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

Mali's Female Basketball Players Rebound After Islamist Occupation

Islamist extremists ruled northern Mali for most of 2012, imposing strict Sharia law, and now some 18 months later, the region is slowly getting back on its feet More

Video Vietnamese Staging Chinese Product Boycott After Oil Rig Spat

Many Chinese-made products go unsold, for now, with numerous Vietnamese consumers still angry over recent dispute More

Koreas Mark 61st Anniversary of War Armistice

Muted observances on both sides of heavily-armed Demilitarized Zone that separates two decades-long enemies 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.
Students in Business for Themselvesi
X
Mike O'Sullivan
July 26, 2014 11:04 AM
They're only high school students, but they are making accessories for shoes, fabricating backpacks and doing product photography - all through their own businesses. It's the result of a partnership between a non-profit organization that teaches entrepreneurship and their schools. VOA's Mike O'Sullivan and Deyane Moses met the budding entrepreneurs near Los Angeles.
Video

Video Students in Business for Themselves

They're only high school students, but they are making accessories for shoes, fabricating backpacks and doing product photography - all through their own businesses. It's the result of a partnership between a non-profit organization that teaches entrepreneurship and their schools. VOA's Mike O'Sullivan and Deyane Moses met the budding entrepreneurs near Los Angeles.
Video

Video Astronauts Train in Underwater Lab

In the world’s only underwater laboratory, four U.S. astronauts train for a planned visit to an asteroid. The lab - called Aquarius- is located five kilometers off Key Largo, in southern Florida. Living in close quarters and making excursions only into the surrounding ocean, they try to simulate the daily routine of a crew that will someday travel to collect samples of a rock orbiting far away from earth. VOA’s George Putic has more.
Video

Video Not Even Monks Spared From Thailand’s Junta-Backed Morality Push

With Thailand’s military government firmly in control after May’s bloodless coup, authorities are carrying out plans they say are aimed at restoring discipline, morality and patriotism to all Thais. The measures include a crackdown on illegal gambling, education reforms to promote students’ moral development, and a new 24-hour phone hotline for citizens to report misbehaving monks. Steve Sandford reports from Bangkok.
Video

Video Virtual Program Teaches Farming Skills

In a fast-changing world beset by unpredictable climate conditions, farmers cannot afford to ignore new technology. Researchers in Australia are developing an online virtual world program to share information about climate change and more sustainable farming techniques for sugar cane growers. As VOA's Zlatica Hoke reports, the idea is to create a wider support network for farmers.
Video

Video Airline Expert: Missile will Show Signature on Debris

The debris field from Malaysia Airlines Flight 17 is spread over a 21-kilometer radius in eastern Ukraine. It is expected to take investigators months to sort through the airplane pieces to learn about the missile that brought down the jetliner and who fired it. VOAs Carolyn Presutti explains how this work will be done.
Video

Video Treatment for Childhood Epilepsy Heats up Medical Marijuana Debate

In the United States, marijuana is classed as an illegal drug by the federal government. But nearly half the states have legalized it, to some degree. Proponents say some strains of marijuana might have exceptional health benefits, for treating pain or inflammation in chronic conditions such as cancer, multiple sclerosis and epilepsy. Shelley Schlender reports on a strain of medical marijuana developed in Colorado that is reputed to reduce seizures in childhood epilepsy
Video

Video Airbus Adds Metal 3D Printed Parts to New Jets

By the end of this year, European aircraft manufacturing consortium Airbus plans to deliver the first of its new, extra-wide-body passenger jets, the A350-XWB. Among other technological innovations, the new plane will also incorporate metal parts made in a 3-D printer. VOA's George Putic has more.
Video

Video AIDS Conference Welcomes Exciting Developments in HIV Treatment, Prevention

Significant strides have been made in recent years toward the treatment and prevention of HIV, the virus that causes AIDS. This year, at the International AIDS Conference, the AIDS community welcomed progress on a new pill that may prevent transmission of the deadly virus. VOA’s Anita Powell reports from Melbourne, Australia.
Video

Video IAEA: Iran Turns its Enriched Uranium Into Less Harmful Form

Iran has converted its stockpiles of enriched uranium into a less dangerous form that is more difficult to use for nuclear weapons, according to the United Nations’ Atomic Energy Agency. The move complies with an interim deal reached with Western powers on Iran's nuclear program last year, in exchange for easing of sanctions. Henry Ridgwell reports for VOA from London.

AppleAndroid