governments.