Winners in Greek poll may pull out of eurozone

Last Updated 24 January 2015, 19:58 IST

 Greece’s radical anti-austerity Syriza party, led by Alexis Tsipras, appears poised to win Sunday’s snap parliamentary elections. It now leads in most polls.

The Greek public supports Tsipras even as his rhetoric instills fear among wealthy Greeks that a Syriza victory could wreak financial havoc and pave the way for the nation’s exit from the eurozone.

Syriza leaders insist they will ignore all austerity measures that the European Committee, the European Central Bank and the International Monetary Fund imposed on Greece as the cost of a 240-billion-euro bailout. They also vow to renegotiate the country’s debt – and threaten to leave the eurozone if they cannot do this.

There is precedent for this. If a portion of Germany’s World War II debt could be forgiven, Syriza leaders argue, Greece’s lenders should be able to forgive some of Athens’ mountain of debt. This would clearly help speed Greece’s economic recovery — an outcome that would benefit the entire European Union.

The threat to renegotiate Greece’s debt does not sit well with the European Central Bank, the IMF or the European Commission. Yet a new debt arrangement could lead to a more sensible approach because it would acknowledge that Greece may never be able to fully repay its creditors while also expanding its economy.

Eurozone members, particularly Germany, continue to view austerity as the key to their efforts to force Greece to reform its economy. But Syriza is pushing back. It contends that growth and investment are crucial. If Syriza can negotiate a reduction in Greece’s outstanding debt, more funds could be allocated to encourage consumer spending and investment in the country.

In addition, Syriza pledges to cut property taxes, reduce unemployment, increase wages and stimulate the economy — all of which may help stem the flight of young Greeks to other nations.

Financial catastrophe

To stop Syriza, Antonis Samaras’ conservative party, New Democracy, has mounted an aggressive campaign. It warns that a Syriza victory could result in chaos and bankruptcy for Greece.

Should Syriza win on Sunday, the conservatives’ worst-case scenario looks highly unlikely, however. Greece’s gross domestic product is now less than 2 percent of the European Union’s overall GDP. So financial catastrophe is improbable.

Regardless of who wins, the new government will have to grapple with a deep recession that has lasted for seven years. Thousands of companies have gone bankrupt. Many storefronts are vacant.

Greece has endured severe declines in productivity and personal income, and an alarming spike in unemployment. It reached roughly 28 percent by March 2013.

An estimated 20,000 Greeks are now homeless — a relatively new problem for Greece. More than a half million people now rely on soup kitchens for food. Nearly one in 10 Greeks lacks unemployment benefits.

(Published 24 January 2015, 19:58 IST)

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