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Greece Faces Fresh Elections… And A Future Without the Euro?

Greece Faces Fresh Elections… And A Future Without the Euro?

 

Greeks will return to the polls in mid-June after politicians again failed to form a coalition government on Tuesday. At elections on May 6, a majority of voters backed parties opposed to the terms of the bailout demanded by the “troika,” the European Union, the International Monetary Fund and the European Central Bank. Austerity measures are demanded in exchange for Greece receiving 240 billion euros ($307 billion) of aid to address the country’s massive debt and assist it in meeting the demands of foreign creditors.

Greeks’ rejection of these has fueled fears that the country’s exit from the euro zone is not only likely but imminent.

The euro fell to a four-month low on Tuesday: Greece defaulting on its debt portends new troubles in Ireland and Portugal, who also carry heavy debts and rely on foreign creditors.

European Leaders Want Greece in Euro Zone, Provided It Sticks to Austerity

On Monday, the chairman of the eurozone group of finance ministers, Jean-Claude Juncker of Luxembourg, had said he wanted Greece to stay in the euro zone. But he emphasized that Athens must alos stick to the terms of the bailou agreement — the unpopular, and more and more resented, requirements to raise taxes while cutting salaries, pensions and government jobs. Greeks who have jobs in the private sector are also feeling the effects of the economic crisis deeply, with some seeing their wages cut by half.

Saying that amending the  bailout agreement is not an option, German Finance Minister Wolfgang Schaeuble is calling Greece’s new vote nothing less than a referendum on whether the country will remain in the euro zone or not. At the first meeting of German Chancellor Angela Merkel and just-inaugurated French President François Hollande on Tuesday, both said they would consider measures to instigate growth in Greece, provided that voters show their commitment to austerity.

Greek President: “Things Will Get Worse”

Since the May 6 elections, nearly $900 million has been withdrawn from Greek banks. According to the New York Times, Greeks withdrew $6.5 billion in January and have been averaging withdrawing $4 billion a month since the end of 2009, when the debt crisis first erupted. The Greek central bank is warning of a “great fear that could develop into a panic” and Greek President Karolos Papoulias said that “things will get worse” in the next two days.

Polls have shown that anti-austerity party Syriza, the Coalition of the Radical Left, would place first in elections. Syriza placed second in the May 6 elections and has refused to join in forming a unity government; the party’s leader, 37-year-old Alexis Tsipras, has emphasized that he will not renege on promises made to voters during elections to reject austerity measures. Tsipras has contended that if Greece leaves the euro zone, it will happen because the terms of the bailout have become impossible and has therefore “irrefutably changed the terms of the debate” even as critics have accused him of being a “risk to Greek stability.”

Tsipras was certainly being referred to in remarks made after the failed talks by Evangelos Venizelos, the leader of the Socialist party PASOK. Noting that “unfortunately, the country is heading again toward elections,” Venizelos — whose party won just over 13% of the vote, its worst showing in 40 years — said that he hoped Greeks would make a more “historically well-considered” choice in new elections.” The attempts to create a unity government had failed, said Venizelos, “because certain individuals put their party’s interest above the good of the country.”

Papoulias will form a caretaker government on Wednesday. Under Greek law, “well respected” individuals are to form such a government, with a prime minister in charge; this latter role is likely to go to the president of the Council of State, Greece’s highest administrative court, Panayiotis Pikramenos.

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13 comments

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2:03AM PST on Feb 4, 2013

Tough times ahead. OMG.





3:00PM PDT on May 17, 2012

The crisis in Greece is the tip of the iceburg. The whole of the EU is affected. No doubt there will be those outside of Europe who will think that they may not be affected. It should not be forgotten that a serious failure of the Euro could have a serious effect on other countries. According to Wikipedia the EU is the largest economy in the world, and the largest trading partner with the US, China and India. If the Euro, as a currency, begins to unravel, and it looks like it could, then the ripples will be felt far and wide. Action is need now to ensure the continuance of the Eurozone, along with some very much overdue change.









1:39PM PDT on May 16, 2012

It seems some countries want a free ride after letting corruption take hold in their government and their people. This is a time for people to work together. Merkel should not be able to dictatet to anyone; everyone in the EU stated they wanted to be their and were voted in, so it it time for everyone in the EU start working as they are a partnership. Everyone should have a voice and a vote. It's way past the time when these folks should be held accountable for their failings and work together for improvement.

11:14AM PDT on May 16, 2012

Money is the root of all evil and no evil is necessary. Barter.

10:26AM PDT on May 16, 2012

At least they are thumbing their noses at the EU by refusing to be bullied into the concessions they demand. The EU is just a big consortium taking over Europe by financial means and trying to bind together diverse nations that are like puzzle pieces that just don't fit.

6:37AM PDT on May 16, 2012

Eu também estou de acordo do que esta escrito o que se passa na Grécia foi um Resultado da ganância dos politicos onde poderiam ter tudo nas suas mãos Agoram outra vez eleições no pais que hoje tem uma divida enorme se a Grécia não tiver um governo com a maioria e establidade politica não vai a lado nenhum é triste ver um povo em que os seus politicos ainda não se entenderam

6:37AM PDT on May 16, 2012

Eu também estou de acordo do que esta escrito o que se passa na Grécia foi um Resultado da ganância dos politicos onde poderiam ter tudo nas suas mãos Agoram outra vez eleições no pais que hoje tem uma divida enorme se a Grécia não tiver um governo com a maioria e establidade politica não vai a lado nenhum é triste ver um povo em que os seus politicos ainda não se entenderam

6:37AM PDT on May 16, 2012

Eu também estou de acordo do que esta escrito o que se passa na Grécia foi um Resultado da ganância dos politicos onde poderiam ter tudo nas suas mãos Agoram outra vez eleições no pais que hoje tem uma divida enorme se a Grécia não tiver um governo com a maioria e establidade politica não vai a lado nenhum é triste ver um povo em que os seus politicos ainda não se entenderam

5:29AM PDT on May 16, 2012

Result of greed,politicians stealing everything they could get their hands on

4:52AM PDT on May 16, 2012

Greece should have gone back to the Drachma in 2008 and saved everyone a lot of money and time.

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