Greece holds elections on Sunday and the rest of Europe is holding its breath. This will be the second time Greece goes to the polls to elect a government that will forge a clear path towards financial stability. The centrist, pro-austerity New Democracy party is tied neck-to-neck with the leftist Syriza party that favors a full renegociation of the financial bailout terms imposed by Europe’s banks and Germany. There is great fear, in both Greece and the rest of Europe, that the elections will continue to destabilize Greece’s financial future and threaten the financial stability in Europe.
Despite who wins, Greece still faces difficult negociations with European banks and lenders over the terms of its austerity programs to get Greece back on fiscal track. Many Greeks think the austerity measures are too strict and do not focus enough on economic stimulus to get the country moving again. Greece finds itself going deeper into recession. For certain, any new government will have to confront Germany for another leaner, and more forgiving, bailout package. From The New York Times:
“Everyone knows that whatever they call it — and they won’t call it a renegotiation — there will have to be a de facto renegotiation of the bailout memorandum,” said Mark Leonard, director of the European Council on Foreign Relations. “If Syriza is the largest party, it will add to the general sense of panic and will push the Germans to do more” to ease pressure on the euro, he said. “The Germans are trying to slow things down, worried they’ll be forced into financial commitments without political commitments in place.”
Germany, most certainly, will not write the Greek government a blank check and German Chancellor Angela Merkel has warned that Greece’s bailout will not be renegotiated. America Abroad reports from Germany, long the economic engine of the EU, where citizens are losing trust in the European Union, and political leaders are struggling counter the discontent. Read more.