Rolling the dice yet again in Greece

While there is every reason to be highly critical of Alexis Tsipras’s six-month record as Greek prime minister, one has to admire his political boldness. He does not shy away from taking big political risks when he finds that the going is getting rough. However, only time will tell whether his most recent gamble to dissolve the Greek parliament and to call new elections proves to be another stroke of political genius. Or whether, instead, it proves to be a foolhardy gamble by a youthful and highly inexperienced politician.

{mosads}In calling new elections for late September, Tsipras is hoping to rid himself of the rebellious faction of his Syriza party and to return to office with a majority government that can successfully implement a highly unpopular economic bailout program. He is basing his gamble on the present disarray of the opposition as well as on his current popularity as the only leader who is perceived as being able to keep Greece in the euro.

In going to the polls for yet the third time this year, Tsipras is also hoping that the Greek electorate will turn a blind eye to the fact that his many missteps have plunged the Greek economy into a renewed economic recession. He is also hoping that the Greek electorate will reward him for having stood up to German Chancellor Angela Merkel and the International Monetary Fun (IMF), even though this has meant that Greece was forced to accept much worse terms on its bailout package than it could have obtained at the start of his administration.

The stakes in Tsipras’s gamble could not be higher, since the already highly battered Greek economy can hardly afford another extended period of political instability. Political instability could also further damage Greece’s reputation as a reliable political partner in Germany, where patience is wearing very thin with Greece’s inability to live up to its European commitments. Yet this is precisely what will occur if Tsipras does not return to office with a majority government that is prepared to fully implement the very difficult terms of its third bailout agreement.

It is of course possible that Tsipras’s gamble will pay off and he will win a majority in the forthcoming election. However, the odds would seem to be long that he will fail in this endeavor. After all, his party is split, the economy is in shambles and he has very little to show for his six months in office. If he does fail, it is difficult to see how a weak coalition government will be able to implement the rigorous IMF-EU bailout package, which itself envisages that, even under the best of circumstances, the very depressed Greek economy will face at least another two years of painful economic recession. It will also be difficult to understand why Tsipras insisted on going yet again to the polls rather than on forming a coalition party with the pro-euro opposition.

Lachman is a resident fellow at the American Enterprise Institute. He was formerly a deputy director in the International Monetary Fund’s Policy Development and Review Department and the chief emerging market economic strategist at Salomon Smith Barney.