News / Europe

Greek Election a Referendum on Its Eurozone Membership

A man passes by election posters of the conservative new Democracy party and the left coalition Syriza party in central Athens, June 13, 2012.
A man passes by election posters of the conservative new Democracy party and the left coalition Syriza party in central Athens, June 13, 2012.
VOA News
Greece's parliamentary elections on Sunday have effectively become a referendum - will Athens keep its eurozone membership or become the first to quit the 17-nation currency bloc?

It is a simple question, but one with potentially far-reaching implications for Greece, the rest of Europe and the world economy. The Greek government has piled up a mountain of debt over the years, but its European neighbors and the International Monetary Fund have twice bailed out the country, sending it billions of dollars in the last two years. Foreign creditors have eliminated more than half the debt Greece owed them.

But many Greeks are angered at the terms of the rescue packages -- that the government impose far-reaching austerity measures, cut wages and pensions, and eliminate thousands of government jobs. On the other hand, Greece's European neighbors say they will cut off the flow of bailout funds if a new government reneges on the country's earlier austerity pledge.

(Click to Expand)(Click to Expand)
x
(Click to Expand)
(Click to Expand)
Greece's fractious political parties were unable to forge a new coalition government after splintered parliamentary elections last month, necessitating the new vote Sunday.

One of the leading candidates to head a new government is Alexis Tsipras, head of the radical left Syriza party who is calling for cancellation of the bailout terms. Surveys show Tsipras running close with conservative leader Antonis Samaras, who supported the austerity measures along with socialist party chief Evangelos Venizelos.

A close vote could leave the parties deadlocked once again, and Greece's continued membership in the euro currency bloc in question. While Greece's economy accounts for just 2 percent of the eurozone economy, some analysts think a default on its financial obligations and a eurozone exit could easily lead to turmoil on world financial markets and a sharp downturn in the U.S. and world economies.

The country's biggest bank, the National Bank of Greece, recently said that a eurozone exit "would lead to a significant drop in living standards for Greek citizens." The bank said Greeks would lose more than half their income and the value of the reinstated drachma would fall 65 percent. The country's already high jobless rate would soar to 34 percent, and inflation would surge to 30 percent.

Despite the dire predictions, Syriza leader Tsipras says the bailout terms are worse for Greeks. He declared this week that the bailout deal "is already in the past" and "will be history for good on Monday."

Yet Tsipras says he wants to keep Greece in the eurozone, but with renegotiated bailout terms. Surveys show 80 percent of Greeks want to stay in the currency union as well.

Numerous European leaders say they want Greece to remain in the eurozone, while adhering to its earlier austerity pledge. But one international finance expert, Andreas Hauskrecht of the Indiana University business school, said he thinks it is almost certain Greece will default and leave the eurozone.

"The reasons are very simple," he said. "Let's take the most optimistic way. They are able to form a government after the election June 17. They are able to hold to their promises on the fiscal side, and they still will default because the Greek economy is shrinking so quickly that the numbers that were the basis for the original plan to cut fiscal deficits are insufficient.

"So basically, they are in a vicious circle, and it's only a question of time until they will have to default," continued Hauskrecht. "The less optimistic say they cannot build a stable government, which is much more likely, and then they will default already in July 2012."

Hauskrecht, like the National Bank of Greece, says a eurozone departure will not produce better times for Greeks.

“Greece for me looks almost like a failed state, with all the categories that we have for failed states," he said. "So basically, there is no government structure left. There is very irresponsible behavior from the different power groups in the society, and they are basically digging the hole deeper and deeper every month. We will have [significant] wealth losses, [significant] losses and decline in the further economy. They’ll face very, very hard times for the next year. Leaving the euro is the end point of a catastrophic development that went over years. It certainly is not the turning point that will give them wonderful perspective soon.”

Syriza leader Tsipras says it is not in Europe's interest to force Greece out of the eurozone. He said that if one of the 17 countries is "brought to collapse ... the fire will become unquenchable" - and will result in the eurozone's demise.

Some information for this report was provided by AP, AFP and Reuters.

You May Like

Philippines, Muslim Rebels Try to Salvage Peace Pact

Peace process faces major setback after botched military operation to find terrorists results in bloody gunbattle between government forces, Moro Islamic Liberation Front fighters More

Republicans Expect Long, Expensive Presidential Battle

Political strategist says eventual winner will be one who can put together strongest coalition of various conservative groups that make up Republican Party More

Video New Wheelchair Is Easier to Use, Increases Mobility

Engineers have come up with a lever-operated design that makes use of easily accessible bicycle technology More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Liberia's Almost Last Ebola Patient Grateful but Still Grievingi
X
Benno Muchler
March 26, 2015 3:41 PM
Beatrice Yardolo was to make history as Liberia’s last Ebola patient. Liberians recently started counting down 42 days, the period that has to go by without a single new infection until the World Health Organization can declare a country Ebola-free. That countdown stopped on March 20 when there was another new case of Ebola, making Yardolo’s story a reminder that Ebola is far from over. Benno Muchler reports from Monrovia.
Video

Video Liberia's Almost Last Ebola Patient Grateful but Still Grieving

Beatrice Yardolo was to make history as Liberia’s last Ebola patient. Liberians recently started counting down 42 days, the period that has to go by without a single new infection until the World Health Organization can declare a country Ebola-free. That countdown stopped on March 20 when there was another new case of Ebola, making Yardolo’s story a reminder that Ebola is far from over. Benno Muchler reports from Monrovia.
Video

Video Cambodian Land Grabs Threaten Traditional Communities

Indigenous communities in Cambodia's Ratanakiri province say the government’s economic land concession policy is taking away their land and traditional way of life, making many fear that their identity will soon be lost. Local authorities, though, have denied this is the case. VOA's Say Mony went to investigate and filed this report, narrated by Colin Lovett.
Video

Video US, South Korea Conduct Joint Military Exercises

The Eighth U.S. Army Division and the Eighth Republic of Korea Mechanized Infantry Division put on a well orchestrated show of force for the media this week during their joint military training exercises in South Korea. VOA’s Seoul correspondent Brian Padden was there and reports the soldiers were well disciplined both in conducting a complex live fire exercise and in staying on message with the press.
Video

Video Space Program Status Disappoints 'Last Man on the Moon'

One of the films that drew big crowds last week at the annual South by Southwest festival in Austin, Texas, tells the story of the last human being to stand on the moon, U.S. astronaut Eugene Cernan. It has been 42 years since Cernan returned from the moon and he laments that no one else has gone there since. VOA’s Greg Flakus reports.
Video

Video Young Filmmakers Shine Spotlight on Giving Back

A group of student filmmakers from across the United States joined President Barack Obama at the White House this month for the second annual White House Student Film Festival. Fifteen short films were officially selected from more than 1,500 entries by students aged 6 through 18. The filmmakers and their families then joined the president and a group of celebrities for a screening of their films. VOA’s Julie Taboh reports.
Video

Video VOA Exclusive: Interview with Afghan President Ashraf Ghani

Afghan President Ashraf Ghani, during his first visit as president to Washington, gave a one-on-one interview with VOA Afghan Service reporter Said Suleiman Ashna, about his request for a change in U.S. troop levels, the threat from the Islamic State, and repairing relations with the United States and Pakistan. The interview was held at Blair House, late Sunday, in Pashto.
Video

Video California Science Center Tells Story of Dead Sea Scrolls

The ancient manuscripts were uncovered in the mid-20th century, and they are still yielding clues about life and religious beliefs in ancient Israel. As VOA's Mike O'Sullivan reports, an exhibit in Los Angeles shows how modern science is bringing the history of these ancient documents to life.
Video

Video Angelina Jolie Takes Another Bold Step

Hollywood actress and filmmaker Angelina Jolie has revealed she had her ovaries and fallopian tubes removed to lower her odds of getting cancer. Doctors say the huge publicity over her decision will help raise awareness about the importance of cancer screening. VOA’s George Putic has more

All About America

Circumventing Censorship

An Internet Primer for Healthy Web Habits

As surveillance and censoring technologies advance, so, too, do new tools for your computer or mobile device that help protect your privacy and break through Internet censorship.
More