WSJ: Greece revisits the panic

Stock markets took a tumble last week as the announcement of a snap presidential election in Athens triggered fears about how lasting Greece’s reform-and-recovery drive will be. This panic about democracy is instructive.

According to The Wall Street Journal, the vote for the ceremonial role of president, which will likely take three rounds of balloting in the parliament over the next few weeks, has become a test of confidence in Prime Minister Antonis Samaras. He will be forced to call a snap parliamentary election next month if he can’t secure 180 votes in the 300-member body for his preferred candidate by the third round. He needs support from 25 independent members to hit that threshold, and he’s not certain to get it. If he fails, voters will elect a new parliament at the end of January.

Mr. Samaras’s decision to call the presidential election that threatens his government appears to be a gambit to neutralize the increasingly popular far-left Syriza party, which promises to undo painful reforms and force creditors to take bigger haircuts on Greek debt. With negotiations for Greece’s exit from its bailout looming, Mr. Samaras seems to hope voters will return his unpopular government to power rather than risk further chaos by handing Syriza power for the exit talks.

That strategy is symptomatic of the broader political failures that have brought Greece to this pass. Since 2010, Athens has reduced pensions, health-care spending and government employment, and as a result borrowing costs have fallen and the economy was showing signs of growing again. But hardly any Greek politician, including the Prime Minister, has bothered to try to persuade voters of the merits of undertaking painful reforms today in exchange for faster, sustainable growth tomorrow.

On the contrary, Mr. Samaras has tried to scale back some reforms, ostensibly to show his independence from the troika of the European Commission, European Central Bank and International Monetary Fund that have orchestrated the bailout. In some cases this has been just as well, as with plans for tax cuts to roll back some of the IMF’s ill-advised hikes. But he has also dragged his feet on many other measures, such as further reducing the bloated government headcount, waiting for the troika to force his hand and then blaming the foreigners when the measures are unpopular.

This “the-bailout-made-me” approach hasn’t built anything resembling a political consensus behind reform, let alone a broader understanding among voters that Greece’s crisis was largely Greece’s fault. No wonder Syriza has enjoyed such success arguing reforms were entirely unnecessary. Mr. Samaras himself was against the bailout and its attendant reforms when it began in 2010 before he was for it after he won election in 2012. Now his strategy is to scare voters rather than persuade them.

Mr. Samaras’s candidate may still win the presidential election, but investors will remember it as a close-run thing. Before anyone bemoans the fickleness of Greek voters, look at this episode instead as a warning of what happens when the political class attempts to foist policies on voters without troubling to do the legwork of persuasion. It would help if, rather than fearing democracy, European leaders got better at it.