A new Greek crisis is on the horizon after the snap general elections that could bring leftist SYRIZA to power which may lead the country to a direct confrontation with its international creditors, according to the Financial Times.
The elections in Greece next month and the likely victory of far left SYRIZA will scare politicians and investors. Once again, there would be the gloomy debate of related potential disasters: default, mass exit of depositors, social unrest and a possible exit of Greece from the eurozone.
The dormant question about Greece’s place in the eurozone has returned, just two years after the country’s debt crisis nearly triggered a break-up of the currency union and shook the European project to its core, says the Financial Times article.
It comes with several eurozone countries struggling with weak growth, the rise of populist anti-EU parties and widespread disenchantment with the politics of austerity promoted by Germany.
European policy has forced many voters to rise against economic austerity and to cast their vote in antisystemic parties who reject the European consensus on how to preserve monetary union.
Investors are worried at the prospect of a victory by SYRIZA, which has pledged to write off much of Greece’s debt and renegotiate the terms of its bailout. The Athens stock exchange fell almost 11 percent to a two-year low before regaining some ground. Greek 10-year bond yields jumped to a year high of 9.8 percent while the government’s short-term borrowing costs hit a record high of 12 percent.
Germany is cautious with SYRIZA as a big haircut of the Greek debt may be economically feasible, but will certainly open the door for other similar requests from Italy, Portugal, Ireland, Spain and even France.