Greek Vote To Determine Its Relationship With EU; International Creditors

SYRIZAGreece is holding a snap general election today after Greece’s parliament failed to receive enough votes on December 29th to elect a new president.

Recent polls show leftist party Syriza, led by Alexis Tsipras (pictured), is currently in the lead and stands poised to move ahead of rival New Democracy party in the country’s 300 member parliament but they may still lack the 151 seats needed in parliament to govern alone.

Tsipras has said that he wants Greece to remain in the 19 member euro currency union but he also seeks to discard the majority of the conditions attached to Greece’s current € 240 billion ($270 billion) international bailout package that includes austerity measures, labor reforms, cuts to public spending and asset sales to help reduce Greece’s public debt of €322 billion in the third quarter of 2014.

Tsipras said before a party meeting in early January that his Syriza Party would ensure that the majority of Greece’s debt would be wrriten off during renegotiations with its international creditors from the so called “troika” represented by the European Commission (EC), the International Monetary Fund (IMF), and the European Central Bank (ECB).

The prospect of a Syriza victory during today’s elections has renewed fears that Greece could default on its loans and exit the euro currency pact with the other 18 countries of the euro area.

Although Greece’s economy is slowly growing again, Greece’s unemployment level is the highest among the other 19 countries in the euro area at 26 percent, inflation is the most deflated at -2.5 percent as of December 2014, and the country’s debt is 176 percent of GDP in the third trimester of 2014, according to eurostat, a level that is considered to be unsustainable.

On December 8th Greece’s international creditors agreed to support a two-month extension of the bailout program after Greece showed a shortfall of  € 2 billion.

German Chancellor Angela Merkel called for unity last Friday ahead of Sunday’s election and urged Greece to remain past of the euro area despite saying recently at the World Economic Forum in Davos that Germany would not concede and accept the demands to have Greek debt written off.

“I want Greece, despite the difficulties, to remain part of our story” Merkel said.

On Monday European Commission President Jean-Claude Junker told Russian Agency TASS that a new Greek government should honor its financial commitments.

“The new Greek government must take on the previous obligations, to stay the course of the reforms and be financially responsible” Junker said.

“Europe will continue to support Greece but it is expected that Athens will stick to the promises made to its partners” Junker added.

-Johnathan Schweitzer

 

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