What Greece's Election Means For The Rest Of The World
What Greece's Election Means For The Rest Of The World
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Greece will vote in parliamentary elections on Sunday, nearly one month after Prime Minister Antonis Samaras was forced to call a snap vote after parliament failed to agree on a new president.
Polls indicate that radical left-wing party Syriza is set to take the most votes. Whether Syriza gains an outright majority or forms a ruling coalition, the party's firebrand leader Alexis Tsipras looks set to become prime minister of the troubled European nation.
Samaras' popularity has declined significantly since coming into office in 2012, amid a strict austerity program imposed by Greece's "troika" creditors, made up of eurozone countries, the European Central Bank and the International Monetary Fund.
Greece received bailouts from the "troika" in 2010 and 2012 totaling 240 billion euros (or $283 billion), and continued funding is set for review again in February.
Despite recent economic gains,unemployment remains as high as 26 percent and the economy is still struggling, the Economist reports.
Tsipras has campaigned furiouslyagainst the austerity measures and vowed to renegotiate the country's huge debt burden. But countries who funded the bailouts, most notably Germany, have refused to negotiate debt relief. The potential standoff raises the prospect that Greece will default on its debt and leave the euro currency, causing economic and political reverberations around the world.
Here are some of the potential implications of Greece's election for the rest of the globe:
HISTORIC MOMENT FOR THE EURO
Analysts say that despite their threatening rhetoric, both Greece and Germany have more interest in striking a deal than a Greek default.
Tsipras moderated his talk about facing down Europe as the election got closer, the Guardian explained. The newspaper noted that Tsipras, if victorious, has a delicate balancing act ahead between the demands of Greece's creditors and his anti-euro political base.
Both Tsipras and German Chancellor Angela Merkel insist that Greece should stay in the eurozone. If Greece does leave, it would be the first departure in the currency's history.
Such a move would not necessarily prompt other European countries to follow. "Investors seem to be betting that the people of Italy, Spain and France will peek at the chaos in Athens, shudder -- and stick to the austerity that Germany’s Angela Merkel has prescribed for them," The Economist wrote.
Yet it would be a huge step into the unknown for the young currency union, particularly among weaker eurozone economies with political troubles of their own, such as Italy and Spain.
DESTABILIZED GLOBAL ECONOMY
Since the 2008 financial crisis, concerns that Greece will default on its debt -- thehighest in Europe relative to gross domestic product -- have repeatedly flared. Economists warn that a Greek default would undermine confidence that other debt-ridden countries will meet their obligations, sending financial markets into further crisis.
However, as Bloomberg noted, some of the most dire predictions were averted by European Central Bank guarantees, and Europe is less panic-stricken today about Greece's potential to destabilize the global economy.
But unpredictability is not good for financial stability. The Wall Street Journal reports that Greece's economy is already suffering from political uncertainty surrounding the elections.
EMBOLDENED RADICAL POPULIST PARTIES
Populist parties of both the left and right are surging across Europe, and could be boosted by a Syriza win.
"With similar anti-establishment parties gaining ground rapidly in a number of other countries scheduled to hold elections in 2015, the spill-over effects from a further period of Greek turmoil could be significant," The Economist Intelligence Unit warned in research for the BBC. "Anti-establishment sentiment has surged across the eurozone (and the larger EU) and the risk of political disruption and potential crises is high."
Anti-establishment parties have even rallied together despite radically different political leanings. The leader of France's far-right National Front party, Marine Le Pen, expressed support for the far-left Syriza despite their conflicting political backgrounds and immigration policies.
RADICAL FOREIGN POLICY?
Syriza also send warning bells across Europe by supporting Greece's pullout from NATO and criticizing sanctions on Russia.
However, the party has also softened its stance on foreign policy issues in the run-up to the election, refocusing on the momentous domestic challenges in the country, Bloomberg noted: "Syriza is sacrificing its more revolutionary ambitions to the overriding goal of getting better terms for Greece’s economic aid package." theworldpost
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