September 30, 2015 / 4:18 PM / 2 years ago

Political surprise in eurozone - austerity is a vote-winner

ATHENS (Reuters) - Upending conventional wisdom, there is now a strong chance that all the European governments that have accepted or implemented unpopular EU/IMF austerity programs may be re-elected in the coming months or remain the strongest political force.

A picture illustration taken with the multiple exposure function of the camera shows a one Euro coin and a map of Europe, January 9, 2013. REUTERS/Kai Pfaffenbach

From Lisbon and Madrid to Dublin, incumbents are gaining ground in opinion polls while the opposition is split among mainstream and radical parties, reducing the prospect of ousting sitting prime ministers and also encouraging investors to buy their countries’ debt.

One explanation is a gathering economic recovery, which is strongest in Ireland and Spain and picking up in Portugal, although unemployment remains painfully high and living standards have fallen for many in those countries.

There are several other factors: nervous voters prefer to play safe after taking the pain of spending cuts and tax rises; untried opposition leaders fail to offer a credible alternative to austerity; populist or nationalist parties are sapping the main opposition party everywhere.

Whatever the reason, it looks as if euro zone politicians may have found an answer to the economic reform conundrum enunciated by then Luxembourg Prime Minister Jean-Claude Juncker in 2007: “We all know what to do. We just don’t know how to get re-elected after we’ve done it.”

It’s not that Europeans have suddenly fallen in love with pay cuts, later retirement, lower welfare benefits or reduced public services. But many are resigned to such sacrifices to preserve a somewhat slimmed-down European social model.

Leftist Greek Prime Minister Alexis Tsipras showed with a convincing victory on Sept. 20 that it is possible to perform a brazen U-turn and swallow previously rejected stringent bailout terms without being wiped out electorally. The hard leftist faction that broke with his Syriza party over the bailout deal failed to win enough votes to get back into parliament.

The political and economic turmoil that plunged Greece back into recession in Tsipras’ first six months in power may act as a deterrent to radical experiments elsewhere in the euro zone.

As in Britain’s May election, when Prime Minister David Cameron’s Conservatives were returned to office with an outright majority of seats despite five years of public spending and welfare cuts, the Greek result confounded opinion polls that had pointed to a dead heat and a hung parliament.

Seen in that light, the opposition Labour party’s choice of anti-austerity leftist Jeremy Corbyn as its new leader after more moderate center-leftist Ed Miliband lost to Cameron, seems at odds with electoral trends around Europe.

PULLING AHEAD

In the final straight before Sunday’s Portuguese election, Prime Minister Pedro Passos Coelho’s center-right coalition, which faced down strikes to implement an EU/IMF bailout plan, is pulling ahead of the mainstream opposition Socialist party.

Passos Coelho is campaigning on his record of having steered the country safely through a sovereign debt and competitiveness crisis that forced his Socialist predecessor to apply for an international rescue in 2011.

He has struck a chord with voters by promising to maintain economic stability, which he says only he can deliver. The election coincides with the strongest economic performance since the end of the debt crisis, with consumer confidence close to its highest levels since 2001.

Socialist challenger Antonio Costa has struggled to pin blame for hardships on the government, since the Socialists agreed to the bailout terms before they lost the last election.

Across the border in Spain, Prime Minister Mariano Rajoy’s conservative People’s Party has stretched its lead over the main opposition Socialists to about six percentage points, while new insurgent leftist and centrist parties, and Catalan nationalists are pulling voters away from the mainstream center-left.

With the PP polling just below 30 percent, Rajoy is still well short of the score he would need to secure an outright majority on Dec. 20, and his party has suffered a series of disastrous regional and municipal election results this year.

Yet many political analysts expect Rajoy will pick up at least enough support to lead a minority administration, while novice Socialist leader Pedro Sanchez will struggle to find compatible coalition partners.

Like Passos Coelho, the uncharismatic Rajoy insists only he can guarantee stability and stop populist forces taking Spain back to the brink, after he avoided a full sovereign bailout when he took an international loan to rescue the banks in 2012.

Last Sunday’s strong regional election win by Catalan separatists, challenging rule from Madrid, may also cause a Spanish unionist backlash in Rajoy’s favor, some say.

The anti-austerity leftist Podemos (We Can) party appears to be fading at around 15 percent nationwide after briefly drawing level with the two mainstream parties - not strong enough to be kingmaker but sufficient to weaken the Socialists.

Ireland’s economy is set to grow faster than any other in the EU at near 6 percent this year, fuelling steadily rising support for Prime Minister Enda Kenny’s Fine Gael party, while left-wing Euroskeptical challenger Sinn Fein has fallen back and center-right rival Fianna Fail has stalled.

    With the recovery accelerating, debate has shifted from the merits of a seven-year austerity drive that followed the 2008 financial crisis - and was accepted with little protest - to whether voters feel better off. Unemployment and personal debt levels are still high.

    Kenny and center-left coalition partner Labour aim to return to power together and will campaign on a message of maintaining economic stability. They will unveil fresh personal tax cuts and spending increases in an Oct. 13 budget, after which Kenny may call a snap election six months ahead of schedule to capitalize on the momentum.

The usual cautions apply. Pollsters have got several elections wrong this year and the voters’ mood may swing again.

And non-euro Poland, the only EU state to have avoided recession since the 2008 crisis, seems set to buck the trend and punish an economically successful center-right government by electing a more fiscally loose party next month, opinion polls suggest.

Additional reporting by Axel Bugge in Lisbon, Julien Toyer in Madrid and Padraic Halpin in Dublin; Writing by Paul Taylor; Editing by Gareth Jones

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