While Greece seems to have secured its immediate survival with a pending first series of $56.7 billion in loans and a bond buyback problem to write down its debt by 20 billion euros ($25.8 billion) if the current coalition government gives way to another, there is still a 33 percent chance the country could leave the Eurozone, the chief of the Standard & Poor’s ratings agency has estimated.
Moritz Kraemer told a business conference in Tel Aviv that if Greece does leave the Eurozone the consequences would be disastrous but could deter other countries from deciding to take the same route out and that he believed the financial bloc, which now has 17 countries including Greece, would survive the shock.
“While we acknowledge that there is a non-trivial possibility of a government of Greece, some future government, almost certainly not the current one … might decide that after all those efforts, after year after year after year of recession, falling living standards and rising unemployment, you might just try to break with what you’ve been trying for so long,” Kraemer said.
Greece’s current shaky coalition government led by Prime Minister Antonis Samaras, head of the New Democracy Conservatives, and his partners, the PASOK Socialists and Democratic Left, are under intense fire for pushing through a $17.45 billion spending cut and tax hike program that has put more punishing measures on workers, pensioners and the poor.
That has pushed the major opposition party, the Coalition of the Radical Left (SYRIZA) into the lead in recent polls. The party’s leader, Alexis Tsipras, is vehemently against the bailout packages and austerity measures and while he said he wants to keep Greece in in the Eurozone, his political opponents said his agenda would force Greece to leave. Tsipras also wants Greece to have a moratorium on paying its loans, which could total $325 billion after a second bailout is completed.
Kraemer didn’t mention SYRIZA by name in his assessment but warned of what could happen if Greece gives up the euro. “If such a scenario would happen and we give it a probability of around one in three, we believe that the consequences for Greece on the social, on the political and the economic spheres would be sufficiently negative, it would be very negative, actually it might be bordering on a humanitarian crisis,” Kraemer said.
“Clearly leaving the euro area without financing on the balance of payments would create great hardship for the population of the country and we believe that if this were to happen … the effect would be so negative that other countries would probably think twice about following.”
(Sources: Reuters, Capital.gr)